TV and print continue with divorce proceedings
Print media continues to be sidelined as news organizations spin off their publishing divisions from the TV business. The latest example involves Journal Communications Inc. and E.W. Scripps Co., which will reportedly combine their broadcasting entities. The companies’ announcement is the third of its kind within the industry since the start of the year.
Early last month, the divorce of Time Inc. from Time Warner’s broadcast division was finalized. The Time Warner-owned CNN did, however, take ownership of CNNMoney, which is the home of CNNMoney.com, Fortune.com, Business2.0.com and FSB.com.
According to CNN.com, Time Inc. CEO Joe Ripp said in a letter to shareholders that “as an independent, publicly traded company, we believe we can more effectively focus on our objectives and satisfy the strategic needs of our business.” After the split, Time Warner will have three divisions: Turner Broadcasting, HBO and Warner Bros.
The next to announce a spinoff was the Tribune Company, which will finalize the separation of Tribune Publishing from the rest of the company. This means that the Chicago Tribune, Los Angeles Times and six other daily newspapers will all be grouped into one publicly traded company. According to ChicagoTribune.com, “The spinoff was announced last summer as a way to offload the publishing assets while avoiding the large capital gains taxes associated with an outright sale.”
Yesterday, Journal Communications Inc. and E.W. Scripps announced that they have decided to combine their broadcasting entities and spin off the newspaper holdings into its own public company. According to The Associated Press, “Shareholders have shown their preference for pure-play broadcast companies rather than companies that combine newspapers and broadcast.” The news resulted in Journal Communications’ shares rising 28 percent and Scripps’ rising 11 percent. As part of the partnership, Scripps’ newspapers will join Journal Communications’ Journal Media Group’s headquarters in Milwaukee, while Journal Communications’ broadcast unit will be folded into Scripps, which is headquartered in Cincinnati.
Finally, although it has yet to happen, it wouldn’t be surprising if Gannett eventually takes the same path. Gannett, the largest newspaper publishing company in the U.S., added to its broadcast division when it purchased Belo Corp. late last year. According to Bloomberg.com, if Gannett spun off its publishing division, it would be worth more, potentially giving shareholders a 21-41 percent gain based on estimates Bloomberg gathered from financial analysts.
Ken Doctor, a media analyst for the consulting company Outsell, noted to the AP that the financial value of newspapers continues to diminish. David Coates, managing editor of newspaper content at Vocus Media Research Group, agreed. “It’s no secret that newspaper entities, including their websites, are losing money. That’s why this comes as little surprise as the big conglomerates have decided to break up their TV and print operations. They are throwing out the bath water and keeping the baby. For years, the broadcast side of things has supported the print side because broadcast knew how to make money through its medium, while many print websites, and definitely print publications, struggle to find a steady revenue stream. Is this the wave of the future? Probably. But it looks a lot more like the impending demise of the print world as we know it.”
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