Archive for the ‘Deals’ Category

Phoenix: Republic sells small Diamondbacks stake

November 19, 2008

Gannett’s company-wide garage sale continues in full swing: The Arizona Republic has sold its 1% stake in the Arizona Diamondbacks pro baseball team, ending a relationship that began when the paper’s corporate parent provided seed capital establishing the team 10 years ago. Financial terms, including the sale price, were not disclosed.

The Republic initially made a $5 million investment and two subsequent $1 million cash calls early on to help with the team’s “financial shortcomings,” the paper said in a story reporting the sale. That $7 million stake was worth just more than 1% of the team. Gannett bought the Republic, plus The Indianapolis Star and three other dailies in Indiana and one daily in Louisiana from the Pulliam family in 2000 for $2.6 billion in cash.

What a Wall Street analyst learned on this blog

November 14, 2008

Hint: It’s about yesterday’s Ripple6 deal, Chief Digital Officer Chris Saridakis — and those curious multimillion-dollar payments.

Glossary: Who the heck is Sparky, and what’s crowdsourcing?

Earlier: More episodes on my YouTube channel

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Ripple6, Saridakis — and those curious payments

November 14, 2008

Companies trying to bury awkward news they don’t want widely circulated often stick it at the bottom of a press release or deep inside a regulatory filing. So, for example, we found the following paragraph at the very end of Gannett’s announcement yesterday that it had bought social-network software maker Ripple6:

“As part of the transaction, the 10 percent share of Ripple6 owned by Chris Saridakis, senior vice president and chief digital officer of Gannett, was bought out completely by Gannett. He did not participate in the sale negotiations.”

Smart Gannett Blog readers noticed that curious passage, and wondered, understandably, why GCI is doing big business with one of its own officers. Worse still, the announcement says: “Terms were not disclosed.” That’s a fancy-schmancy way of saying Gannett would not reveal the price paid for Ripple6 — or the method of payment. (Gannett stock? Unlikely. Cash? Probably.)

One unhappy reader summed it up last night in a comment: “A horrible economy. A stock that dives from $90 to $8.50. In the middle of it all, an acquisition that benefits — more than GCI stakeholders — one of its new division heads.”

Saridakis beats odds — twice!
Gannett will use Ripple6 to create and power online communities, including its most successful ones to date: the recently rebranded MomsLikeMe.com sites.

Now, there are thousands of software companies in the world to buy. What are the odds GCI would choose one co-owned by one of its highest-ranking officers? Better yet, what are the odds Gannett would make that kind of deal twice? Quite good, it turns out.

Just eight months ago, GCI paid $4.6 million to Saridakis (left), for the remaining shares he owned in PointRoll — the advertising services company Gannett bought in 2005. Saridakis, 40, was its CEO at the time, and so a significant stockholder.

That $4.6 million payment raised eyebrows, when it was disclosed last spring in a shareholders proxy report filing with the U.S. Securities and Exchange Commission. Moreover, the payment was disclosed way back on page 50, where many investors might not have seen it. By then, of course, Saridakis had pole-vaulted onto the powerful Gannett Management Committee, chaired by CEO Craig Dubow. Saridakis was the young technologist, suddenly in line to succeed Dubow.

Document reveals $2.2 million contract
The same proxy report also says: “In March 2008, we entered into contracts with Ripple6, Inc., an entity in which Mr. Saridakis holds a 10% interest, pursuant to which Ripple6 will provide approximately $2.2 million of computer programming services related to strategic plan initiatives. As our senior management was aware of his indirect interest, Mr. Saridakis did not participate in the negotiation of these contracts. Due to the immaterial amounts involved, the contracts were approved by senior management.”

That $2.2 million is the gross amount, of course; I’d like to know how much of it was profit split among Saridakis and his partners — and how big a cut Saridakis got.

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Tip: ‘Shining star’ PointRoll lays off 20; more due

October 14, 2008

Gannett is apparently tightening its grip on one of the company’s most promising digital investments: PointRoll, the advertising services start-up it bought from then-CEO Chris Saridakis and others in a series of deals, starting three years ago.

Saridakis (left) was later promoted to GCI’s chief technology officer, last January — putting him in line to run any businesses that survive Gannett’s troubled transition to a fully digital company. But as Saridakis spends more time on Gannett Digital, there’s no guarantee his former company will prosper inside more tradition-bound Gannett.

“The Gannett influence is taking hold and truly beginning to destroy a formerly shining star,” says my tipster, who requested anonymity. “Last week, 20 people were laid off from PointRoll. More are expected this week. . . . This is nearly 10% of the overall employee base.”

What’s more, my tipster says, PointRoll is “flat from a revenue standpoint, year over year. Still an impressive business and extremely profitable. But they are losing share to competition.”

PointRoll ‘fully Gannettized’
Business start-ups often lose their entrepreneurial edge when they get swallowed by bigger, more bureaucratic enterprises. Early employees chafe at new red tape and slow decision-making. They quit for more promising ventures, taking with them the passion for innovation needed to keep the start-up growing fast. The start-up often withers and sometimes dies. (Background: I spent nearly eight years as USA Today‘s entrepreneurship reporter.)

“In short,” my tipster says, “PointRoll has been fully Gannettized and its prospects are now only marginally brighter than those of Gannett.”

Earlier: Trouble for Gannett and HighSchoolSports.net?

Can you confirm my reader’s tip — and add details? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: a recent PointRoll homepage screenshot]

New sports network tests webcasting possibilities

October 5, 2008

[Tampa’s Freedom High was one of last night’s games]

Extending its live webcasting experiments, Gannett has launched a new high school sports network, featuring six or more games from across the country beamed on the Mogulus video service. The new Gannett Grid channel is a joint production of the broadcasting division plus newspapers including USA Today, says Poynter Online’s Al Tompkins; he interviewed Kerry Oslund, the broadcasting division’s vice president for new media.

The Grid uses new technologies that make the show cheaper and easier to produce: laptops, aircard connectivity — plus Mogulus, a technology company in which Gannett invested a reported $10 million in July. One of last night’s games, for example, featured Freedom High School in Tampa, Fla., where Gannett owns WTSP-TV.

The fledgling network got a trial run last month, when GCI used it to broadcast live feeds of Hurricane Gustav’s landfall in Louisiana. More recently, USAT used Mogulus to webcast Thursday’s vice presidential debates. My initial impression of the Grid: I had trouble understanding who was playing, because the on-screen graphics are pretty weak.

Part of ‘one Gannett’ plan
The Grid is a proving ground for live webcasting; Oslund portrayed it as part of the “one Gannett” strategy, where worksites produce information and sell advertising in a seamless nationwide network. Grid producers want to know what worked — and what didn’t work, presumably to avoid some of the big problems its had with the HighSchoolSports.net game score publishing system this season.

“This is just one of many ‘one Gannett’ prototypes in development,” Oslund told Tompkins. “We will refine it, build an improved version and when we’re ready, we’ll offer a bulletproof product we can distribute more broadly. All the while, we will be checking in with our customers, adding layers of marketing and promotion and growing audiences. We’ll succeed fast or fail fast.”

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Gannett discloses size of new borrowing: $1.2B

October 4, 2008

That’s how much the company now says it drew on its revolving credit line — a drawdown announced Wednesday, the same day Standard & Poor’s threatened to cut Gannett’s debt ratings.

Gannett didn’t reveal the dollar amount until yesterday, when it made an 8-K filing with the U.S. Securities and Exchange Commission. The Financial Times notes today that the new loans sent such GCI debt soaring nine times higher — to a total $1.9 billion. The move demonstrates the “growing rush by businesses to lock in funding” as commercial paper financing markets shut down around them. The British newspaper notes other companies have taken similar steps recently, including Goodyear, General Motors and Duke Energy.

The new borrowing replaces one common source of financing — so-called commercial paper — that’s grown more scarce amid the banking crisis. Gannett said in a Wednesday statement that the new financing was unrelated to S&P’s warning, which could boost the cost of the company’s credit if the ratings agency deems GCI’s finances more precarious. The company apparently announced the drawdown as a signal to Wall Street that it can still tap short-term financing to cover ordinarily operating expenses: payroll, newsprint purchases, etc.

But I also assume that using credit lines is more costly or less desirable in other ways. Otherwise, why would Gannett ever finance operations with commercial paper?

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Tip: GCI ‘seriously’ interested in Daytona paper

September 27, 2008

Reviving speculation that GCI’s in a buying mood again, a reader says in an e-mail: “Gannett seems to be seriously looking at the Daytona Beach News-Journal. Several corporate suits were in town recently and a select group of operating-committee members from Brevard went on a field trip.”

The Daytona paper has been on the sale block since April, when the majority owning Davidson family was forced to find a buyer after losing a costly court challenge brought by minority owner Cox Enterprises. Last spring, two readers here wondered if Gannett might be interested; yesterday’s e-mail, plus an anonymous comment from a second reader, was the first I’d heard about GCI’s possible interest in the paper since May.

It would be noteworthy if Gannett was shopping again. There’s been little market for print papers in some time: values plunged amid increased uncertainty over the industry’s prospects, and the broader economy’s further weakening. Three months ago, for example, Dow Jones & Co. shelved plans to sell its smaller Ottaway Newspapers chain. Buyers fear getting burned by paying too high — which is what happened when private investor groups scooped up the Minneapolis Star Tribune and the The Philadelphia Inquirer at the wrong time.

But Gannett may be a uniquely well-placed suitor for Daytona because it already owns Florida Today, 90 miles south in Brevard County’s Melbourne. GCI could boost profits by eliminating duplicate jobs at the papers, in human resources, accounting, production and editorial. The papers could share printing. And a single publisher and editor could oversee both titles — Gannett’s direction, with its clustering strategy.

Of course, GCI already has its hands full in Florida, the source of so much revenue loss because of the battered real estate market. But that could force the Davidsons to sell at a really bargain price.

The News-Journal has been through several layoffs since the Davidsons offered it for sale. The paper’s site says it employs 850 — which sounds high, based on Gannett metrics. Dayton’s daily circulation is about 100,000, so it averages about 90 employees per 1,000 readers. Florida Today‘s is closer to 80 per 1,000 readers. (These are very rough calculations, based on publicly available data that may be out of date.)

The News-Journal says it is Florida’s last family owned paper; the Davidsons have controlled it since 1928.

At a glance
Daytona: 100,000 weekdays, 120,000 Sundays
Brevard: 79,000 weekdays, 95,000 Sundays

Daytona, Brevard staffers: What have you heard? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

Related: A blog devoted to the Daytona paper, although it looks like it’s on hiatus.

[Sources: circulation, News-Journal and GCI’s 2007 Annual Report to shareholders; today’s front pages, Newseum]

Tips: Trouble for GCI and HighSchoolSports.net?

September 6, 2008

[Friday night lights: Carmel High School players celebrate victory last night over Center Grove High in Greenwood, Ind.]

Gannett bought a controlling stake in HighSchoolSports.net in October 2007, adding the Ohio company to its small portfolio of technology start-ups in hopes they will generate more digital revenue. The company and its corporate parent — Schedule Star LLC — target high school coaches, students and their families, providing game schedules and related information.

But nearly a year later, readers tell me the relationship between Gannett and Schedule Star has gotten tense. At least one group of newspapers has been chastised for not using all of HighSchoolSports’ features, a reader told me late last month. Thursday, another reader said: “I heard that Gannett and HighSchoolSports had some sort of falling-out. Does anyone know?”

A third reader ventured an answer. “My understanding (not being in the sports dept.) is that, after working on HighSchoolSports for the last 6 weeks or so, everything was still so f’ed up that Corporate decided to abandon it,” the reader wrote. “And now that PrepsFactory is no longer supported either, our sports guys are back to typing agate by hand over the phone. What a joy. Jim, can you dig up any more dirt on this? Seems like quite a screw-up.”

All sports editors, ad-sales and IT folks: What’s going on with HighSchoolSports.net? Have you used it? Are you having problems? Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.


Other digital deals

  • Gannett buys control of CareerBuilder; what’s next?
  • Mogulus video deal said worth $10 million
  • GCI buys out ShopLocal.com
  • Company said investing $8 million in Cozi

[Photo: Sam Riche, The Indianapolis Star]

CareerBuilder: Now, GCI’s got control; what next?

September 3, 2008

Gannett paid $135 million cash to struggling Tribune Co. for an additional 10% stake in the giant jobs website — giving GCI a controlling interest, today’s announcement says. The new ownership breakdown:

GCI now has three seats on the site’s six-seat board. Tribune and McClatchy have one seat each, and the site’s CEO has one seat.

A reader here asks: “Anyone have any thoughts on the increased share in CareerBuilder that Gannett just purchased? All it means for us Classified Recruitment folks is more business we can’t go after because CareerBuilder ‘has’ them. Oh, but yes: We’re still supposed to make goal. Ummm . . . math anyone?”

Fun facts in public documents!
Gannett’s press release doesn’t say how the company paid Tribune; it only discloses the $135 million buyout price. I suspected this wasn’t an all-stock deal: After all, Tribune CEO Sam Zell has all the newspaper shares he needs. To find the answer, I went to GCI’s mandatory 8-K notice, filed today with the U.S. Securities and Exchange Commission. (And, yes: It was a cash deal.)

And I suppose you’ll be wanting paid overtime, too?

August 19, 2008
“Hopefully, they’ll merge our paper
with a cafeteria.”

— a Gannett Blog reader, commenting on speculation about newspaper mergers during any reorg of the newspaper division.