Gannett Co., Inc. (GCI): Traditional Publishing Sector Demands Solutions

This spin-off will also help the broadcasting segment to rise above the UK hacking scandal that has spattered the whole group. The scandal has generated an estimated $300 million-$320 million in costs for the company, and it is a good decision to try and get rid of it. We will have to wait and see if the new publishing company, which will start with zero debt and $2.6 billion in cash, can prove the skeptics wrong. Since the spin-off announcement, News Corp (NASDAQ:NWSA) stock has rocketed to $31.70, a 60% surge in price.

Broadcasting landscape in the U.S.

The leader in the U.S. broadcasting business continues to be CBS, which owns 29 stations and reaches nearly 38% of all U.S. households. In second place, we find News Corp with 27 broadcasting stations and reaching 37% of U.S. households. After the spin-off, the company will probably pursue a more aggressive strategy and could further increase its market share. In third place, we will have to see what happens with Gannett Co., Inc. (NYSE:GCI)’s deal, but it is currently being fought between Sinclair Broadcast Group and the latter.

Note that no company may own television stations which reach more than 39% of all U.S. television households, according to the Federal Communications Commission. Amid all of the competition, companies may have to get rid of assets related to the publishing sector, which seems to be the most battered, and focus instead on broadcasting and digital media, where growth can be found.

The article Traditional Publishing Sector Demands Solutions originally appeared on Fool.com and is written by Vanina Egea.

Vanina Egea has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Vanina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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