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The largest newspaper group in the United States, Gannett Co., Inc. owns 75 daily newspapers, including USA TODAY, the largest-selling daily newspaper in the country. Gannett also owns more than 20 television stations covering roughly 17 percent of the United States. Although the company's focus is primarily on its newspaper and broadcasting properties, it operates a news service and is also involved in commercial printing, telemarketing, data services, and news programming. Headquartered in Arlington, Virginia, Gannett maintains offices in 45 states, the District of Columbia, Guam, and the United Kingdom.
Origins
Gannett was the brainchild of Frank Gannett, who paid his way through Cornell University by running a news correspondence syndicate; when he graduated he had $1,000 in savings. Gannett got into the media business in 1906 when he and several associates bought the Elmira Gazette in Elmira, New York, with $3,000 in savings, $7,000 in loans, and $10,000 in notes. They bought another local paper and merged them to form the Star-Gazette, beginning a pattern of mergers to increase advertising power that the company would follow throughout its history. Six years later, in 1912, Gannett bought the Ithaca Journal, beginning his toehold in upper New York state. The company gradually built up a portfolio of 19 New York dailies by 1989.
In 1918 Gannett and his team moved to Rochester, New York, a city whose papers would turn out to be among the company's strongest. Many of Gannett's rising executives were groomed at the Rochester papers. The group purchased two newspapers upon their arrival and merged them into the Times-Union. The papers' holdings were consolidated under the name Empire State Group. In 1921 the Observer-Dispatch of Utica, New York, was acquired. In 1923 Gannett bought out his partners' interests in the Empire State Group and the six newspapers the group then owned, and formed Gannett Co., Inc. Gannett appointed Frank Tripp general manager. Tripp helped run the everyday business of the papers, and the two were close allies for years. The Northeast was Gannett's focus for the next 25 years, and the company expanded aggressively with acquisitions there. Another key executive, Paul Miller, joined the company in 1947, becoming Gannett's executive assistant. By then, the company operated 21 newspapers and radio stations.
The company's role as a leader in technology began in 1929, when Frank Gannett co-invented the teletypesetter. Gannett newsrooms were among the first to use shortwave radios to gather reports from distant sources. In 1938, before color was used much in newspapers, many Gannett presses were adapted for color; with its USA Today, the company would continue to be a leader in color use. Other advantages included a corporate plane that helped reporters get to the site of news quickly. Frank Gannett died in 1957, but not before he saw Miller named president and chief executive officer. Miller oversaw the company's expansion from a regional to a national chain in the next decade.
Gannett News Service, as the company became known, was founded in 1942 as Gannett National Service. The wire service subsidiary provided the company's local papers with national stories from Washington, D.C., and 13 bureaus. The stories often featured a local angle or local sources. A television news bureau was added in 1982. Through all these years, Gannett grew by buying existing newspaper and radio and TV stations. In 1966 it founded its first newspaper, Florida Today. It was the work of Allen Neuharth, who later was to become the founder of USA Today. Neuharth brought the new paper to profitability in 33 months, an incredible feat in the newspaper business, according to analysts. Because the paper was near the National Aeronautics and Space Administration (NASA), it was dubbed "Florida's Space Age Newspaper." The paper was ultimately redesigned to emphasize state and local news and was promoted and sold with USA Today, which provided national and international coverage.
Gannett went public in 1967. In 1970 Miller assumed the title of chairman, and Neuharth was promoted to president and chief operating officer from executive vice-president, making him the heir-apparent to the top position in the company. Neuharth went on an acquisition spree, leading the company to its current size and status in the media world. He became chief executive officer in 1973 and chairman in 1979.
1970s: Growth Through Acquisitions
Two notable mergers were those with Federated Publications in 1971 and with Speidel Newspaper Group in 1977. Two years later, Gannett merged with Combined Communications, the biggest such merger in the industry at that time, for $400 million. The Evening News Association joined the Gannett family later when Gannett bought it for $700 million. One near merger was with Ridder Publications. That company's president, Bernard H. Ridder, Jr., was a golfing mate of Miller. Ridder had concluded that the only way his small, family-held company's stock would ever reach its full potential was for Ridder Publications to merge with a big media company. The two talked, but Ridder proved to be more interested in Knight Newspapers because it had less geographic overlap with Ridder than did Gannett. But in 1989 Gannett and Knight-Ridder implemented a joint operating agency to combat the decline in newspaper advertising revenues in Detroit, Michigan. The cooperative venture was the largest ever merging of two competing newspapers' business operations. The arrangement called for the Knight-Ridder's Free Press and Gannett's Detroit News to divide revenues equally. Since Gannett held more of Detroit's market share before the merger, it took a loss during the venture's first year, 1990.
In 1986 Neuharth retired as chief executive officer, passing the baton to John Curley. Curley had been president and chief operating officer since 1984; he joined Gannett in 1970. Curley took on the title of chairman in 1989. A newsman like most of Gannett's heads, Curley was editor and publisher of several Gannett papers and was founding editor of USA Today.
Neuharth continued as chairman of the Gannett Foundation, which was established in 1935 by Frank Gannett to promote free press, freedom of information and better journalism, adult literacy, community problem-solving, and volunteerism. Neuharth spent as freely at the foundation as he had at the company, giving $28 million to various programs in 1989 alone. Despite criticism from some Gannett newspaper executives, Neuharth also oversaw the Foundation's move from Rochester, New York, to Arlington, Virginia, where USA Today's offices were located. Interior design of the charity's new headquarters ran to $15 million.
With expenses rising faster than assets, Neuharth sold the Foundation's ten percent share of Gannett Co. back to the company for $670 million. On July 4, 1991, the philanthropy's name was changed to the Freedom Forum, and its mission was changed to focus on First Amendment and other strictly journalistic issues. Gannett Co. created a $5 million fund to replace money withdrawn from the Gannett Foundation's more community-oriented charities. Other accomplishments of the company in the early 1990s included: increasing the company's use of recycled newsprint to 20 percent of total usage, over 180,000 tons; being named one of the United States' top 20 places for African Americans to work; and becoming the first news service to syndicate a weekly newspaper column dedicated exclusively to gay and lesbian issues.
Neuharth had said in 1982 when he started USA Today that it would begin making annual profits in three to five years. By 1990 the paper had had quarterly profits but never a full year of profitability. Between 1982 and 1990, USA Today sapped the company of an estimated $500 million. September 1992 marked ten unprofitable years for USA Today. But with 6.6 million readers daily, the United States' most widely read newspaper also celebrated record advertising and circulation revenues. USA Today executives claimed that had the U.S. economy not been in recession, the paper would have been in the black by 1990. Fortunately, the rest of Gannett's business was strong enough to offset USA Today's annual losses. Curley, the paper's president and publisher, hoped that cost-containment measures, lower newsprint prices, and other savings in the production-distribution process would bring USA Today into profitability.
The year 1991 was Gannett's most difficult since the company went public in 1967. The company slipped from second to third in rankings of the top U.S. media concerns as a result of Time Warner's leapfrog to first place. Annual revenues dropped two percent and net income was down 20 percent from the year before. Fifty-five of Gannett's 86 local dailies raised circulation prices, and circulation barely rose.
Yet the national daily newspaper was another demonstration of Gannett's leadership role in the use of technology, as well as journalism. The paper also was an innovator in graphics, especially in the use of color. Media observers credited USA Today's use of color as the spur for industrywide interest in color graphics. The copy for the paper was composed and edited at USA Today's Arlington, Virginia, headquarters, then transmitted via satellite to 36 printing plants in the United States, Europe, and Asia.
$5 Billion in Revenues: 1990s
Gannett's most significant activity during the 1990s took place in the divestiture and acquisition arena, an area that some observers believed the company needed to explore more fully. Critics contended that Gannett, renowned for its financially conservative approach, should loosen its purse strings and adopt a more aggressive acquisition strategy. Confronted with suggestions that the company should purchase a movie studio or a television network, Gannett management demurred, preferring to keep its focus set on its core businesses. "We aren't complicated people," Curley informed the Wall Street Journal in late 1995. "We like newspapers and TV stations. If you run them very well, they can do very well ... ." Despite the company's penchant for financial discipline and its steadfast adherence to its existing businesses, the 1990s saw Gannett explore new business opportunities and express more than a modicum of acquisitive might.
Gannett began the process of adding and paring away businesses in 1995. That year, the company shouldered past rival bidders such as Ellis Broadcasting and NBC in its $1.7 billion acquisition of Greensville, South Carolina-based Multimedia, Inc. The acquisition gave Gannett 11 daily newspapers, 50 other newspaper publications, five network-affiliated television stations, two radio stations, and production and syndication control for television shows hosted by Phil Donahue, Sally Jesse Raphael, Rush Limbaugh, and Jerry Springer. The acquisition of Multimedia also ushered Gannett into the cable business, giving the company 450,000 cable television subscribers. As the company delved into the previously foreign territory of operating cable television systems and controlling television programming, it withdrew from two other businesses. In 1996 the company sold its outdoor advertising division to Outdoor Systems of Phoenix, divesting the business to free its resources for the development of its newspaper and broadcast properties and to facilitate the incorporation of the Multimedia properties into its fold. Louis Harris & Associates, Gannett's polling subsidiary, also was sold in 1996, a year that saw the company enter into a joint venture with Knight-Ridder and Landmark Communications to form an Internet service provider called InfiNet, created to help publish newspapers online.
Deal-making continued to predominate at Gannett headquarters as the company entered the late 1990s. The company had exchanged six of its radio stations for a television station in Tampa, Florida, in 1996; in 1998, it exited the business entirely by selling its remaining five radio stations to Evergreen Media. As the company's radio properties disappeared, the number of its television stations increased with the acquisition of three stations in Maine and South Carolina. Before the end of the decade, the company completed two more significant deals, which, in keeping with the trend established in the 1990s, included a divestiture and an acquisition. In 1999, the company sold the cable assets obtained in the Multimedia acquisition. According to company officials, the decision to divest the cable properties was not based on a strategic decision, but represented an opportunity to realize a significant profit. Gannett sold the cable business to Cox Communications for $2.7 billion, a move that the company's treasurer described as "a grand-slam deal" in the July 31, 1999 issue of Editor & Publisher. In a separate announcement, Gannett revealed that it was acquiring 95 percent of Newsquest plc, the largest regional newspaper publisher in England.
The cumulative effect of the acquisitions and divestitures completed during the latter half of the 1990s lifted Gannett's revenues above $5 billion by the end of the decade. Although the company shied away from headlong leaps into other areas of the media industry--unlike many of its competitors--Gannett's consistent record of financial growth suggested that there was no pressing need to develop into a comprehensive, broadly diversified media conglomerate. For Gannett, the future held no greater prospect than maintaining its stature as the largest newspaper group in the United States, an objective management intended to fulfill by remaining tightly focused and conservative in its leadership during the 21st century.
Principal Subsidiaries: Gannett Direct Marketing Services, Inc.; Gannett News Service; Gannett National Newspaper Sales; Gannett Telemarketing, Inc.; USA Today; Newsquest plc (95%); Gannett Offset; Multimedia Cablevision; Gannett Newspaper Agency (50%); Gannett Media Technologies International; Gannett New Business Product Development; Gannett Retail Advertising Group; Gannett U.K. Limited.
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