TEGNA Inc., the McLean, Va-based broadcast and digital media company formerly known as Gannett, intends to spin-off Cars.com, creating two independent publicly traded companies: TEGNA, the largest independent broadcast station group among major network affiliates in the top-25 markets, and Cars.com, a top online destination in the digital automotive marketplace. TEGNA also announced that it is evaluating strategic alternatives for CareerBuilder, a global leader in human capital solutions.
Additionally, TEGNA announced that Gracia C. Martore, president, chief executive officer and a member of the Board of Directors, will retire upon the closing of the spin-off, which is expected to take place in the first half of 2017.
According to a release, “as a result of the planned spin-off, which is expected to be tax-free to TEGNA shareholders, TEGNA and Cars.com will be positioned to take advantage of differentiated opportunities in the rapidly evolving broadcast and digital landscapes. Both will have balance sheets and capital return policies tailored to their specific business characteristics, which are expected to result in increased growth opportunities and appropriate market valuations. The spin-off of Cars.com from TEGNA is also expected to improve management fit and focus at both companies.
“Gracia Martore, TEGNA president and chief executive officer, said, “Over the last four and a half years, we’ve taken a series of important strategic steps to increase the value of our businesses, including the acquisition of broadcast stations from Belo Corp. and London Broadcasting, the acquisition of full ownership of Cars.com, and the spin-off of the Gannett publishing business. The spin-off we are announcing today is the next logical step in our ongoing transformation to best position our market-leading businesses and continues our strong track record of creating value for shareholders.”
“Martore continued, “Spinning off Cars.com from TEGNA will establish two strong, industry-leading companies that are well positioned to compete and to continue to profitably grow in their targeted markets. Each business will have increased strategic, operating, and financial flexibility at a time when the broadcast and digital sectors are both rapidly evolving – presenting both companies with a wealth of opportunities. Cars.com will have the flexibility to invest in further organic growth and to participate in the active digital automotive M&A market, and TEGNA will have a strong balance sheet and cash flow to continue to pursue investment in organic growth and opportunistic acquisitions and to provide an optimal mix of capital returns to shareholders. We are fortunate to have strong CEOs for both companies, and we believe this is the right time to separate in order to unlock potential shareholder value both in the near term and over time as they develop independently as two separate pure-play companies. Additionally, while our 53% majority interest in CareerBuilder will remain with TEGNA, we, along with our partners Tribune Media and McClatchy, believe it also makes sense to evaluate strategic alternatives for this business given its recent evolution.””
The company also announced that upon the closing of the spin-off, Dave Lougee will become CEO of Tegna and Alex Vetter will serve as CEO and president of Cars.com. Lougee currently is the president of Tegna Media. Tegna owns or operates 46 TV stations in the U.S., including WUSA in D.C.