Gannett Company, Inc.
Gannett Company, Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Telephone: (703) 854-6000
Fax: (703) 558-4638
Web site: http://www.gannett.com
Sales: $6.71 billion (2003)
Stock Exchanges: New York
Ticker Symbol: GCI
NAIC: 511110 Newspaper Publishers; 513120 Television Broadcasting
Referring to itself as a diversified news and information company, Gannett Company, Inc. owns 101 daily newspapers, including the best-selling daily newspaper in the United States, USA Today, which is also available in 60 countries worldwide. Gannett also owns more than 20 television stations covering roughly 17 percent of the United States. Although the company's focus is primarily in its newspaper and broadcasting properties, it operates a news service and is also involved in commercial printing, telemarketing, data services, and news programming. The company also owns and operates over 130 web sites in the United States and another 80 in the United Kingdom. Headquartered in Arlington, Virginia, Gannett maintains offices in 43 states, the District of Columbia, Guam, the United Kingdom, Belgium, Germany, Italy, and Hong Kong.
Gannett was 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; much later, 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 to a national chain in the next decade.
Gannett News Service, as the company became known, was founded in 1942 as Gannett National Service. The wire service subsidiary provided the company's local papers with national stories from Washington, D.C., and 13 bureaus. The stories often featured 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 was ultimately redesigned to emphasize state and local news and was promoted and sold with USA Today, which provided 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.
1970s: Growth Through Acquisitions
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. However, 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.
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. A newsman like most of Gannett's heads, Curley 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 were located. Interior design of the charity's new headquarters ran to $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 included: 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. September 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 claimed 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.
The year 1991 was Gannett's most difficult since the company went public in 1967. The company slipped from second to third in rankings of the top U.S. media concerns as a result of Time Warner's leapfrog to first place. Annual revenues dropped two 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 also was an innovator in graphics, especially in the use of color. Media observers credited USA Today's use of color as the spur for industry-wide interest in color graphics. The copy for the paper was 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.
The information company. Newspapers. Television. Internet.
$5 Billion in Revenues: 1990s
Gannett's most significant activity during the 1990s took place in the divestiture and acquisition arena, an area that some observers believed the company needed to explore more fully. Critics contended that Gannett, renowned for its financially conservative approach, should loosen its purse strings and adopt a more aggressive acquisition strategy. Confronted with suggestions that the company should purchase a movie studio or a television network, Gannett management demurred, preferring to keep its focus set on its core businesses. "We aren't complicated people," Curley informed the Wall Street Journal in late 1995. "We like newspapers and TV stations. If you run them very well, they can do very well.…" Despite the company's penchant for financial discipline and its steadfast adherence to its existing businesses, the 1990s saw Gannett explore new business opportunities and express more than a modicum of acquisitive might.
Gannett began the process of adding and paring away businesses in 1995. That year, the company shouldered past rival bidders such as Ellis Broadcasting and NBC in its $1.7 billion acquisition of Greensville, South Carolina-based Multimedia, Inc. The acquisition gave Gannett 11 daily newspapers, 50 other newspaper publications, five network-affiliated television stations, two radio stations, and production and syndication control for television shows hosted by Phil Donahue, Sally Jesse Raphael, Rush Limbaugh, and Jerry Springer. The acquisition of Multimedia also ushered Gannett into the cable business, giving the company 450,000 cable television subscribers. As the company delved into the previously foreign territory of operating cable television systems and controlling television programming, it withdrew from two other businesses. In 1996 the company sold its outdoor advertising division to Outdoor Systems of Phoenix, divesting the business to free its resources for the development of its newspaper and broadcast properties and to facilitate the incorporation of the Multimedia properties into its fold. Louis Harris & Associates, Gannett's polling subsidiary, also was sold in 1996, a year that saw the company enter into a joint venture with Knight-Ridder and Landmark Communications to form an Internet service provider called InfiNet, created to help publish newspapers online.
Deal-making continued to predominate at Gannett headquarters as the company entered the late 1990s. The company had exchanged six of its radio stations for a television station in Tampa, Florida, in 1996; in 1998, it exited the business entirely by selling its remaining five radio stations to Evergreen Media. As the company's radio properties disappeared, the number of its television stations increased with the acquisition of three stations in Maine and South Carolina. Before the end of the decade, the company completed two more significant deals, which, in keeping with the trend established in the 1990s, included a divestiture and an acquisition. In 1999, the company sold the cable assets obtained in the Multimedia acquisition. According to company officials, the decision to divest the cable properties was not based on a strategic decision, but represented an opportunity to realize a significant profit. Gannett sold the cable business to Cox Communications for $2.7 billion, a move that the company's treasurer described as "a grand-slam deal" in the July 31, 1999, issue of Editor & Publisher. In a separate announcement, Gannett revealed that it was acquiring 95 percent of Newsquest plc, the largest regional newspaper publisher in England.
The cumulative effect of the acquisitions and divestitures completed during the latter half of the 1990s lifted Gannett's revenues above $5 billion by the end of the decade. Although the company shied away from headlong leaps into other areas of the media industry—unlike many of its competitors—Gannett's consistent record of financial growth suggested that there was no pressing need to develop into a comprehensive, broadly diversified media conglomerate.
The Early 2000s
As the 1990s rolled to a close Gannett became embroiled in a $10 million dollar lawsuit with banana giant Chiquita Foods International. In May 1998 the Cincinnati Enquirer, a Gannett-owned newspaper, ran an 18-page exposé on the banana titan, alleging numerous questionable business practices, but it was soon alleged that Enquirer reporter Mike Gallagher had illegally obtained Chiquita voice-mail messages. By June 28, 1998, the Enquirer had retracted the story upon the front page of its Sunday edition. Repercussions from the suit would extend into the next century as the reporter and his managing editor filed suits of their own.
Gannet acquired Sacramento's KXTV Channel 10 in February 1999, although it sold its Multimedia Cablevision Inc., a 515,000-subscriber operation it had picked up in 1995 through its acquisition of Multimedia. By October 1999, Gannett was back in purchasing mode, picking up eight papers in the new York area from the Tucker Communications group; additionally, the company expanded in to Great Britain, picking up 11 British dailies. The trend continued in to 2000, when Thomson Co. agreed to sell Gannett 21 daily papers for $1.13 billion in June.
- Frank Gannett buys out his partners in the newspaper business and forms Gannett Company Inc.
- Frank Gannett invents the teletypesetter.
- The Gannett wire service is established.
- Company goes public on the New York Stock Exchange.
- USA Today begins publication.
- Gannett acquires Newsquest plc.
Long time Chief Executive Officer John J. Curley stepped down from Gannett in June 2000, passing the mantle to his right-hand man, President and Vice-Chairman Douglas H. McCorkindale. Curley remained chairman until early 2001, when he retired, leaving McCorkindale chairman, president, and CEO. The orderly changeover caused nary a ripple in Gannett's stock; McCorkindale had been Curley's associate for so long that investors seemed assured that the firm would continue on familiar patterns. Certainly the company strategies remained the same. In that same month Gannett bid on yet another British company, Newscom, publisher of four daily newspapers, for $702 million, then cut a check for $2.6 billion for Arizona Republic and Indianapolis Star publisher Central Newspapers. The acquisitions mounted through the rest of the early 2000s, and by 2004 Gannett controlled three Scottish papers and 11 related magazines, as well as 34 publications from Brown County Publishing Company, including The GreenBay News-Chronicle. Profits for the company remained on the upswing into the middle of 2004, and CEO Corkindale was voted in by directors to remain chairman until 2006, two years longer than originally scheduled.
Such success did not come without some controversy. As late as 2003 the lawsuits related to the Chiquita Banana stories in the Enquirer were still in the courts. Ultimately the courts decided in favor of former editor Larry Beupre and awarded him a $550,000 settlement for his claim that he had been the company's scapegoat. There was likewise trouble in Hawaii, with Honolulu Star-Bulletin owner David Black accusing Gannett of various unsavory business practices, including various legal manipulations that rendered it cost-prohibitive for his paper, a rival to the Gannett-owned Honolulu Advertiser, to purchase newsprint.
In late 2004, however, even with occasional assaults, Gannett was clearly secure financially and in its role as an industry leader. The company remained a steady draw for talented minority workers, thanks in no small part to Gannett's aggressive recruitment drives aimed at promising college graduates. In 2004, a titanic merger looked to be in the works between the television operations of Gannett and Hearst-Argyle, following the relaxation of duopoly rules by the Federal Communications Commission (FCC). A merger of the two companies would come close to dominating 35 percent of the market place, near the allowable cut-off ministered by the FCC. Critics suggested that a merger would further shrink both jobs and diversity of viewpoints in areas controlled by both companies, but that remained to be seen.
USA Today; USA Weekend; Newsquest plc; Gannett News Service; Gannett Offset; Gannett Retail Advertising Group; Gannett Media Technologies International; Nursing Spectrum; Texas-New Mexico Newspapers Partnership; Captivate; Clipper Magazine Inc.; 101 Inc.; Army Times Publishing Company; Gannett UK Ltd.
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—updates: April Dougal;
Jeffrey L. Covell;
Howard A. Jones