McLean-based Gannett Co. Inc. will split itself into two separate, publicly traded companies and will buy out its partners in its Cars.com venture.
Gannett, publisher of USA Today and dozens of other daily papers, will create one company for its publishing business and a second company for its broadcasting and digital businesses. It describes the split, expected to take place by mid-2015, as a tax-free distribution of its publishing assets to shareholders.
Gannett will also spend $1.8 billion to buy the 73 percent stake in Cars.com it doesn’t already own from its joint venture partners: Tribune Media Co., AH Belo Corp., McClatchy Co. and Graham Holdings Co.
Owning Cars.com outright will double Gannett’s digital business. Its broadcasting business, which includes dozens of television stations, has also doubled through Gannett’s recent acquisitions of Belo and London Broadcasting.
Gannett says it expects the publishing business to be virtually debt-free after the separation with all of Gannett’s existing debt retained by the broadcasting and digital company.
Gannett (NYSE: GCI) had second quarter revenue of $1.46 billion, up 12 percent from a year ago. Gains in revenue, and in earnings, were led by broadcasting and digital. Gannett’s publishing division saw revenue decline 4.1 percent. Print advertising fell 5.7 percent.
The news was having a minimal effect on Gannett stock Tuesday morning; it was hovering around Monday's close.
The publishing company will retain the Gannett name. The broadcasting business has not yet been named. Both will remain headquartered in McLean.