The owner of USA TODAY, founded in 1906 as a small newspaper publisher in Upstate New York, joined a quickly growing list of media companies -- including
"It is a bittersweet moment for me because I love both of these businesses,"
The plan is not a surprise for many of the company's followers and investors, some of whom had called on Martore to unlock the growth potential of the broadcasting and digital businesses by separating them from the print unit, where revenue has fallen steadily in recent years.
In recent years, Martore has acquired additional broadcasting and digital assets to diversify the company and convince shareholders and analysts that it's looking at a future beyond its roots in newspapers. Last year,
Spinoffs become a trend
While such splits have become a trend for media companies, it's too soon to be able to judge the long-term implications, particularly for the new publishing companies.
The move comes just a day after
Media companies spinning off publishing units also have included
The Belo TV station group
Martore will be the CEO of the new broadcasting and digital company, which will be renamed, and both new companies will continue to be based in
The planned spinoff of the publishing business -- which includes USA TODAY and 81 daily community newspapers and their affiliated websites -- will be done with a tax-free distribution to shareholders in a formula to be determined. It will retain the name
The company said the publishing unit will be "virtually debt-free" after the spinoff, with the broadcasting and digital company retaining
Investors cheered the move after it was announced early Tuesday, with shares of the company up more than 6% in pre-market trading. But shares fell back
In its second-quarter earnings report,
Martore said in a conference call with analysts that
For example, its TV stations, print websites and local newspapers receive a large chunk of their national news content from USA TODAY. The newspapers also widely use TV station videos to accompany stories on their websites.
Free to do deals
Martore characterized the plan as a way for "the two companies that are unfettered to invest in great transactions" and grow beyond its current limits. Acquisitions could be central to their growth strategies.
While few companies are buying newspapers, Martore said "there have been attractive newspaper properties" for sale that
"We bump into it more often than you'd imagine," she said.
With a positive cash flow, "an incredibly strong balance sheet" and no TV ownership problems, the publishing company will be able to look for opportunities, she said.
The other media companies that embraced the carve-out-print strategy still are working through the operational kinks, but as a financial strategy, "it seems to be working," said
The market value of the broadcasting and digital entities tends to be close to that of the previously combined company, so the value assigned to the publishing company is "icing on the cake," Doctor said.
"This does maximize shareholder value. It works financially."
But the publishing companies, without the financial growth of the more profitable divisions, may find survival difficult as publicly traded companies that have to show incremental improvements each quarter.
When the new
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