The largest newspaper company in the US has no faith in the future of print.
The Gannett Co. said today it will spin off its publishing operations into a separate company, thereby cleaving its money-losing newspapers from its more profitable television and digital media assets.
Gannett owns USA Today and such regionally dominant newspapers as the Arizona Republic, the Indianapolis Star, the Cincinnati Enquirer, the Des Moines Register and Detroit Free Press, among others. They have a total of 81 local newspapers in the US, which will now separate from the 46 TV stations and such digital properties as Cars.com and CareerBuilder.
“The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses to compete effectively in today’s increasingly digital landscape,” said Gracia Martore, CEO of Gannett.
What she really means: “We are aware that printing newspapers is no longer a viable long-term play.”
Full disclosure: I am a former USA Today reporter. A few years ago, I met with the new publisher, who was going around and meeting everyone in our bureau. I remarked at the time that the web site needed to be beefed up considerably, as print was going away faster than anyone realized. She acknowledged that, but noted that there was still a lot of money to be made from the printing division, so the company was loathe to do anything to weaken it.
Apparently, we’ve reached the tipping point. The questions remaining are numerous. What happens next for the beleaguered newspapers, who are still the strongest news outlets in their respective markets? Will they become digital-only operations? Will USA Today still be delivered to hotels, a major source of circulation for the paper? Can the publishing division survive without the cushion of broadcasting revenues? Will the publishing assets be acquired?
Gannett isn’t the first to spin off its print assets. Time Warner, News Corp, and Tribune Media already have removed their print laggards, while Conde Nast has employed a strategy of printing only a few days a week and tying in their web operations.
The biggest question is how much longer you’ll be able to actually hold a printed copy of any newspaper. Given the costs of production and distribution, it’s already a quaint notion to many under age 50, who live in an on-demand world. And full-page ads, the chief revenue-driver of print, aren’t exactly growing in volume.
That said, there is still a major distribution advantage to reaching people in their homes, and smart people like Jeff Bezos and Warren Buffett are invested in newspapers. Perhaps the hidden monetary value will be unlocked by their wisdom. Time Inc., the publishing operations spun off from Time Warner, are up just under 17% since its split.
For now, it’s looking more like print will slowly go the way of vaudeville, which died but lives on in the form of television and the Net, a reminder of a kinder, gentler way of life that no longer exists.