Gannett Co. Inc., the publisher of USA Today, said it would take full ownership of Cars.com and spin off its publishing assets into a publicly traded company as it focuses on its digital businesses.
The company said it would buy the 73 percent stake it does not already own in Classified Ventures, the entity that owns Cars.com, from other joint venture partners for $1.8 billion in cash.
Gannett will buy out the remaining stake from Tribune Media Co, McClatchy Co, A.H. Belo Corp and Graham Holdings Co.
The deal values Cars.com, which lets users check prices, compare models and read reviews of auto dealers, at about $2.5 billion.
“Cars.com doubles our growing digital business, while our recent acquisitions of Belo and London Broadcasting doubled our broadcasting portfolio,” CEO Gracia Martore said.
After Gannett’s publishing division spinoff, one company will focus on broadcasting and digital content and the other on publishing.
The move comes at a time when newspaper publishers in the United States have been struggling with deep declines in advertising revenue and circulation.
Gannett said it expects its publishing business to be virtually debt-free after the separation, with all of the company’s existing debt retained by the broadcasting and digital company.
“Print media has lost billions in annual ad revenue during the past decade, due in large part to auto dealerships shifting ad dollars to digital media, Google search in particular,” said eMarketer analyst Mike Hudson. “In order to survive, companies like Gannett must find a long-term digital revenue source tied to autos, and sites like Cars.com have proven to be lasting parts of the modern auto purchase funnel.”