Gannett buying rest of Cars.com for $1.8B – USA TODAY
Gannett, owner of USA TODAY, has agreed to buy the shares of automotive sales site Cars.com it doesn’t already own for $1.8 billion.
Cars.com is owned by Classified Ventures, a joint venture of Gannett and four other newspaper and former newspaper companies: McClatchy, Tribune Media, A.H. Belo and Graham Holdings. Gannett owns 27% of the Cars.com, and the deal would value the business at about $2.5 billion.
Gannett rose 4.4% to $34.32 Monday, giving it a market value of about $7.7 billion. The shares advanced as much as 9% in after-hours trading before settling back to unchanged later on. Shares of McClatchy gained as much as 21% to $5.50 after hours and were still up almost 13% later in the day. A.H. Belo rose about 5.2% after hours. Tribune and Graham were unchanged.
Cars.com is one of the leading sites for online research and shopping for new and used cars. Founded in 1998, Cars.com allows users to check prices, compare models, read reviews and see online price offers from dealers.
Cars.com generates a large portion of its revenue from classified ad sales to dealers. It offers a free listing option but charges for any extra days after the first month and for other premium services related to the ad, such as additional photos.
Bloomberg reported the announcement could come Tuesday. As part of the deal, it reported that the owners other than Gannett will have five-year agreements with Cars.com that allow them to continue get revenue for advertising in their respective regions.
For Gannett, acquiring Cars.com would fill some of the holes left by diminished revenues from classified advertising in its print publications. Gannett also holds a majority stake in a venture with Tribune, McClatchy and Microsoft that owns job-hunting site CareerBuilder.
“CareerBuilder and Cars.com, being a digital version of classified advertising, (are) a key component of the publishing business,” says James Goss, managing director Barrington Research Associates in Chicago. “It does fit in very well.”
Although he cautioned that he had no direct knowledge of the deal, Goss says it shows again that Gannett plans to stand by the publishing business and grow it where it can.
“It hasn’t been looking to abandon publishing,” he says. “It looks to be stabilizing it and growing the areas that can be grown.”
However, Craig Huber, an independent media analyst with Huber Research Partners, says “it moves (Gannett) much more in the digital direction.”
Earlier Monday, Tribune Co. completed a corporate reorganization that spun off its publishing unit — including the Chicago Tribune — into a business named Tribune Publishing Company. Tribune Co. renamed itself Tribune Media and will continue to operate the remaining TV stations and digital ventures. It owns 27.8% of Classified Ventures.
Graham Holdings formerly owned The Washington Post. A.H. Belo publishes newspapers including The Dallas Morning News. McClatchy publishes newspapers including The Sacramento Bee.
Contributing: Bloomberg News