Gannett Co. Inc., the publisher of USA Today, said it would take full ownership of automotive website Cars.com and spin off its publishing assets into a publicly traded company as it focuses on its digital businesses.
After the spinoff, which will be done through a tax-free distribution to Gannett’s shareholders, one company will focus on broadcasting and digital content and the other on publishing.
The move comes at a time when newspaper publishers in the United States have been struggling with deep declines in advertising revenue and circulation.
Gannett said it expects its publishing business to be virtually debt-free after the separation, with all of the company’s existing debt retained by the broadcasting and digital company.
Gannett’s shares jumped nearly 8 per cent premarket on Tuesday.
The company said it would buy the 73-per-cent stake it does not already own in Classified Ventures, the entity that owns Cars.com, from other joint venture partners for $1.8-billion (U.S.) in cash.
Gannett will buy out the remaining stake from Tribune Media Co., McClatchy Co., A.H. Belo Corp. and Graham Holdings Co.
Cars.com lets users check prices, compare models and read reviews of auto dealers.
“Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio,” Chief Executive Gracia Martore said.
Gannett has been snapping up broadcast TV stations to diversify from newspapers. It spent $1.5-billion on buying the broadcaster Belo last year. Earlier this year it acquired six TV stations from Dallas-based London Broadcasting.
Reuters reported the Cars.com deal on Monday, citing people familiar with the matter.
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