There was a time in the early 80s when Rupert Murdoch was one
relcalcitrant bank away from meltdown. Time Warner wasn’t even a twinkle
in the merger maker’s eye, and Walt Disney was under pressure after a
string of film flops. Back then, the Gannett Corporation was the stock
to be seen with.
But these days, the country’s fifth largest media group is barely known
outside its home base in the US.
The Virginia-based company is the largest newspaper group in the US by
circulation, and is the parent of one of the only two genuine national
newspapers in the US, USA Today. But the group that was once the darling
of Wall Street has failed to stage a spectacular take-off, either into
other forms of media or in the international arena.
Gannett raced ahead in the 70s, spending dollars 1.5 billion on
acquisitions and cornering the US regional newspaper market. At one
point, the company operated more than 100 newspapers with a combined
circulation of 6.3 million.
In the bus-shelter advertising market, its position was even more
Gannett Outdoor Group operated three-quarters of the country’s 14,000
bus-stop shelters, and held the lucrative contracts in New York, Los
Angeles, San Francisco and Chicago.
But what really excited the pundits was the fact that Gannett seemed
prepared to make its media assets sweat in a way that the other big
players hadn’t been able to. The culmination of this was the launch in
1988 of USA Today on TV, a syndicated TV version of its flagship
newspaper, and seemingly an object lesson in how media companies should
go about exploiting their biggest brand names.
However, USA Today on TV flopped and sent Gannett scurrying from the TV
market just as everyone else was moving in. After getting its fingers
burnt, Gannett went into its shell, concentrating on improving
efficiencies in a declining newspaper market rather than embracing the
realities of the new-media market.
Suddenly, Gannett is no longer the hot stock. It’s not that it is doing
badly - far from it - it’s just that observers had expected so much
When the former journalist and now the president and chief executive
officer, John Curley, announced two years ago that revenues were rising
in every operating division, and by an average of 15 per cent, he was
rewarded by the share price falling by 50 cents.
But where most bosses might have seethed inwardly and shrugged off the
criticism, Curley went for the jugular, accepting an invitation to speak
to analysts in New York. ’Many of you,’ he told them, ’have deep-seated
fears newspapers are passe, despite the fact that newspapers continue to
draw the audiences advertisers covet most.’
That remains the official Gannett position. But there are stirrings that
the cosy status quo is about to change. Chief among these was the
completion of the sale of Gannett Outdoor in August last year for
dollars 690 million, and the purchase of Multimedia Inc at the end of
The former means Gannett will not be able to enjoy the success of a
medium that enjoyed its biggest revenue leap for more than a decade in
1995, but it also means someone else will be trying to defend the city
contracts, most of which are set for review in the next few years. The
New York contract is due to be decided next year and has attracted
bidders such as More O’Ferrall as well as the indigenous firms.
The multimedia acquisition, on the other hand, did what many observers
have been advocating for years - it made Gannett into a TV player. It
brought the group ten TV stations, including nine NBC affiliates, giving
Gannett 14 per cent coverage of US TV homes.
Better, it takes Gannett back into the TV programme business and
re-opens the possibilities of exploiting the powerful USA Today brand on
TV. Multimedia has a good track record in chat shows, making US
programming staples such as Donahue, Sally Jessy Raphael and Rush
Limbaugh. In addition, it owns a cable TV network, NewsTalk
For some, this diversification away from the core newspaper business is
too little, too late. But the company has been dogged by misfortune in
its attempts so far. The new-media division was rocked by a financial
scandal in which its president was implicated in insider trading, so
that such projects as a USA Today CD-Rom service and Sky Radio, an
in-flight radio station, were subsequently closed.
All this leaves newspapers responsible for more than 80 per cent of
group revenues last year. Fortunately, they continue to defy the
sceptics and turn in improved performances. In the most recent results,
for the third quarter of 1996, newspaper revenues were ahead 13 per
cent, while national ad revenue increased 27 per cent. Just to be on the
safe side, Gannett continues to expand its TV interests judiciously,
acquiring its first CBS affiliate, in the important Tampa market, in
Some disgruntled shareholders continue to demand that the company makes
more of a splash, using its strong cash flow to make a bid for CBS, for
example, rather than pick up TV stations here and there. But Gannett
will not be hurried. This is, after all, a company that was founded in
1906, which makes it venerable by US standards, and so perhaps entitled
to take things at a more stately pace.
GANNETT AT A GLANCE
Gannett is the largest newspaper group by circulation in the US.
It also operates TV and radio stations, direct marketing and printing
firms and runs a cross-media advertising sales division. The company was
founded by Frank E.
Gannett in 1906, incorporated in 1923 and first listed on the New York
stock exchange in 1969. It has about 38,600 employees in the US, and in
overseas offices in Guam, the Virgin Islands, the UK, Germany and Hong
Gannett runs 92 daily newspapers with a combined daily paid circulation
of about 6.6 million. USA Today, the country’s largest-selling daily
newspaper, sells around two million. USA Today International is
available in more than 90 countries throughout Asia, Europe, North
Africa and the Middle East.
Other titles are mostly mid-sized city titles, based in places as
diverse as Des Moines in Iowa, Sioux Falls in South Dakota and Boise in
The Detroit News is the largest of the city titles.
Gannett also owns a variety of non-daily publications, including USA
Weekend, a weekly magazine with a 19.2 million circulation delivered in
452 Gannett and non-Gannett newspapers. Other spin-off titles include
the USA Today Baseball Weekly.
The company owns and operates 16 television stations and 11 radio
stations, as well as cable television systems in markets such as Denver,
Colorado, Atlanta, Georgia, and Jacksonville in Florida.
Basic cable subscribers to the system, which is currently available in
just five states, already number around 460,000.
These include Gannettwork, a cross-media selling division, and Gannett
National Newspaper sales, a commercial printing operation, as well as
the USA Today Information Network.