Wall Street rewards news with stock surge
TV and newspaper giant Gannett saw its shares shoot higher Wednesday as it announced plans to follow other industry players in putting paywalls around its local papers’ websites and said it will return $1.3 billion to shareholders by 2015, accelerating its stock buyback.“Gannett is once again playing offense, poised for growth and value creation,” said CEO Gracia Martore, calling 2012 “an inflection point.” She told investors at a meeting in Gotham that the new subscription model for U.S. community publishing — which doesn’t include flagship paper USA Today — will boost ad revenue significantly and add $100 million a year to earnings starting next year. The McLean, Va.-based group, which owns 82 newspapers and 23 television stations covering more than 18% of the U.S. market, said that starting with USA Today, it will relaunch all desktop, mobile and tablet apps over the next 12-24 months. The stock closed up 4.2% at $15.61 on Wednesday, well outpacing the overall market and closing in on its 52-week high. By 2015, Gannett expects overall annual revenue growth in the 2%-4% range, pre-tax margins to increase to between 15% and 19%, and cost savings of $100 million-$150 million. TV stations should see $90 million in retransmission revenues this year, up 13% from 2011. Gannett also discussed a new digital marketing services unit targeted at small and medium size businesses, expected to generate $275 million-$350 million in annual revenue by 2015, and the expansion of USA Today Sports Media Group.