Print spinoff for TEGNA, Gannett completed

TEGNA, the media company formerly called Gannett, said Monday it has completed the spinoff of its publishing business, finalizing a strategy that had been in the works for nearly a year to protect its broadcasting and digital businesses from the decline in print advertising.

The spun-off publishing company, which adopts the name Gannett, owns newspapers in 92 markets, including the Press & Sun-Bulletin in Binghamton, The Ithaca Journal and Star-Gazette in Elmira. It also owns USA TODAY and plans to acquire more papers and other media assets.

TEGNA, which will continue to be based in McLean, Virginia, owns or provides services to 46 TV stations nationwide, and runs Cars.com and CareerBuilder.com. "We are ready to hit the ground running," TEGNA CEO Gracia Martore said in a statement.

TEGNA, whose name was derived from the letters in Gannett, began trading Monday on the New York Stock Exchange under the symbol TGNA. Gannett, which will share the headquarters with TEGNA, retains its stock symbol, GCI.

Shares of new Gannett fell more than 5 percent Monday, or 77 cents, to $14.13, giving it a market capitalization value of $3.3 billion.

TEGNA shares rose over 6 percent, or $1.92, to $31.63.

On their last day of trading prior to the split, shares of old Gannett rose under 1 percent to end Friday, June 26, at $37.16, raising the company's market value to $8.43 billion.

"Following the spin of publishing, TEGNA boasts a streamlined asset base, which we expect to result in a greater emphasis on TEGNA's high growth digital assets," wrote John Janedis, an analyst at investment banking firm Jefferies, in a note to initiate coverage of TEGNA.

In August, 2014, Gannett — which had nearly doubled its TV station business by buying competitor Belo a year earlier for $1.5 billion — announced its plans to separate into two publicly traded companies. The move, Martore then explained, would "increase shareholder value by building scale, increasing cash flow, sharpening management focus, and strengthening all of our businesses."

With the spinoff, Gannett shareholders keep their shares of Gannett (now TEGNA). They also received one share of new Gannett for every two shares of old Gannett stock they owned as of June 22.

Led by CEO Robert Dickey, former president of the Gannett U.S. community publishing division, Gannett formally revealed Monday a plan to push its newspapers to work more closely together, and share resources and stories under a new structure, called USA TODAY Media Network.

In June, Gannett expanded its local publishing business by completing the acquisition of the remaining 59 percent stake in the Texas-New Mexico Newspapers Partnership that it did not previously own. After the deal with Digital First Media, Gannett added 11 newspapers in three states, boosting its editorial employee count to more than 4,000 in the U.S. and the U.K.

"Together, we are moving forward as one unified organization," Dickey said in a statement Monday. "Over the next year, we will continue to innovate and invest in this network."

Citing Gannett's $500 million credit facility, Janedis said Gannett will have "both the capacity and appetite to expand its footprint" through acquisitions in midsize markets.

But with print advertising and newspaper subscribers still declining, "we continue to expect revenue to decline (longer-term)," he wrote.

"While top line growth remains challenged, we believe that operating as an independent entity should give Gannett the flexibility to grow margins by further consolidating back-office operations and extracting other cost efficiencies," he wrote.