Gannett Company, Inc.

The unparalleled giant of the American newspaper business just keeps getting bigger, and not even a journalistic scandal at its flagship paper—USA Today, the nation’s biggest—was enough to slow down Gannett Company, Inc.

The Gannett empire was built through the accumulation of lots of smaller newspapers. The vast majority of the chain’s papers—more than 100 in all—are in small towns like Chillicothe, Ohio and Muskogee, Okla. In July, Gannett announced it was accumulating a few more—23 newspapers and 11 specialty publications in all, purchased from a privately held publisher in Wisconsin.

The purchase put to rest a struggle between Gannett and publisher Frank Wood that has played out for nearly a quarter-century, with Wood accusing the company of unfair business practices. In the end, Wood’s papers couldn’t compete with those of Gannett, and he relented.

Fellow publisher Richard McCord, who also has gone head-to-head with Gannett, wrote a book about Wood’s fight against the media giant. He told the Chicago Tribune, “Frank has put up an astonishing struggle to remain community based and independent in an age of media conglomerates.”

Astonishing though it may have been, given Gannett’s size and power in the industry, Wood’s surrender was, in a word, inevitable. Gannett boasts a combined daily circulation of 7.6 million. USA Today has a circulation of 2.3 million, far more than No. 2 Wall Street Journal with 1.8 million. Some of the company’s other larger market newspapers include the Detroit News, the Arizona Republic, the Cincinnati Enquirer, the Louisville Courier-Journal and the Indianapolis Star.

In addition to its newspaper holdings, Gannett is also the sixth-largest television broadcast company in the United States with 23 stations. With its 1995 purchase of Multimedia Inc., Gannett expanded the business into radio and cable television systems. Since then, it has concentrated on newspapers and television, in addition to InfiNet, its Internet access and service venture that it acquired sole ownership of in 2003.

The news chain was founded in 1906 when Frank E. Gannett and associates bought half interest in the Elmira Gazette in New York. Throughout the early years of the company, Gannett acquired more newspapers in upstate New York and by the late 1940s his company owned 21 newspapers and seven radio stations.

Gannett died in 1957, but his company was only getting started. By 1967, the chain had gone public. Allen H. Neuharth, who later wrote the best-selling autobiography Confessions of an S.O.B., became chief executive in 1973 and chairman in 1979, during the company’s most aggressive period of growth. In 1982, Gannett launched USA Today, the first general circulation newspaper aimed at the entire nation.

Skeptics derisively dubbed the daily “McPaper” and criticized its extravagant use of color, short articles contained within single pages and graphics with titles like “What We Are Eating.” But the public loved it, and USA Today became an unprecedented success.

In recent years, the newspaper has fought to be recognized for its serious journalism. But those efforts suffered a serious setback in early 2004, when one of the paper’s star reporters, Jack Kelley, was accused of plagiarism and fabrication. Reported on the heels of the Jayson Blair meltdown, the Kelley scandal saw the resignation of not only the reporter himself but several top editors as well. Nevertheless, Gannett raised the cover price by a quarter just a few months later, the first hike since 1985.

With Gannett’s considerable holdings in both newspapers and television stations, it has been an active participant in the debate before the FCC over media consolidation. Not surprisingly, Gannett supports the elimination of the rule that would prevent a company from owning a newspaper and broadcast station in the same market.

Last year, media ownership activist Andrew Schwartzman, president of Media Access Project, criticized Gannett for failing to cover a hearing in Phoenix about the FCC’s then-ending decision on whether to loosen media ownership rules. Gannett, which supports deregulation, owns a local television station and the dominant newspaper, the Arizona Republic, in Phoenix. A corporate spokeswoman said coverage of the event was up to local management.

—John Dunbar, Robert Morlino

August 20, 2004

Sources: Gannett Company Inc. Web site, Form 10-K, Broadcasting & Cable, Chicago Tribune