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Gannett newspapers to start charging for online access

Gannett has promised investors market-beating shareholder returns and a return to growth in publishing as its new chief executive tries to reposition the owner of USA Today as a "digital powerhouse" with the brands and relationships to take on online-only rivals.

At an investor day in New York, Gracia Martore sought to challenge perceptions of Gannett as an owner of out-of-favour newspapers from The Wausau Daily Herald in Wisconsin to The Argus in Brighton and local television stations such WATL-TV in Atlanta. She said its close ties to local advertisers gave it a "home town advantage" over digital upstarts.

Vikram Sharma, chief digital officer, said Gannett could build a digital marketing services business with revenues of $275-million to $350-million (U.S.) by 2015, helping small and medium-sized advertisers with challenges such as social media marketing and search engine optimization.

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Ms. Martore, who took over from Craig Dubow in October, said Gannett would return more than $1.3-billion to shareholders by 2015 through a 150 per cent increase in its annual dividend to 80 cents a share and a plan to buy back $300-million worth of shares in the next two years.

Annual revenue growth would recover to between 2 and 4 per cent by 2015, assuming no change in the U.S. economy, she said. The strategy of stabilizing publishing, expanding into related growth businesses and finding another $100-million to $150-million of cost savings by 2015 was "not a quick fix" but "very doable," she added.

The initial costs of the new strategy would knock first-quarter profits but full-year earnings should meet consensus estimates of about $2.18 a share, Gannett said. Its shares were up 4.6 per cent at $15.67 in afternoon trading.

Bob Dickey, president of the U.S. community newspapers, said its 80 titles would all charge for access to online content by the year end. Digital subscriptions would knock weekday home delivery of the newspapers by 6-7 per cent, with a 1-2 per cent impact on Sundays, he estimated, but would add $100-million to annual operating profits by 2013.

David Hunke, publisher of USA Today, said the 30-year-old title was overhauling its digital design to improve navigation and engagement. It was working with hotels to offer customized local travel and entertainment content to guests' tablets and mobile phones, as well as the traditional newspaper outside their door.

Tom Beusse, president of the sports media group that USA Today created last year, said acquisitions and its roll-up of the group's local and national sporting coverage would make it one of the five biggest online sports brands by 2015, with online revenues of $300-million, up from $100-million now, and unmatched access to high school sports leagues.

Gannett's local NBC and ABC broadcasting affiliates expect $90-million in retransmission fees from distributors this year, up 13 per cent, on top of the one-off benefit of election advertising and the Olympics.

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The group made little mention of Newsquest, the U.K. local newspaper group behind the Oxford Mail and the Northern Echo, but said it was faring "significantly better" than its U.K. rivals.

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