Why Gannett's New Acquisition May Save the Company
There are only two types of companies in this world: those who can adapt to the new needs and methods of consumers, and those who can't. A recent acquisition by Gannett (NYS: GCI) , the publisher of USA Today, shows that it doesn't intend to be left in the dust.
Gannett is a media and marketing solutions company founded in 1906. At first, the company focused solely on publishing a single newspaper in upstate New York. Now Gannett owns 82 daily newspapers, 200 weekly newspapers and magazines -- 500 nondaily publications all over the U.S. In recent years, the company has expanded beyond publishing; it now runs 23 TV stations as well as several websites that include CareerBuilder.com, Cars.com, and more.
These newer parts of Gannett's business are an indication that the world of publishing is quickly seeing its focus change from classic print newspapers to websites. To stay viable in this shifting world, on Aug. 21, Gannett announced that it had acquired BLiNQ Media, a social media advertising company.
Gannett is growing
One look at Gannett's recent Q2 2012 earnings report will confirm the growing importance of digital compared to classic revenue streams. In the second quarter of 2012 the company's revenue from publishing and advertisements decreased about 6% and 8%, respectively. Meanwhile, Gannett's digital revenue increased 5%, thanks in no small part to CareerBuilder.com's 7% revenue jump, and TV revenue growing 11%. The indication here is that strength lies in digital and TV, not in the classic arenas of print.
Gannett's acquisition of BLiNQ (seriously, did a fourth-grader spell this?) is a timely one. BLiNQ uses analytics to identify the best ways for a company to advertise using social media, an important factor as Gannett uses advertising as a way to offset the declining revenue from its classic segments like publishing. To illustrate this, the company's digital revenues in its publishing segment were up an impressive 29.3%. Clearly, Gannett wants to build on that success.
With BLiNQ in its arsenal, Gannett can now combine various parts of its business in new and more profitable ways. For instance, if a company buys advertising space in a Gannett publication, the company can offer the buyer additional advertising online. Or Gannett could use its ShopLocal division in coordination with BLiNQ to offer companies localized advertising and specialized ads for certain areas.
BLiNQ gives Gannett some room to breathe, but does it make the company a viable option for investors? Let's take a look at how Gannett stacks up against its competitors.
|New York Times (NYS: NYT)||47.53||1.23%||11.06%||0%|
|Meredith (NYS: MDP)||14.16||7.58%||14.56%||4.70%|
Sources: Yahoo! Finance and Fool.com.
Gannett is cheaper, more efficient with its revenue, and provides a better dividend than its fellow publishers. Keep that in mind the next time you need to decide whether to crack open USA Today or TheNew York Times.
While I'm not sure where the publishing industry will be in the next five years, I am sure that acquiring BLiNQ was an excellent move on Gannett's part. It's clear that the company isn't ready to roll over and beg for mercy just yet. Now that the company has the ability to capitalize on this trend, investors will definitely want to keep their eyes on it.
Add Gannett to My Watchlist.
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The article Why Gannett's New Acquisition May Save the Company originally appeared on Fool.com.Fool contributor Mark Reeth has no positions in the stocks mentioned above, but he does enjoy doing the Sunday crossword puzzle. Follow him @ChristmasReeth. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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