Media giant Gannett announced Tuesday it is splitting its broadcast and publishing business in two, moving TV and digital operations away from the declining newspaper business. In total, Gannett owns 46 TV stations, USA Today, and 81 other newspapers and websites.
"The bold actions we are announcing today are significant next steps in our ongoing initiatives to increase shareholder value," Gannett CEO Gracia Martore said in a statement, noting that the company is doing so "by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses."
But does severing the print arm of the Gannett machine actually further the apparent death march of print? Not so fast—Gannett's not the only one to have recently spun off their print arms, and the company has good reason to do so.
As Michael J. De La Merced and Christine Haughney put it for The New York Times:
Such transactions are intended to free faster-growing television and other media operations from less profitable newspaper and magazine businesses. Executives hope that these deals push up stock prices and allow each division to focus on its own needs.
But investors have shown far more appetite for broadcast assets than newspapers, which continue to struggle as print advertising revenues decline and digital advertising revenue brings in a fraction of print advertising profits.
In fact, Gannett's spinoff almost completely mirrors those made by major companies like Time Warner Inc., News Corp., and the Tribune Co. The latter just completed its split with its publishing division Monday—prompting Ken Doctor at Nieman Lab to wonder whether Gannett would follow in its footsteps.
To break down Gannett's prospects, we took at look back at how these recent companies have fared since their striking out on their own.
Tribune Company > Tribune Publishing
Spinoff: August 4, 2014
The most recent company to spin off is also the one with the most confidence in its prospects, mostly because it can finally back away from teetering on the brink of bankruptcy, though it did begin its formation with $350 million in debt.
Though it's too early to examine the company's business, the company's new chief executive Jack Griffin told The New York Times that Tribune Publishing "will be a company that has a greater percentage of its revenue coming from digital sources," hinting that it won't just be about keeping previous print properties afloat.
Overall, the company's spin off saves it from bankruptcy, and ends the reports that the billionaire Koch brothers would purchase the company.
Time Warner > Time Inc.
Spinoff: June 6, 2014
Also a relatively recent endeavor and one that quelled rumors of outside media companies purchasing the print arm, the Time Warner spinoff of Time Inc. as its own magazine publishing company raised heavy concerns as waves of layoffs affected hundreds of employees. Plus, Time Inc. began with a less-than-desirable $1.3 billion debt.
But the spinoff meant creating one of the biggest companies in the field, delivering a massive advantage to its efforts, as well as providing more resources to advance Time Inc.'s stake in digital media. Though the company's stock first fell after it spinoff, the company has retained most investors, and the stock has risen nearly 16 percent since. Plus, some of the company's titles, including Sports Illustrated, have embarked on digital offerings, launching a video network and an app shortly after the spinoff began.
News Corp. > News Corp. and 21st Century Fox
Spinoff: June 28, 2013
But perhaps those examples have happened too soon. To go back further, the Rupert Murdoch media giant spun off its print arm in 2013, but didn't leave it with a debt to hamper its efforts to survive.
Because of this, the spun off company posted a $506 million profit in its first earnings report following the split, far better than its $2.1 billion loss the year before. Today, the company's print advertising revenue has slipped slightly, with revenue falling 5 percent in May.