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: 36,700
Sales: $3.38 billion
Stock Exchanges: New York
SICs: 2711 Newspapers; 4832 Radio Broadcasting Stations; 4833 Television Broadcasting Stations; 7312 Outdoor Advertising Services

Gannett Co., Inc., is the United States’s largest newspaper group. In 1991 the company owned 81 daily newspapers (including its flagship USA Today), more than 50 nondaily publications, and the weekly newspaper magazine USA Weekend, among other holdings. Gannett’s dailies boast a total average paid circulation of over 6.2 million, more than any other newspaper group. The company also has 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.

In 1918 Gannett and his team moved to Rochester, New York, a city whose papers would turn out to be among the company’s strongest. Many of Gannett’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 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.

The company’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 used much in newspapers, many Gannett presses were adapted for color; with its USA Today, the company would continue to be a leader in color use. Other advantages included a corporate plane that helped reporters get to the site of news quickly. Frank Gannett died in 1957, but not before he saw 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 became known as, 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 newspaper, 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, according to analysts. 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.

Gannett went public in 1967. In 1970 Miller assumed the title of chairman, and 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. That company’s president, Bernard H. Ridder, Jr., was a golfing mate of Miller. Ridder had concluded that 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. But in 1989 Gannett and Knight-Ridder implemented a joint operating agency to combat the decline in newspaper advertising revenues in Detroit, Michigan. The cooperative venture was the largest-ever merging of two competing newspapers’ business operations. The arrangement called for the Knight-Ridder’s Free Press and Gannett’s Detroit News to divide revenues equally. Since Gannett held more of Detroit’s market share before the merger, it took a loss during the venture’s first year, 1990.

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 an effort to illustrate that point, Gannett started its “News 2000” project to preserve and advance First Amendment rights and develop a more positive image for newspapers in the process.

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 1993. 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 continued as chairman of the Gannett Foundation, which 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, giving $28 million to various programs in 1989 alone. Despite criticism from some Gannett newspaper executives, Neuharth also oversaw the Foundation’s move from Rochester, New York, to Arlington, Virginia, where USA Today’s offices are located. Interior design of the charity’s new headquarters ran at $15 million.

With expenses rising faster than assets, Neuharth sold the Foundation’s ten percent share of Gannett Co. back to the company for $670 million. On July 4, 1991, the philanthropy’s name was changed to the Freedom Forum, and its mission was changed to focus on First Amendment and other strictly journalistic issues. Gannett Co. created a $5 million fund to replace money withdrawn from the Gannett Foundation’s more community-oriented charities. Other accomplishments of the company in the early 1990s include: increasing the company’s use of recycled newsprint to 20 percent of total usage, over 180,000 tons; being named one of the United States’ top 20 places for African-Americans to work; and becoming the first news service to syndicate a weekly newspaper column dedicated exclusively to gay and lesbian issues.

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. And September of 1992 marked ten unprofitable years for USA Today. But with 6.6 million readers daily, the United States’ most widely read newspaper also celebrated record advertising and circulation revenues. USA Today executives claim that had the U.S. economy not been in recession, the paper would have been in the black by 1990. Fortunately, the rest of Gannett’s business was strong enough to offset USA Today’s annual losses. Curley, the paper’s president and publisher, hoped that cost-containment measures, lower newsprint prices, and other savings in the production-distribution process would bring USA Today into profitability.

1991 was Gannett’s most difficult year since the company went public in 1967. The company slipped from second to third in rankings of the United States’ top media concerns as a result of Time Warner’s leapfrog to first place. Annual revenues dropped 2 percent and net income was down 20 percent from the year before. Fifty-five of Gannett’s 86 local dailies raised circulation prices, and circulation barely rose.

Yet the national daily newspaper was another demonstration of Gannett’s leadership role in the use of technology, as well as journalism. The paper has also 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 copy for the paper is composed and edited at USA Today’s Arlington, Virginia, headquarters, then transmitted via satellite to 36 printing plants in the United States, Europe, and Asia.

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 Montana’s Great Falls Tribune 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 in recent years, however, so Gannett has been working to improve the profitability and journalistic performance of its current holdings.

In the 1990s Gannett has sought to improve its financial performance by catering to both ends of the media spectrum: consumers and advertisers. For consumers raised on television who say they find newspapers “boring,” Gannett’s flagship, USA Today, offers concise stories. The company also has been encouraging its local dailies to use more graphics and briefer stories. Advertisers are drawn to the print media’s comparatively low costs and to USA Today’s 1.7 million week-day and 2.2 million weekend circulation.

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.