INTERNATIONAL: MEDIA OWNER PROFILE: Gannett hits heights in print but falls short of TV stardom - The largest newspaper group in the US has not exploited its full potential, Richard Cook reports

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.

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 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.