Gannett Co., Inc.

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Gannett Co., Inc.

1100 Wilson Boulevard
Arlington, Virginia 22234
U.S.A.
(703) 284-6000
Fax: (703) 276-5548

Public Company
Incorporated: 1923
Employees: 36,600
Sales: $3.44 billion
Stock Exchange: New York

In 1990 Gannett Co., Inc. owned 82 daily newspapers, including its flagship USA Today; 66 nondaily publications; and the weekly newspaper magazine USA Weekend, among other holdings. The company also owned and operated ten television stations, eight FM radio stations, and seven AM radio stations, many of which are in major markets. In addition, its Gannett Outdoor was the largest outdoor-advertising group in North America.

Gannett has been a leader in the application of technology and in media issues since its founding in 1906. It continues to be a leader today—albeit a more controversial one, largely because of USA Today and former chairman Allen Neuharth. Current chairman John Curley wants to maintain the company’s industry leadership role but takes a less flashy approach than his predecessor. He is also focusing more on the bottom line.

Gannett is the brainchild of Frank Gannett, who paid his way through Cornell University by running a news-correspondence syndicate; when he graduated, he had $1,000 in savings. Gannett got into the media business in 1906, when he and several associates bought the Elmira Gazette in Elmira, New York, with $3,000 in savings, $7,000 in loans, and $10,000 in notes. They bought another local paper, and merged them to form the Star-Gazette, beginning a pattern of mergers to increase advertising power that the company would follow throughout its history. Six years later, in 1912, Gannett bought The Ithaca Journal, beginning his toehold in upper New York state. The company gradually built up a portfolio of 19 New York dailies by 1989.

Gannett and his team moved to Rochester, New York, in 1918, a city whose papers would turn out to be among the company’s strongest. Many of the company’s rising executives were groomed at the Rochester papers. The group purchased two newspapers upon their arrival and merged them into the Times-Union. The papers’ holdings were consolidated under the name Empire State Group. In 1921 The Observer-Dispatch of Utica, New York, was acquired. In 1923 Frank Gannett bought out his partners’ interests in the Empire State Group and the six newspapers the group then owned, and formed Gannett Co., Inc. Gannett appointed Frank Tripp general manager. Tripp helped run the everyday business of the papers, and the two were close allies for years. The Northeast was Gannett’s focus for the next 25 years, and the company expanded aggressively with acquisitions there. Another key executive, Paul Miller, joined the company in 1947, becoming Gannett’s executive assistant. By then, the company operated 21 newspapers and radio stations.

Gannett’s role as a leader in technology began in 1929, when Frank Gannett co-invented the teletypesetter. Gannett newsrooms were among the first to use shortwave radios to gather reports from distant sources. In 1938, before color was in much use, many Gannett presses were adapted for color. Today, with its USA Today, the company continues to be a leader in color use. A corporate plane also helped reporters get to the site of news quickly.

Frank Gannett died in 1957, but not before he saw Paul Miller named president and chief executive officer. Miller oversaw the company’s expansion from a regional chain to a national one in the next decade.

Gannett News Service, as it is known today, was founded in 1942 as Gannett National Service. The wire service subsidiary provides the company’s local papers with national stories from Washington, D.C., and 13 bureaus. The stories often have a local angle or local sources. A television news bureau was added in 1982.

Through all these years, Gannett grew by buying existing newspaper and radio and TV stations. In 1966, it founded its first newspapers, Florida Today. It was the work of Allen Neuharth, who later was to become the founder of USA Today. Neuharth brought the new paper to profitability in 33 months, an incredible feat in the newspaper business, analysts say. Because the paper was near the National Aeronautics and Space Administration (NASA), it was dubbed “Florida’s Space Age Newspaper.” The paper has since been redesigned to emphasize state and local news and is promoted and sold with USA Today, which provides national and international coverage.

The company went public in 1967. In 1970 Paul Miller assumed the title of chairman, and Allen Neuharth was promoted to president and chief operating officer from executive vice president, making him the heir-apparent to the top position in the company. Neuharth went on an acquisition spree, leading the company to its current size and status in the media world. He became chief executive officer in 1973 and chairman in 1979.

Two notable mergers were those with Federated Publications in 1971 and with Speidel Newspaper Group in 1977. Two years later, Gannett merged with Combined Communications, the biggest such merger in the industry at that time, for $400 million. The Evening News Association joined the Gannett family later when Gannett bought it for $700 million. One near-merger was with Ridder Publications. Bernard H. Ridder Jr., president, was a golfing mate of Paul Miller. Ridder had concluded the only way his small, family-held company’s stock would ever reach its full potential was for Ridder Publications to merge with a big media company. The two talked, but Ridder proved to be more interested in Knight Newspapers because it had less geographic overlap with Ridder than did Gannett.

Some industry critics have warned that media consolidation, such as Gannett’s 1970s acquisitions, thwarts open debate and the exchange of ideas. Gannett defenders, however, claim that chain newspapers can be just as vigorous in promoting and defending the rights of a free press as independent newspapers.

In 1986 Neuharth retired as chief executive officer, passing the baton to John Curley. Curley had been president and chief operating officer since 1984; he joined Gannett in 1970. Curley took on the title of chairman in 1989 and still headed the company in 1991. Neuharth continued as chairman of the Gannett Foundation.

In 1989 the Gannett Foundation gave $28 million to various programs. It was established in 1935 by Frank Gannett to promote free press, freedom of information and better journalism, adult literacy, community problem-solving, and volunteerism. Neuharth spent as freely at the foundation as he had at the company. Neuharth put the foundation’s 10% ownership of Gannett up for sale in 1990, in the midst of questions about Neuharth’s spending priorities. In 1990 the foundation’s expenses were rising faster than its assets. Under Neuharth, the foundation spent $15 million on interior design of its headquarters, when it moved from Rochester, New York to Arlington, Virginia, where USA Today’s offices are located.

Curley, a newsman, as most of Gannett’s heads have been, was editor and publisher of several Gannett papers and was founding editor of USA Today. Neuharth had said in 1982 when he started USA Today that it would begin making annual profits in three to five years. By 1990 the paper had had quarterly profits but never a full year of profitability. Between 1982 and 1990 USA Today sapped the company of an estimated $500 million. The national daily newspaper was another demonstration of Gannett’s leadership role in the use of technology, as well as journalism. The copy for the paper is transmitted by satellite to its 15 printing plants.

The paper also had been an innovator in graphics, especially in the use of color. Media observers credit USA Today’s use of color as the spur for industry wide interest in color graphics. The paper is also known for the brevity of its stories, which many journalists have criticized but which many editors have imitated. USA Today in 1990 had a paid circulation of about 1.8 million.

Industry estimates put Gannett as the nation’s second-biggest media concern, with a market value of $7 billion, behind only Capital Cities/ABC, the largest, with a $10.2 billion market value. After the firm’s buying binge under Neuharth, analysts say it is likely that Gannett will take a slower pace in the next several years. In 1990, it purchased the Great Falls Tribune, of Montana, from Cowles Media for $41 million, making it the company’s 83rd daily paper. There are fewer great deals to be made on newspaper acquisitions these days, however, so Gannett will probably work to improve the profitability and journalistic performance of its current holdings.

Principal Subsidiaries

Gannett Direct Marketing Services, Inc.; Gannett News Service; Gannett Outdoor; Louis Harris & Associates; Gannett National Newspaper Sales; Gannett Telemarketing, Inc.; USA Today Update; USA Today Books.