National / International News
Media company Gannett announced Tuesday it plans to split in two.
Its newspaper and publishing arm – including USA Today – will split off to become one company, retaining the name Gannett. Its broadcast and digital arm, which has yet to be named, will become its own company. That company also, and not coincidentally, just bought up Cars.com.
It’s the latest example of a decade-old scramble to figure out what to do with newspapers.
In some ways, Gannett is spinning off its publishing side, but you could also say it’s ditching it.
“They’re doing it for the simple reason that newspapers are in a downward spiral that’s irreversible,” says Porter Bibb, managing partner at Media Tech Capital Partners.
The idea is that newspapers drag down earnings, stock prices, and even investment from the broadcast and digital side of the company. Those companies could excel, ostensibly without needing to subsidize their ailing brother.
“The latest number showed that while 70 percent of [Gannett’s] revenues were coming from newspapers, already 60 percent of profits were coming from broadcast,” says Ken Doctor, media analyst at Newsonomics.
Even though digital ad spending for newspapers is expected to increase 4.3 percent this year to $3.64 billion, traditional print newspaper ad spending is expected to drop 4 percent to $16.73 billion. That brings the total ad spending down 2.6 percent from last year, according to eMarketer.
The decline of newspapers is intimately tied to why the broadcast and digital side of Gannett will buy Cars.com. Auto advertising used to be the hand that fed newspapers. Now that hand is feeding someone else.
“Print media’s lost billions in ad revenue in the last decade, and a large part of that is from auto dealerships who have shifted spending from print classifieds over to digital,” says Mike Hudson, an analyst with eMarketer.
The broadcast and digital side of Gannett followed the money and it's leaving publishing and newspapers behind in what has become a popular strategy. Time Warner spun out Time Inc. and News Corp split off from 21st Century Fox.
It’s not necessarily leaving print behind to die, just to fend for itself.
“Essentially, the theory goes if you spin off the print piece, the print can have the freedom to focus on the business of print itself,” says Hudson.
There are often crossovers – relationships between TV and print remain. In Gannett’s case, the print company would very likely continue to provide news services to the broadcast side.
But to the extent these spinoffs are independent, they are also vulnerable.
“The companies are left as standalone companies, that means they operate now without a safety net,” Doctor says.
So far the print spinoffs aren’t looking great, either.
“All these publishing companies are still negative on revenue year over year, and for most of them they haven’t grown revenue for seven years really since the recession,” Doctor says. “So we don’t know about the long-term impact of it.”
The broadcast companies appear to be doing better in terms of earnings and stock prices, but that doesn't prove spinning off is a good strategy. Broadcasters have their own battles to fight – think about cable TV and its battles with Aereo and Netflix.
So while the spinoff is a popular move, it’s also a new and unproven one.
Graphic by Shea Huffman/Marketplace
A report today from two bank regulators, the Federal Reserve and the Federal Deposit Insurance Corporation, basically said that "too big to fail" thing.
It was an update on how banks are faring in putting together their living wills, as mandated by the Dodd-Frank law. Basically, it explains how they would handle failure without involving the government.
It's not looking so good. In the words of Thomas Hoenig, the second in command at the FDIC:
"Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support."
In other words: Wall Street's totally still going to hose us.
From its base in south central Russia, the relatively small group has reportedly collected passwords along with user names and email addresses.
The White House says U.S. exports to Africa have jumped 40 percent in five years. But the administration says growth can be even faster. "I want Africans buying more American products," Obama said.
There’s this pretty amazing YouTube video featuring Rafael Dumon at Lake Garda, Italy. Dumon attempts a self-proclaimed world’s first: using a wingsuit to jump off a mountain, gliding onto the lake far below.
“I’m not going to be using my chute, and I will end up skimming on the lake. And instead of bouncing, I will hope to kind of glide in at a trajectory, similar to a plane,” Dumon says.
Believe it or not, he does it, capturing the feat with a GoPro camera:
But what if something had gone wrong? Could GoPro be held liable? After all, the company has its own YouTube channel for users to share extreme videos.
“Well, I would say that they’re certainly at risk for a lawsuit, but not necessarily at risk for losing a lawsuit,” says Jim Underwood, a law professor at Baylor University in Waco, Texas.
He says for GoPro to lose, the plaintiffs would actually need to prove there was something wrong with the camera that caused the accident.
Underwood says another possible lawsuit would be for a plaintiff to blame the risky behavior on the company’s marketing, "and that they failed to provide adequate warnings of those dangers.”
But in the same breath, he says the courts have ruled that when the danger is clear, there’s no need to spell out it.
“In fact, that’s why these videos are so popular - because the danger is so obvious and sometimes shocking,” Underwood says.
Even though it may be difficult for GoPro to lose one of these lawsuits, the company wants would-be investors to know they could be sued.
On page 34 of GoPro’s IPO filing with the Securitites and Exchange Commission under a section entitled “risk,” the company writes:
“Consumers use our cameras and accessories to self-capture their participation in a wide variety of physical activities, including extreme sports, which in many cases carry the risk of significant injury. We may be subject to claims if consumers are injured while using our products.”
GoPro may have reason to be concerned. The workout app Strava, which lets cyclists and runners compete virtually, has been criticized -- and even sued -- for encouraging dangerous biking in busy cities.
“Trial lawyers will never miss an opportunity to try to open a new avenue for litigation. Certainly the world of apps is one of those," says Bob Hartwig, president of the Insurance Information Institute.
He says unless laws start to change, the way litigation works in this country -- lawyers are actually encouraged to file a lawsuit against everything and everyone involved in an accident. Even a GoPro camera.
"I'm just thrilled for the opportunity to coach these unbelievable athletes," WNBA star Becky Hammon says at a news conference announcing her hire by San Antonio.
President Obama capped the U.S.-Africa Business Forum in downtown Washington, D.C., with a speech to the collected leaders and business people at the conference.