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What: Tribune Publishing Co. again rejected the  revised Gannett Co., Inc. proposal to acquire all of Tribune Publishing for US$15.00 per share in cash. Additionally, an influential proxy advisory firm, Glass Lewis, urged Tribune’s institutional investors to vote against the Gannett take over at the Tribune Publishing Annual meeting on June 2. In related news , Tribune Publishing received a US $70.5 million investment from Nant Capital in a deal that makes the California-based technology investment firm the company’s second-largest shareholder with a 12.9% stake. Nant Capital is allied with Tribune Publishing’s largest shareholder Michael Ferro.
Why it matters: Gannett is the largest newspaper company in the country. As the industry consolidates large players such as Gannett and Tribune are trying to achieve efficiencies by merging. Obviously, the financial terms of the consolidation/merger are currently argued about between the two companies.

descargaTribune Publishing’s Board has again rejected the Gannett proposal as not in the best interests of Tribune shareholders but invited Gannett to agree to a mutual Non-Disclosure Agreement under which both parties could engage in due diligence and discussions to assess whether a transaction in the best interests of Tribune and Gannett shareholders can be negotiated. There can be no assurances that any such agreement can be reached.

Gannett’s $864 million hostile effort to acquire Tribune Publishing (TPUB) received a second consecutive blow after an influential proxy advisory firm urged institutional investors not to support the USA Today publisher’s “just vote no” campaign against the Chicago-based media company’s directors. The recommendation, which was made by Glass Lewis, in a report obtained by is in response to a campaign launched by Gannett on May 2 urging shareholders to oppose Tribune Publishing’s eight incumbent director candidates in an uncontested election.

Investment by Nant Capital

Tribune Publishing received a US$70.5 million investment from Nant Capital in a deal that makes the California-based technology investment firm the company’s second-largest shareholder, edging past the 4.695 million shares owned by Oaktree Capital Management, which has pushed Tribune Publishing to negotiate a sale to Gannett.

In addition to the US$70.5 million growth capital investment from Nant Capital, LLC, which was founded by Dr. Patrick Soon-Shiong, Tribune has agreed to issue an aggregate of 4,700,000 shares of its common stock to Nant Capital at US$15.00 per share to support the Company’s transformation strategy.

The shares to be purchased by Nant Capital, similar to those purchased in the February 4, 2016, investment by Merrick Media, are subject to a three-year lock up. In connection with the transaction, Dr. Patrick Soon-Shiong has been invited to join the Tribune Publishing Board of Directors as Vice Chairman. He will begin serving on June 2, 2016.

Following the transaction, Nant Capital will own approximately 12.9% of Tribune Publishing’s outstanding shares, making Nant Capital Tribune’s second largest shareholder. Nant Capital has entered into customary standstill arrangements, including limitations on additional share acquisitions and an agreement to vote its shares in connection with the election of directors and any change of control transaction involving the Company proportionally to how all other shares of Tribune common stock are voted.

Tribune Publishing also announced it has entered into a term sheet with NantWorks, LLC for a co-exclusive, non-transferable, fee-bearing license pursuant to which Tribune will receive access to over 100 machine vision and artificial intelligence technology patents for news media applications as well as access to and use of studio space made available by NantStudio, LLC, a subsidiary of NantWorks, LLC.

Under the term sheet, Tribune Publishing will issue to NantStudio, LLC 333,333 shares of Tribune common stock and will be entitled to retain the first US$80 million in revenues derived from the licensed patents royalty free, after which Tribune will pay to NantWorks a 6% royalty on subsequent revenues.

“The Gannett $15.00 per share proposal for all of Tribune is clearly inadequate as a control investment in Tribune and, as ISS has pointed out, our Board ’has grounds to decline to engage’ on Gannett’s proposal,” said CEO, Justin Dearborn. “We remain unrelenting in our pursuit of value whether on a standalone basis or through a transaction, and believe the us$70.5 million growth capital investment announced today from Nant Capital – making Nant Tribune’s second largest shareholder – will support Tribune’s transformation strategy.

Dearborn continued, “We continue to have serious doubts about Gannett’s ability to enter into a transaction – especially when you consider its approximate us$650 million pension and OPEB liability – that makes sense for Tribune and its stakeholders.We are focused on taking the necessary steps to transform our business in response to the massive changes that have overtaken the publishing industry, supporting our outstanding journalists and, above all, creating superior value for our shareholders.”

The Board has set no timetable for concluding the discussions and does not intend to disclose further developments unless and until the Board determines that disclosure is appropriate or necessary.

Goldman, Sachs & Co. and Lazard are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to Tribune Publishing.

What: Tribune Publishing board of directors rejected USA Today owner Gannett’s US$815 million offer to acquire the company. In addition, Tribune adopted a “limited duration Shareholder Rights Plan.” Under the plan, known as “Poison Pill” in financial circles,  Tribune’s shareholders can double their holdings in the event that another party — in this case Gannett — acquires more than 20 percent of the company.
Why it matters: Tribune Publisher, owner of Los Angeles Times, Chicago Tribune and nine other daily newspapers, said Gannett’s “opportunistic” proposal understates the company’s true value and is not in the best interests of its shareholders. A potential acquisition, would make Gannett’s position, already the largest newspaper publisher in the U.S., even more hegemonic.

7slgoGr4_400x400 descargaTribune Publishing’s board of rejected USA Today owner Gannett’s US$815 million “opportunistic”offer to buy the company, arguing the proposal understates the company’s real value and is not in the best interests of its shareholders.

In addition, Tribune disclosed that its board has adopted a “limited duration Shareholder Rights Plan.” Under the plan, Tribune’s shareholders can double their holdings in the event that another party — in this case Gannett — acquires more than 20 percent of the company.In common corporate parlance, that’s a “poison pill,” a way to essentially protect corporate insiders from shareholder activism (like Gannett’s intent to buy Tribune).

Tribune publishing is the owner of  Los Angeles Times, Chicago Tribune and nine other daily newspapers.Gannett wanted to buy Tribune Publishing with the view of expanding its Network and uniting USA Today with its more than 100 local daily newspapers.

Last month, Gannett offered US$12.25 in cash for each Tribune share plus the US$390 million Tribune’s debt, bringing the total value of the bid to us$815 million. The owner of USA Today publicly announced the proposal two weeks after unsuccessfully making a private offer.

On the other hand, Tribune  is in the midst of  an strategic plan that includes creating digital subscription services and expanding the LA Times brand globally, which will include opening seven international bureaus this year, including outposts in Hong Kong, Seoul and Mexico City..In addition, the publisher plans to break out the Times’ revenue and profit as a separate segment from the rest of the company, which could boost the sale price and put pressure on Gannett to raise its offer.

“Tribune Publishing is in the early stages of a compelling transformation, with a well-defined strategic plan to drive increasing monetization of our important brands, capitalize on the global potential of the LA Times and significantly accelerate our conversion of content to revenue through an enhanced digital strategy,” Dearborn said in a statement Wednesday.

“Tribune Publishing’s board has unanimously determined that Gannett’s opportunistic proposal understates the company’s true value and is not in the best interests of its shareholders,” Tribune said in a statement.

 

 

Trump Effect could be positive for Hispanics; Honey Maid profiles Dominican immigrant family; Gannett downsizes; and Clinton ponders Latino campaign strategy.

The Trump effect

Yeah, he talked trash about Hispanics and made people very mad. But you know what? He also got more people to, um, notice Hispanics. And that includes general-market media. Publications including the Business Insider, International Business Times, and the Baltimore Sun (which covered Honey Maid’s “4 de Julio” campaign as part of the larger story), as well as usual suspects like the Yucatan Times, ran articles countering Trump’s egregious remarks by making the same points that Hispanic media outlets and agencies have been making for a long, long time: $1.5 trillion market + 17.1 percent of total U.S. population = important demographic. We told you so!

Honey Maid is sweet on Hispanics

“4 de Julio” is one of a new set of TV spots for Honey Maid, the brand that Mondelez International relaunched two years ago. It focuses on the Gomez family, immigrants from the Dominican Republic, talking about what it means to be American. According to Co.Create, along with the 30-second TV spot, the brand made short documentaries profiling three of the families featured in the ad. The campaign from Droga5 extends the #ThisIsWholesome theme, which aims to showcase American diversity by featuring same-sex parents, biracial couples and blended families.
[youtube https://www.youtube.com/watch?v=tsxFM_P5cr4&w=560&h=315]

Sell Clinton like Coke

HillarySpeaking of general market pubs covering Hispanic issues, BuzzFeed ran an article on a potential Hispanic marketing strategy for the Hillary Clinton campaign. BuzzFeed reported, “The campaign is said to be keeping its options open for talent, looking beyond Hispanic political firms that have been brought on for this work in years past to, as an example, ‘go get the firm that does Latino advertising for Coca-Cola,’ said Andres Ramirez, a 20-year veteran Democratic strategist who was part of the local meeting in Nevada.”

BuzzFeed reporter Adrian Carrasquillo spoke to several Hispanic marketing consultants, as well as Hispanic political consultants to get their views on how Hillary should get with Latinos.

Gannet is downsizing

Or maybe we should call it right-sizing. The media conglom spun off its newspaper properties under the Gannett rubric. Now, Tegna Inc., the digital and broadcast company that split from Gannett, is unloading its giant McLean, Va. headquarters complex. London-based Tamares Group will buy the complex and lease part of it back to Gannett. In June, Gannett completed its acquisition of the Texas-New Mexico Newspapers Partnership, and CEO Robert Dickey said that he aims to have newspapers in the expanded chain work more closely together and share assets as USA Today Media Network.

Bromley retires and shuts agency

BromleyExecutives always say they’re leaving somewhere to pursue “other opportunities.” In the case of Ernest Bromley, who founded Bromley Communications in 1981, it’s really true. He’s going after a PhD in consumer behavior, according to the San Antonio Business Journal. Read our full interview with Bromley to hear his thoughts about the current Hispanic marketing landscape and why we need the kind of research that clients won’t pay for.

Local radio up while overall ad spending dips

Kantar Media’s quarterly ad-spending report found that overall dollars were down – and not only because of the extreme advertising for the Olympics last year. Sixteen of the 21 media types Kantar monitors saw lower spends. One of the exceptions was local radio: Hispanic local radio expenditures increased 6.5 percent, while English-language local radio was up 5 percent, thanks to auto dealers, legal services, and healthcare providers. Network radio went down 2.0 percent, and national spot radio dimmed 11.3 percent.

Join us at PORTADA Mexico!

What: Gannett is folding its USA Weekend edition. The December 28 edition will be its last. Larry Kramer, president and publisher of USA Today wrote in a memo to Gannett employees on Friday.
Why it matters: Gannett’s decision reflects the steep decline in Sunday magazine advertising. Magazines inserted in so-called carrier newspapers are a sizable revenue category in the newspaper industry. With the demise of USA Weekend, the largest Sunday magazine insert, the market is going to continue to shrink.

Hispanic NewspapersSince 1985, USA Weekend is a national weekend newspaper magazine distributed through more than 800+ so-called carrier newspapers in the United States and published by Gannett Company as a sister publication to USA Today. The magazine’s focus is on social issues, entertainment, health, food and travel. While Gannet just announced that December 28 will be the last issue date for USA Weekend, it has been adding USA Today content into its own local newspapers as well as partner newspapers. This effort has included weekend content (under the “Life” banner.). “Over the next few weeks, we will be working with USA Weekend affiliates to discuss the weekend Life product,” states Larry Kramer’s memo to Gannett employees.

Advertising in Sunday Magazines fell 10.9% in the first half of 2014 compared to the same period of 2013.

Decline in Sunday Magazine Advertising

The folding of USA Weekend is a reflection of the steep decline of Sunday magazine advertising. Advertising in Sunday Magazines fell 10.9% in the first half of 2014 compared to the same period of 2013. The decline was even steeper during q2 with a 15.8% decline, according to Kantar Media.
Sunday magazines have been the domain of newspaper publishers for many years (e.g. The New York Times Weekend mag). These magazines were inserted in major Sunday newspapers and often also inserted in a network of local newspapers (e.g. USA Weekend and Parade), the so-called carrier newspapers. Initially, these carrier newspapers paid Gannett and other publishers a fee for the right to distribute their magazine (e..g. USA Weekend) with their Sunday newspaper. Sometimes they also sold local advertising into it. With the decline in newspaper advertising the pendulum shifted and often the publisher of the Sunday magazine now had to pay the local newspaper publishers to distribute the product.

USA Weekend competitor Parade Magazine was recently sold by Advance Publications to Athlon Media Group, a company whose lineup of newspaper distributed magazines, includes American Profile, Relish, Spry Living and Athlon Sports, which have a combined circulation and reach of 38 million-plus via 1,600 newspapers. Athlon has been reducing Parade’s distribution in some small markets (e.g. Alaska).

What? Gannett will add 12 to 14 pages of USA Today content each day to 35 newspapers. It is expected that the company will  eventually expand the plan to its 81 local newspaper markets.
Why it matters: The move highlights the huge weight  local community newspapers have when it comes to connect with local audiences.

gannettContent may be king but local content is the emperor. Gannett just announced that it will add 12 to 14 pages of USA Today content each day to 35 newspapers including The Journal News in White Plains, N.Y., The Tennessean in Nashville and The Cincinnati Enquirer. It is expected that the company will  expand the plan to its 81 local newspaper markets.

The move highlights the huge weight  local community newspapers, many of them Hispanic, have when it comes to connect with local audiences. While national and metro dailies’ ad revenues are clearly declining, most local newspapers, particularly in second and third tier markets, are growing.

By inserting an abbreviated version of the USA Today into Gannett  newspapers, circulation will increase to 2.5 million readers on Sundays (from 1.5 million).
Photo: Yon Garin. Creative Commons License.
Photo: Yon Garin. Creative Commons License.

The plan is to introduce USA Today into local newspapers websites as well. Larry Kramer, USA Today’s publisher said to The New York Times that “as fewer readers buy or subscribe to both a local newspaper and a national one, the inserts enable Gannett to offer a single product that provides wider coverage.” Gannett has been testing this project since October in 4 papers in Indianapolis; Rochester; Fort Myers, Fla.; and Appleton, Wis.

According to the Alliance for Audited Media, USA Today currently has 2.876 million weekday readers for both the print and digital editions, with just over 1.3 million of those for the printed paper.

At the UBS Global Media and Communications Conference yesterday  Bob Dickey, president of U.S. Community Publishing  at Gannett explained that the program has been embraced enthusiastically by subscribers. Dickey also discussed a recent pilot program, in which a USA TODAY edition was integrated into print and e-editions of four local newspapers.As a result, he announced that the program will be expanded to 35 markets in early 2014. The new initiative, which is an extension of Gannett’s successful all-access content subscription model, will provide local consumers with an enhanced news product that leverages Gannett’s unique ability to generate and distribute national content while at the same time, enhancing its ever-important local hometown coverage.

Dickey also discussed enhancements to the all access content subscription model, as well as the positive impact of G/O Digital, Gannett’s comprehensive approach to digital marketing services, which will continue to help diversify the Publishing segment’s revenue stream.

Tribune’s move confirms a trend as other large media companies are spinning off their high growing broadcast assets and keeping their publishing properties in a different unit. News Corp spun off its publishing arm in June. Belo spun off its broadcast and publishing units a few years ago and recently its Broadcast unit was sold to Gannett for about US $1.5 billion. After this transaction Gannett, traditionally a newspaper company, anticipates that broadcast will represent more than half of the company’s combined total EBITDA and together, Broadcast and Digital are expected to contribute nearly 2/3 of total EBITDA. Gannett has not communicated any intentions to split its broadcast and publishing units.

tribuneTribune Co.’s plan to separate its broadcast and publishing divisions into two companies. The company in a statement said the Tribune Co. name would remain connected to its expanding broadcast business and Tribune Publishing Co. would become the new name of the company holding its newspaper assets, including the Chicago Tribune and Los Angeles Times, as well as Spanish-language newspapers Hoy (Los Angeles and Chicago) and El Sentinel in Fort Lauderdale, FL.

“Moving to separate our publishing and broadcasting assets into two distinct companies will bring single-minded attention to the journalistic standards, advertising partnerships and digital prospects of our iconic newspapers, while also enabling us to take advantage of the operational and strategic opportunities created by the significant scale we are building in broadcasting,” Peter Liguori, president and CEO of Tribune, said in a statement. “In addition, the separation is designed to allow each company to maximize its flexibility and competitiveness in a rapidly changing media environment.”

The move may allow to make the print business more attractive to potential buyers and to make the broadcast business more successful in an eventual IPO.

Tribune said each company will have its own board of directors and senior management team. According to Chicago Business “Splitting the two businesses will allow Tribune to separate the various tax, pension and other aspects associated with the two legacy businesses as well, perhaps allowing it to make the print business in some way more attractive to potential buyers and to make the broadcast business more successful in an eventual initial public offering of stock. That could make it easier for Tribune to handle an ongoing dispute with the Internal Revenue Service over hundreds of millions of dollars in taxes the agency says the company owes.”

The Trend of spinning off Broadcast from Publishing

Other large media companies are spinning off their broadcast assets and keeping their publishing properties in a different unit. News Corp spun off its publishing arm in June.  Belo  spun off its Broadcast and Publishing units a few years ago and last month its Broadcast unit was sold to Gannett  for about $1.5 billion. Two weeks ago Tribune itself announced the acquisition of local TV, a deal that made it one of the largest TV station owners in the United States.

 

Alternate delivery systems will become more important for many weekly magazines and community newspapers if the United States Postal Service goes through with its proposal to eliminate Saturday delivery. An example of an alternate delivery system is Bloomberg Businessweek’s partnership with Gannett to hand deliver the magazine in 21 different markets.

The partnership just got expanded to 13 more markets. The Bloomberg Businessweek-Gannett partnership will introduce Expedited Morning Delivery (via Gannett’s newspaper delivery apparatus) to new markets including Asheville, N.C.; central Wisconsin; Cincinnati; Indianapolis; and Ithaca and Rochester, N.Y., by the end of July 2013. Customers who receive Businessweek via the Gannett partnership will get their magazines in a polybag delivered with their newspaper or on their doorstep if they’re not a subscriber, Businessweek President Paul Bascobert told Poynter.

Magazines will be hand delivered by Gannett in 21 different markets

An alternative to U.S. Postal Service delivery, the Expedited Morning Delivery service is designed to put Bloomberg Businessweek in the hands of subscribers on the earliest day at the earliest delivery time possible, often one or two days earlier than the U.S. mail.

Gannett, the largest U.S. newspaper publisher, increased its quarterly revenues for the first time since 2006.  Net operating revenue totaled $1.52 billion in the third quarter of fiscal 2012,, vs. $1.39 billion in the 2011 quarter. 2011 ‘s third quarter had one week less than 2012’s.

Quarterly operating revenue for the publishing unit – the company’s largest business segment – rose 3.7% to $1.04 billion. Higher circulation revenue – up 16.8% – stemming from the rollout of the “all access content subscription model” helped offset a decline in advertising revenue. Advertising revenue fell to $657.5 million from $670.7 million in the fourth quarter a year earlier. Benefiting from higher political ad spending, the broadcasting unit’s operating revenue jumped 43.9% to $287.5 million in the quarter. Television revenue totaled $280.2 million, a 45.7% increase.

Net operating revenues from print circulation were up 5.6 percent in the third quarter of fiscal 2012 over the same period of the year before, Gannett announced. Digital advertising was up 4.7 percent, “due primarily to revenue growth at CareerBuilder,” the earnings report says.


Success with Paywalls 

 Seventy-one of Gannett’s newspapers now have a paywall. The gains in digital subscriptions nearly offset the decline in print advertising, which was down 6.6 percent. Digital “now represents more than 25 percent of total revenues,” CEO Gracia Martore said in a statement accompanying the earnings release. At USA Today, digital revenue was up 69.7 percent; and unique visitors to USA Today’s mobile sites were up 79 percent in September. Overall, net operating revenues from publishing were down 3 percent.

“The impact of the all access content subscription model as well as an increase in digital advertising and marketing solutions resulted in a 64.6 percent increase in digital publishing revenues,” the company’s release says. “Digital revenues at our local domestic publishing operations were 76.0 percent higher due primarily to the all access content subscription model.”

In February 2012 Gannett  announced a plan to install paywalls at all its newspapers except USA Today. CEO Martore said in a conference call with analysts that the company remains on track for its promise that the initiatives will increase circulation revenues 25 percent and add $100 million of operating profit by the time they have all been in place for a year at the end of 2013.