Gannett is one of the last holdouts in an industry that’s forsaking the traditional newspaper-TV marriage, as Time Warner Inc. (TWX) and Tribune Co. (TRBAA) follow News Corp. in divorcing print media from the faster-growing TV business. While Gannett’s stock price surged after the purchase of Belo, the newspaper unit is still dragging the company’s profit multiple down to the lowest among U.S. media peers, data compiled by Bloomberg show. Splitting off the newspapers would give Gannett a stronger stock currency to buy more local TV stations, FBR & Co. said.
A breakup “would follow a path that many have been down,” William Bird, a New York-based analyst at FBR, said in a phone interview. “This is something that makes long-term sense. The growth profile of a newspaper publisher is definitely much below that of a broadcaster. That’s kind of the lower-multiple business that pulls the whole down.”
When asked in July if the board would consider spinning off the publishing division, Gannett Chief Executive Officer Gracia Martore said “we never rule anything out.” Jeremy Gaines, a spokesman for McLean, Virginia-based Gannett, declined to comment further.