Billionaire investor Carl Icahn recently disclosed his 6.6% stake in Gannett Co., Inc. (GCI - Analyst Report) and indicated that he was in the favor of the split, which the diversified media conglomerate announced in early August. The activist investor hinted that his firm took a stake in the company, as its shares were undervalued and believes that the decision to split would help in unlocking value.
Gannett recently announced that it will split its business into two separate entities, one completely focusing on Broadcasting and Digital businesses and the other concentrating on Publishing. The bold step is in line with the Tribune Company that spun off its newspaper business into a publicly traded company Tribune Publishing Company (TPUB - Snapshot Report). News Corporation (NWSA - Analyst Report) and Time Warner Inc. (TWX - Analyst Report) have also separated their broadcasting and digital properties from the sluggish print business.
Gannett informed that following the split, the two companies will remain headquartered in McLean, VA. While the Publishing business will be christened as Gannett, the name of the Broadcasting and Digital company is yet to be decided. Gracia Martore will spearhead the Broadcasting and Digital company, while Robert J. Dickey will serve as CEO of the Publishing company.
For quite some time now, Gannett has been making endeavors to expand its presence in broadcasting and digital products with a view to lower its dependency on the soft print media business as well as traditional advertising and therefore reduce susceptibility to economic conditions.
The recent news of Gannett taking over Cars.com underscores the same. Prior to this, the company bought six television stations of London Broadcasting Company and also acquired television-station operator, Belo Corp. We believe this will transform Gannett’s business model, which was largely focused on low margin newspapers to a high-margin multi-media business.
Apart from business model diversification initiatives to add revenue streams and counter any economic onslaught, Gannett is adapting to the evolving multi-platform media universe, which currently includes the Internet, mobile, social media networks and outdoor video advertising. The company is also realigning its cost structure and streamlining operations to increase efficiencies.
Gannett currently holds a Zacks Rank #3 (Hold).