A TSR Turnaround in the Making

The US media company Gannett announced a new business and financial strategy in 2012. Since then, the company has tripled its share price and been one of the top value creators in the S&P 500.

Gannett is perhaps best known as the publisher of USA Today, but it has a broad portfolio of digital, mobile, broadcast, and print properties. However, like many media companies with roots in the newspaper business, it’s had to face a real and perceived decline in print-based readership and advertising.

In particular, revenue decline had created an overhang on value creation, and as recently as 2011 the company traded for less than its breakup value. In effect, investors were valuing the company as if it had no future cash flows from its newspaper businesses.

But the company has transformed itself through a new business and financial strategy, which included a 150% increase in the company’s dividend and a range of strategic and operational moves, including its recent decision to spin off its publishing business in 2015. The result has been a strong and immediate improvement in Gannett’s performance, with an exceptional average annual TSR of 71%. The company’s share price tripled in the first two years after launching its new strategy.

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