Case Study - Gannett

8/9/2019 Case Study - Gannett

1/22

SuzanneYadaBusiness160Tues.Thurs.7:30a.m.

SUMMARY:

GannettCo.,Inc.,isthelargestnewspapercompanyintheUnitedStates,publishing85daily

newspapersandowning23televisionstations.Thetroublingeconomiclandscape,coupled

withthedeclineoftheprintmedium,makes2009anespeciallytoughyearforGannett.

Howcanthecompanysurvive?

Spring09

CASESTUDY:GANNETTCO.,INC.


2/22

CASESTUDY:GANNETTCO.,INC.

BYSUZANNEYADA

Theyear2009hasalreadybeendisastrousforthenewspaperindustry.In

additiontobattlingadifficulteconomicclimate,consumerhabitshaveshiftedover

thelastdecadefromreadinganexpensiveandbulkyprintpublicationtoconsuming

afreeandimmediateonlineone.Thismayhaveincreasedreadershipfornewspaper

companies,buttheyhavestruggledeversincetofindawaytosufficientlymonetize

thecontentonline.

Theywerestilltryingtofigureitoutwhentheeconomycollapsedinlate2008,

andmanywonderifnewspaperswillsurvivethiscurrentdownturn.Itisclearthe

largenewspapercorporationswillnotreturntothedoubledigitprofitsoflast

decadeanytimesoon(Overholser&HallJamieson,2006).However,thecompany

thatfirstsetthebarforthosehighprofitexpectations,GannettCo.,Inc.,isexpected

topullthroughthisrecession(Melvin,2009)foranumberofdifferentreasons.

Thegoalofthispaperistoexplorethosereasons,asIanalyzeGannetts

strengths,weaknesses,opportunitiesandthreats.ThenIwillpresentthreedifferent

managementdecisionpossibilitiesforGannettsfuture,andIwillexplainwhyIfeel

oneofthoseoptionsisthebest.

Beforethat,however,Iwillgiveyouthebackgroundonthecompany,its

purpose,historyandcurrentpositioninthemarket.


3/22

Yada/2

WHATISGANNETT?

Gannett(pronouncedgunNET)isanewscorporationthatownsadiverserange

ofmediaoutletsandrelatedoperations,includingprint,broadcast,digitalcontent

andothers.GannettisthelargestnewspaperpublisherintheUnitedStates,owning

85dailynewspapersandabout850nondailypublicationsin31statesandGuam.

ItsflagshipnewspaperistheUSAToday.Gannettalsoowns17dailypapersand200

otherpublicationsintheUnitedKingdom(Gannett.com,2009).

Inadditiontoprintpublications,Gannettowns23televisionstationsthatreach

morethan20millionhouseholdsintheU.S.,covering18percentoftheU.S.

population(Romaine,2009).ItsDigitalsegment,formedin2008,operatesonline

venturessuchasCareerBuilder,anemploymentWebsite;ShopLocal.com,anonline

shoppingandadvertisingchannel;PointRoll,arichmediamarketingcompany;and

Ripple6,aproviderofsocialmediatechnologyandanalytics.Thecompanyalso

dealswithcommercialprinting,newssyndication,andmarketinganddata

operations(2008AnnualReport,2009).

HISTORYANDREPUTATION

FrankGannett,thecompanysfounder,firstboughtahalfinterestinatiny

conservativenewspaperinupstateNewYorkin1906.Twentyyearslater,Gannett

owned21newspapersand7radiostations(Overholser&HallJamieson,2006).He

acquiredthesemediaoutletswiththepromiseofautonomyfortheoriginalowner

andpurposefullyfoughttokeepthewordchainfrombeingutteredanywherein

hisnewsrooms(Williamson,2006).


4/22

Yada/3

Asnewspapersshiftedtheirreportingvoicefromtheyellowjournalismeraof

sensationalismtoamorenuancedsenseofobjectivity,theperceivedseparationof

journalismwiththebusinessofjournalismwasmoreimportanttomaintainthan

ever.

Thattraditionshiftedbythe1960swhenlargenewspapercompaniesbeganto

gopublic,includingGannettin1967.Aroundthistime,AllenH.Neuharthbeganhis

ascentintopowerascompanypresident,CEOandchairman.Beforethen,

newspapercompanieshavetraditionallyportrayedthemselvesasimpoverished

organizationswhoseonlygoalwastoprotecttheFirstAmendment,butNeuharth

knewinvestorswerentinterestedinputtingtheirmoneyinabusinessthatprided

itselfonpoverty(Bagdikian,2004).

BythetimehebecameCEOin1973andchairmanin1979(Gannett.com,2009)

hechangedtheimageofthecompanytoreflectitsfinancialgoals,begantousethe

wordchaintodescribetheGannettbrandandwasunashamedtoemphasizethe

bottomline.Inshort,Neuharthbegantreatingthecompanymorelikeabusiness

thanapublicservice,andothermediaoutletstooknotice(Squires,1994).

Fromthelate1970sintothe80s,theGannettCorporationbegantorapidly

acquireothernewspapersandmediacompanies,specificallycommunitypapers

wheretherewaslittleornocompetition.

Criticsdecriedtheacquisitionsasbreakingantitrustlaws,cheapening

journalisticqualityinthenameofthebottomlineandreducingthenumberof

voicesheardinthemedia.Gannettrespondedwithanadcampaigninitsown

newspapers,emphasizingitscommitmenttotheFirstAmendment,itspoolofnews


5/22

Yada/4

andinformationfromacrossthenation,anditsstrongerabilitytofightinbigcourt

casesinvolvingfreedomofspeech(Bagdikian,2004).Evenwiththesepoints

emphasized,noonedeniedGannettsbusinessstrategytotakelocalmediacontrol.

Neuharthboastedinhisownbook,ConfessionsofanS.O.B.,thatWallStreetanalyst

JohnKornreichoncesaid,Gannettsbasicmediabusinessisawesome.Itisvirtually

anunregulatedmonopoly(Neuharth,1989).

Therapidgrowthinacquisitionswasalsomirroredinitsrevenues.Gannettwas

oneofthefirstnewspapercompaniestoseedoubledigitprofits,promptingawave

ofplanstofollowsuitwithinothernewscorporations.Gannettsetthestandardin

profitability,going18yearsfrom1967to1985witheachquarterlyprofitgreater

thantheonebefore(Bagdikian,2004).

ThemostsignificantdateinGannettsrecenthistorywasSept.15,1982,theday

thecompanylaunchedUSATodayaftertwoyearsofresearchingwhatwouldbethe

idealnationalnewspaperforbothreadersandadvertisers(Gannett.com,2009).

Thedesignandstyleofthenewspaperplacedanewfocusoncolor,infographicsand

shorter,morepositivenewsarticles,mimickingtheexperienceoftelevisioninmany

ways(Prichard,2007).

CriticslambastedUSAToday,nicknamingitMcPaperinreferencetowhatthey

feltwasthecheapeningofnewsthatplayedtothereadersevershrinkingattention

span.Butbytheendof1983,thenewspaperprovedtobeimmenselypopular.It

soldmorethan1.3millioncopiesadayandwouldeventuallybecomethelargest

sellingdailynewspaperinthenation(Prichard,2007).


6/22

Yada/5

GANNETTTODAY

Today,thecompanyisledbyCraigDebow,whobecametheCEOofGannettin

2005.HeadquarteredinMcLean,Virginia,itsmorethan225millionoutstanding

sharesofcommonstockareheldbyapproximately8,500shareholders(2008

AnnualReport,2009).Thecompanycurrentlyhasapproximately41,500fulltime

andparttimeemployeesaftera10percentworkforcereductioninOctober2008

andtheeliminationof1,000newsroompositionsinAugust(MacMillan,2008).

ThispastyearwasturbulentforGannett.Itsoperatingrevenuesfor2008were

$6.8billion,a9percentdropfromtheyearbefore.Thecompanyreportedanetloss

fromcontinuingoperationsof$6.65billionin2008,comparedtoanoperating

incomeof$1.65billiontheyearbefore.Therewasalsoanetlossof$6.65billionfor

2008comparedwithnetincomeof$1.06billionfor2007(2008AnnualReport,

2009).

Theearlymonthsof2009alsosawGannettsstockreducedtojunkstatus,which

severelyimpactedthecompanysabilitytosecurefinancingtomakestrategic

growthmoves(Witkowski,2009).Attheendof2008,thecompanyhad

approximately$3.8billioninlongtermdebt,and$2.2billionofthatwasborrowed

frombankstherestwasinunsecuredpublicnotes(2008AnnualReport,2009).

COMPARINGTHECOMPETITION

Theindustryasawholehasseendrasticdamage,andnewspapersacrossthe

countryareshutteringitsdoors.TheNewYorkTimespublishedthefollowing

graphiconMarch12,2009,anditisalreadyoutofdate.Manyofthepapersthat


7/22

Yada/6

werenotedtocloseinthisinfographichavedonesoalready,underscoringhow

quicklytheindustryisdeteriorating:

BADNEWSFORNEWSPAPERS

Sources:AuditBureauofCirculations;thecompanies.Graphic:NewYorkTimes


8/22

Yada/7

Thelowerhalfofthepreviousgraphicshowsabriefcomparisonwiththetop

fivelargestpublicnewspapercompanies.Thefollowinggraphsgivemorecontext:

3NEWSSTOCKSCOMPAREDTOS&P500,19712009

3NEWSSTOCKSCOMPAREDTOS&P500,20072009

Stocksymbols:GCIGannettCo.,Inc.;NYTNewYorkTimesCompany;SPXS&P500Index;WPOWashingtonPostCompany.Source:MarketWatch.com

Inthesegraphs,twoothernewscompaniesstockperformance,theNewYork

TimesCompanyandTheWashingtonPostCompany,aremeasuredupwith

GannettsandtheStandard&Poor500Indextoprovidesidebysidecomparisons.

TheNewYorkTimesCompanysawits2008operatingcostsdrop5percent.In

2007theyreportedanoperatingincomeof$187.6million;in2008theyhadan


9/22

Yada/8

operatinglossof$88million.Netincomein2007was$208.7million;netlossin

2008was$57.8million(2008AnnualReport,2009).Thoughadrasticdip,the

multimilliondollarfiguresaredwarfedbyGannettsreportedbillions.

However,TheWashingtonPostCompanyalsoreportedinthebillionsandisone

ofthecompaniesthatsawamodestincreaseinoperatingincome,thanksinpartto

Kaplan,asuccessfulsubsidythatprovideseducationalandtrainingservices

unrelatedtonewsgathering.In2007,thecorporationreported$4.2billionin

operatingincome;in2008ithadraised7percentto$4.5billion.However,2007s

netincomecameinat$280.6million,and2008sincomemeasuredat$65.7million,

a77percentdecrease(2008AnnualReport,2009).However,editorshadtoaddress

conflictofinterestaccusations,becausetheacquisitioncoincidedwiththepassage

oftheNoChildLeftBehindAct.ThebuyoutresultedinbadPR.

THEINDUSTRYSMAINCHALLENGES

Stockpricesandoperatingincomesarenotenoughtopaintthefullfinancial

pictureofthesecompanies.Thefollowingfactorshelpexplainwhatchallengeslie

aheadforthenewsindustry,andwhysomedonotthinknewspaperswillsurvive:

Onlineadvertisingisnotsufficient.Readershipandcirculationformany

newsorganizationshaveincreasedbecauseofthewebsreach,butcompanieshave

notyetfoundawaytoearnadequateincomefromthem.Theoriginalgoalwhen

newsorganizationsputcontentonlineforfreewasthattheincreasedviewership

wouldbeattractivetoadvertisers.Unfortunately,onlineadvertisinglacksthe

scarcityandvisibilitythatprintadvertisingoffers,andnewscompanieshavea


10/22

Yada/9

hardertimechargingpremiumprices(Mutter,2008).Readersarefacedwithmore

competitionfortheirattentionthaneverbefore,fragmentinganadvertisersoptions

andmakingtheirmessagelesspowerful.However,advertisershavebeenturningto

asignificantcompetitor,GoogleAdSense,becausetextadsareeasytocreate,have

globalreach,canbedirectlymanagedthroughonlinetoolsandarenarrowly

targeted.Manynewspapersdonotofferanyofthesebenefits.

Printstillearnsthevastmajorityofadvertisingincomebyfar;ofthe$38billion

inadvertisingthenewsindustrywasestimatedtohaveearnedin2008,only$3

billioncamefromonline,whichislessthan10percent(Pew,2009).Thosenumbers

areshifting,however,butitisnotenoughtobuoycompaniesthroughadeep

worldwiderecession.Thegraphbelowillustrates:

PRINTVS.ONLINEADEXPENDITURES,20032007

Source:BusinessAnalysisandResearch,NewspaperAssociationofAmerica,PewProjectforthe

ExcellenceinJournalism.


11/22

Yada/10

Craigslist,thefreeonlineclassifiedswebsite,isanotherexampleofanonline

competitorcausingdamagetoanewspapersbottomline.Classifiedadvertisingin

printpeakedinthefourthquarterof1997atanaverageof41.6percentofa

newspapersadrevenue,butithadbeenreducedto28.84percentbyNovember

2008(Riley,2008).Gannettsownnumberslookslightlybetter;in2007,classifieds

represented40.6percentofGannettstotaladvertisingrevenue.In2008,it

plummeted25percentbutstillmaintaineda36.4percentsliceofadrevenues:

Source:Gannett2008AnnualReport

Inaddition,Gannetthasinvestedinotheronlineclassifiedenterprisessuchas

CareerBuilder,ShopLocalandClassifiedVentures.Thoseoperationsareinthe

Digitalsegmentandaccountedforseparatelyfromthetableabove.

Oncecontentisofferedforfree,itisdifficulttogettheusertopayforit

again.ThereishopethattheAmazonKindle,anelectronicreadingdevice,willdo

fornewspaperswhattheiTunesStoredidforrestoringprofitstodownloadable

music,butthatremainstobeseen.

Itisalsopossibletochargevisitorsofawebsitetoviewthecontent,butthat

ideassuccessalsoremainstobeseen.TheNewYorkTimeshastriedaservice


12/22

Yada/11

calledTimesSelectthatrequiredpaymenttoviewpremiumcontent,butitwas

discontinued.However,executivesattheTimesaretalkingofresurrectingitagain

inadifferentway.

CertainpublicationssuchastheWallStreetJournalhavebuiltapaywallon

theirwebsites,andithasbeensuccessfulbecauseitstargetaudienceisbusiness

readerswhoareabletousecompanyfundsforsubscriptions.Itisunclearwhether

thiswillworkforgeneralinterest,geographybasedcommunitynewswebsites,

whichisGannettscoreoperation.

Manypeoplewouldalsoconsiderputtingcontentunderlockandkeytobe

ethicallyquestionable,sincemuchofjournalismspurposeistobringimportant

issuestothepublicsattention.However,newspapershavebeenchargingforits

contenttogreatsuccessseveralyearsbeforetheInternet,andthepaywall

possibilityisanattempttorestorethatbusinessmodel.

Restructuringdebtisnearimpossibleinastrugglingeconomy.Manyof

thelargestnewscorporationsintheUnitedStatesgotthatwayfrommergersand

acquisitions,whichwereboughtandsoldusingdebt.Theydidnotforeseethe

decimationoftherevenuemodelandexpectedtobeabletorepaythemassive

amountsofdebttheyowe.However,theeconomycollapsedandsodidrevenue.

Companieseverywherewereforcedtomakepainfulcutbacks,andnewspaper

companieswerenotabletonavigatearoundboththefailedeconomyandthe

competitiontheInternetprovided.

Financialanalystshavedowngradedmanyofthesecompaniesstockratings,

whichmeansbanksandotherlenderscanhaltloansandchargehigherinterest


13/22

Yada/12

rates.Thisseverelyhamperstheoptionsthesecompanieshave,becauseinsteadof

makinginvestmentsnowthatcouldendupmakinglargeprofitsinthefuture,the

companyhasnochoicebuttododrasticcutbackstostayafloat(Cranberg,

Bezanson,Soloski,2001).

Severalnewspapersacrossthenationownedbypubliclytradedcompanieshave

beenshutterednotbecausethepaperwasntprofitable,butbecausetheparent

companysdebtwassodeepitcouldntkeepaboveoperatingcosts.

SWOTANALYSIS

SowhatdoesthisallmeanforGannett?HereiswhereIwilldiscusswhatI

believeareGannettsstrengths,weaknesses,opportunitiesandthreatsasitrelates

totheoperationsofthebusiness.

STRENGTHS

TheleadershipinplaceatGannettislookingtodiversifyincomebeyondthe

traditionaladvertisingmodel,whichisagreatstepforward.Itsacquisitionof

venturessuchasCareerBuilder,Ripple6andothernonnewsentitiessuchas

commercialprintingoperationsmayhelpfundtherestofthecompanysfunctions

throughtheeconomiccrisis,anditscurrentholdingsinbroadcastandniche

publicationsalreadyunderscorethebenefitofdiversifyingrevenuestreams.

Gannettisalsoaggressivelyconsolidatingseveralaspectsofitscore

operations,fromcentralizedcopyeditingdeskstonationwidecallcentersto

collectivewebmastersthattakecareofthewholenetwork.Inmyopinion,Gannett


14/22

Yada/13

hastakensomeoftheconsolidatingtoofar,however.Somequalitywillbe

compromisedwithtoomuchconsolidation,withcentralizedcopyediting,for

example.Butinotherinstancesitincreasesefficiency,whichtranslatestothe

bottomlineandaidsthebusinessinstayingafloat.

Thecompanyisknownforitsstrongemphasisindiversityandhasbeen

namedoneofthe20bestplacesforAfricanAmericanstowork(Gannett.com,2009).

Thisbuildsagoodreportwiththecommunityandhelpscounteracttheaccusation

thatGannettpapersreducethemixofvoicesheardinthemedia.

Gannetthaspaidparticularlycloseattentiontoembracingnewtechnologies.Twoyearsagoitrolledoutasocialmediawebsitetemplateforallthenewspapersin

thecompanytoadapttotheircommunities.Readersareabletointeractwitheach

otherandthestoriesthataffecttheirtownsandcities.Gannetthasalsojumpedon

boardwiththeAmazonKindleinofferingaUSATodaysubscriptionandanumberof

itsblogs.LastyearscreationofaDigitalbusinesssegmenthasenhancedGannetts

onlineofferingstoinvestors.

Nichepublicationshaveamixedbagofresults,butIthinkGannettspushto

delivercontentinamyriadofdifferentspecifictopicswillhelpreadersinthelong

runandincreasecirculation.Itwillalsoofferadvertisersamultitudeofwaysto

reachtheirowntargetmarket.

AsreluctantasIamtoadmitit,Gannettsstrategyofowningcommunity

paperswithlittletonocompetitionhashelpedpayoff.Gannettsabilitytosetad

rateshigherduetolackofcompetitionhascontributedtothedoubledigitprofitsof

previousdecades,whichmayinturnbeonereasonGannettwillstillbearoundafter


15/22

Yada/14

thiseconomicstormsettles.However,Idonotbelievethispracticeisgoodfor

Gannettscoreproduct,journalism,nordoesitbenefitadvertisersorthe

communitiestheylivein.Inflatingadvertisingrevenuehurtslocaleconomies,andit

affectsthewaythecommunityinteractswiththereporterswhoproducethemain

product.ThecompanyhasalreadybeentherecipientofbadPRaboutthissubjectin

the1970sand80s,andthepotentialforittoexplodeagainisstillreal.

Anotherthingthatisastrengthforthebusinessbutaweaknessforthe

contentistheemphasisonfeatures,sportsandentertainmentinnewscoverage.It

isastrengthbecausetheyaresimplestoriesjournalistscandotokeepthe

newspaperandwebsitespopulatedwithcontent,whichmeanstheycanproduce

morestoriesinlesstime.Itisaweaknessbecauseitunderscoresacommon

complaintthatGannettcheapensnewscoverage,whichinturnisnegativeforthe

imageofthecompany.

WEAKNESSES

Therecessioncouldnothavehitataworsetimefornewspapers,when

readerswerealreadyshiftingtheirreadinghabitsonline.Gannettneedstheability

totakeoutloansinordertoinvestinitselfanditsoperations,andthatcanthappen

easilynowbecauseofthecreditcrunch.Inaddition,Gannettsmajoradvertisersare

inthehousing,retailandautomobilesectors,whicharefacingmajortroublesof

theirown.Also,adownturninbusinesstravelmeansemptierhotels,whereUSA

Todaycountshalfitscirculationindoortodoordeliveries.


16/22

Yada/15

Gannettcontinuallyhastobattleitsownreputationforpoor,shallow

journalism.Ithasrecentlybeendoingasolidjobinitsflagshipnewspaper,USA

Today,whichhasreinvigorateditsinvestigativenewscoverage.However,the

communitypapersarenotcloselyfollowingsuit.Aninvestmentinthequalityofthe

contentregainsrespectfromcommunitymembers,andmoreimportantly,the

advertisers,whoarewatchingnewspapersize,qualityandaudiencesthinningfrom

poorcontent.

OPPORTUNITIES

ThereasontheWashingtonPostCompanydidsowellinasidebysidestock

pricecomparisonwithGannettismostlybecauseoftheirsubsidiaryKaplan.Kaplan

providestutoringandmentoringservices,whichisinlinewiththepaperscore

missiontoeducateandinformthepublic,butnotexactlyjournalism.Gannettmay

considerasimilarventuretodiversifyitsincome.

TheDetroitFreePress,aGannettpaper,andtheDetroitNewshaveboth

reducedtheirhomedeliveryprintproducttofourtimesaweekwithamorerobust

websiteupdatedconstantly.Withreadersdeclininghabitswiththeprinted

newspaperandtheheavyexpenseofprintinganddeliveries,thereisanopportunity

inthemajormetromarketstodothesamethingcompanywideandsavemoney.

Thereisanopportunitytomonetizefulleventcalendarlistingsthat

newspapershavenotembracedyet.Takingthephonebookmodel,publicationscan

listeveryeventforfree,buteventpromoterscanpaymoreforhighlights,iconsor

extralinesoftext.


17/22

Yada/16

Gannettmayhavetheweighttotrysomethingradicallynew.Ifitpartners

withAmazon.comandoffertosendafreeorsteeplydiscountedKindletopaid

subscribers,Gannettcouldsavealargeamountinprintingcosts.

IfqualityjournalismisaconcernforGannett,thecompanycanalwaysform

allianceswithnonprofitfoundationsandprogramsdedicatedtopreserving

investigativejournalism,suchasProPublica.org,theCenterforInvestigative

ReportingandSpot.Us,allofwhichfundindepthreportingprojects.

THREATS

Theeconomyisgoingtobeathreatlongafterithasrecovered,becausethe

repercussionsofthisdownturnwillbefeltdeepwithinthefinancialstructureof

businessthroughoutitsrecoveryyears.

Thereadersmovetoviewingcontentforfreeonlineishurtingthemassive

printadrevenueofnewspapers.Asanewspaperstargetdemographicgrowsolder,

theyoutharenotreplacingthem,insteadchoosingtofrequentwebsiteslike

MySpaceorFacebookinstead.Theymaygettheirnewsfromblogsthatarenot

professionallyeditedandverified.

OnlineadvertisingcompetitorssuchasGoogleAdSenseandCraigslistwill

continuetobethreats,aswillnewtechnologiesthatnoonehasenvisionedyet.

Theenvironmentalmovementandrecyclingculturehavediscouraged

readerstosubscribetothenewsprinteditions,becausereaderswillfeelthepapers

arekillingtrees.


18/22

Yada/17

THREEMANAGERIALDECISIONS

InknowingthisinformationaboutGannettitsstrengthsandweaknesses,its

historyandstrategiesIhaveselectedthreepossibleoptionsfortheGannett

Corporationtotakeinnavigatingthefutureofthenewsbusiness.

1)ShiftthebulkoffocustotheDigitaldivision.Printisdying,andthere

needstobeaheavyinvestmentintothefutureofnewsifGannettwishestobe

aroundanother103years.TheDigitaldivisionhasamultitudeofsmartcompanies

thatmaynotberelatedtojournalismbuthavethepotentialtobesolidprofit

makerswithanyrenewedfocus.GannettcanalsoapplytheDetroitexperimentto

morepapersthatis,reducethenumberofdaysthepaperprintsandbeefupthe

websitecoverageinstead.Thedownsideisthatprintistherealincomeearnerinthe

companyintermsofrevenue.Butsometimesthenextstepinabusinessevolution

hastobeforcingthecustomer(inthiscase,theadvertiser)toadjustandbecome

usedtoadifferentformat.Printwillnotbearoundforever,andfocusingheavilyon

Digitalisariskybutneededshift.

2)Findnewwaysofaddingvaluetoprint.Sinceprintisfarandawaythe

biggestmoneymaker,Gannettcancreatenewwaysprintcanmeetreadersneeds.

Thecompanymaywanttolookintomorecoupons,giveaways,valuableinsertssuch

asCDsandDVDs,largephotographs,puzzlesections,highqualitydesign,and

anythingelsethatreinforcesthetactileexperienceofprint.Inadditiontothat,there

areoptionsindevelopmentformorenicheproducts,includingcustomized

magazinesthereaderscancreatethemselvesbyselectingthekindofcontentthey


19/22

Yada/18

want.Thereisaprototypesystematprintcasting.orgforthecustomreaderthatcan

beadaptedtoaGannettstrategy.Anotherexperimentthecompanymaywanttotry

isreversepublishingonlinecontent.EachGannettnewswebsitealreadyhasa

socialnetworkwhereusersareallowedtoblogandcomment.Haveeditorsselect

thebestofthosecommentstopublishintheirnewspapersorintoanewniche

magazinethatcantargetdifferentadvertiserslookingforayoungerdemographic.

Thisgivesonlinecontributorsthethrillofseeingtheirworkinprint,itgives

advertisersexposuretheywouldntgetonline,anditsinexpensivetoimplement.

3)Focusonadifferentsubsidyaltogethertobringinrevenues.Thetough

timesinthejournalismindustriesarenotacoincidenceitisdifficulttofundreal

newsandinformation.Itmaybenefitnewsorganizations,then,tofindacompletely

separatebusinesstogeneratethecashflowuntiltheeconomyrecovers.Thesuccess

ofTheWashingtonPostCompanyisalessonthatGannettisveryclosetolearning.

TheiracquisitionofKaplan,atutoringcompany,turnedthebusinessintoaprofit

generatingventure.Gannetthasenteredintoafewrelatedbusinessesotherthan

journalism,buttheymayneedtostepoutsidetheirwayofthinkingevenfurther.

MYRECOMMENDATION

IwouldrecommendthatGannetttakeoption3.Iwasconvincedbythestatistics

IsawandthenewsarticlesIreadabouthowTheWashingtonPost,whilenot

flourishing,isactuallyperformingdecentlydespitethecircumstances.


20/22

Yada/19

Ithinkitistoosoonforthecompanytoriskcompletelyabandoningprintwhen

itisstillmakingsuchalargechunkofrevenues.Whenmoredefinitivedatacomesin

fromtheDetroitFreePressexperiment,thenperhapsIcanrecommendoption1.

Option2makessenseintheshorttermonly,becauseprintsdaysarenumbered.

However,itwouldnothurttoimplementmorereinforcementfortheprintproduct

inthemeantime,becausethatisGannettsbiggestrevenuevehicle.

Option3hasthemostprooftobackitupintheexampleoftheWashingtonPost

Company.WashingtonPost,however,despitetheconflictofinterestaccusations,

hadthebenefitofreaderperceivedjournalisticintegrityandmakingbusiness

decisionsbasedonmorethanjustthebottomline.Gannettdoesnothavethat.

Iamnotadvocatingabandoningthenewsbusiness;infactinthelongrunitmay

helpsolvethepuzzleonhowtooperateacompanythatservessocietalaswellas

financialpurposes.Therewillalwaysbereadersinterestedinqualityjournalism,

buttheremaynotalwaysbeasustainablebusinessmodelattachedtoit.Journalism

mayhavetobeacompanyslossleader.

ItisextremelyimportantthatbusinessesofthesizeandstatureofGannett

continuetofindotherrelatedrevenuestreamstobringintothecompanyandin

returnfundtheimportantinformationcommunitiesneedtobeeducated.

Untiltheeconomybecomesmorestableandthefutureofthenewsindustry

becomesmoreclear,newsorganizationseverywherewillhavetodothesame.


21/22

Yada/20

SOURCELIST

Bagdikian,BenH.(2004,May15).TheNewMediaMonopoly.BeaconPress.

Cranberg,G.,Bezanson,R.,Soloski,J.(2001).TakingStock:Journalismandthe

PubliclyTradedNewspaperCompany.IowaStateUniversityPress.

Fairfield,H.&Parlapiano,A.(2009,March12).BadNewsforNewspapers

infographic.TheNewYorkTimes.

GannettCo.Inc.(2009).2008AnnualReport.RetrievedApril2,2009,from

http://media.corporateir.net/media_files/irol/84/84662/08GCIAnnualReport.pdf.

GannettCo.Inc.(2009).Companyprofile.RetrievedApril2,2009,from

http://www.gannett.com.

GannettCo.Inc.(2009,May2).Standard&Poor'sCorporateDescriptions.

Hamilton,J.T.(2006,March13).AllTheNewsThatsFittoSell.Princeton

UniversityPress.

MacMillan,R.(2008,October28).Gannettwillcut10percentofnewspaperjobs.

Reuters.

Melvin,T.(2009,May7).LookfortheNewspaperShakeout'sLikelySurvivors.

RealMoney.com.

Mutter,A.(2009,January6).FivefatalflawsinlocalInternetadsales.

ReflectionsofaNewsosaur.http://newsosaur.blogspot.com/.

Neuharth,A.H.(1989,September19).ConfessionsofanS.O.B.Doubleday

Business.

NewYorkTimesCompany,The(2009).2008AnnualReport.RetrievedApril30,

2009,fromhttp://www.nytco.com/investors/financials/annual_reports.html.


22/22

Yada/21

Overholser,GenevaandHallJamieson,Kathleen,editors(January26,2006).

AmericanInstitutionsofDemocracy:ThePress.OxfordUniversityPress.

Peck,C.(2009,April1).JournalismThatMatters:TheNextNewsroom.

http://www.mediagiraffe.org/wiki/index.php/Jtmdcnextnewsroom.

PewProjectforExcellenceinJournalism(2009),TheStateoftheNewsMedia

2009:AnAnnualReportonAmericanJournalism.Retrievedfrom

http://www.stateofthemedia.org/2009/index.htm.

Prichard,P.S.(2007,September1).TheMakingofMcPaper:TheInsideStoryof

HowUSATodayMadeIt.SpotlightPress.

Riley,D.(2008,November30).Understandingthefallofnewspapersinrevenue

numbers.Inquisitr.Retrievedfromhttp://www.inquisitr.com/10201/

understandingthefallofnewspapersinrevenuenumbers/.

Romaine,S.B.(2009,February13).GannettCo.ValueLineInvestmentSurvey.

Squires,J.D.(1994).ReadAllAboutIt!TheCorporateTakeoverofAmericas

Newspapers.RandomHouse.

Sullivan,C.(2003,July28).PapersLureWebHeads.Editor&Publisher.

WashingtonPostCompany,The(2009).2008AnnualReport.RetrievedApril30,

2009,fromhttp://phx.corporateir.net/phoenix.zhtml?c=62487&p=

irolreportsAnnual

Williamson,S.T.(2006)FrankGannett:ABiography.KessingerPublishing.

Witkowski,W.(2009,February26).Moody'sdowngradesGannettbondstojunk

status.MarketWatch.

Case Study - Gannett

Documents

Transcript of Case Study - Gannett