WASHINGTON, August 5, 2014 – Big news on the publishing front this morning. Following the pattern charted by other multimedia holding companies like News Corp (NWS, NWSA), McLean, Virginia-based Gannett (GCI), owner of USA Today, the largest newspaper publisher in the U.S, and a major player in TV station ownership, announced it’s going to spin off its publishing businesses.
These legacy business, including USA Today, will become a separate company. Shares will be received by Gannett stockholders as of the transaction’s record date and will be tax-free for those shareholders.
Once the spinoff is complete, Gannett plans to keep both entities in McLean. The transaction is expected to be completed by mid-2015.
Gannet also announced it will pay $1.8B for the 73 percent stake of Cars.com that it doesn’t currently own. Gannett shares are up between 5-6 percent in pre-market trading Tuesday.
Too bad the market isn’t taking a cue from the action in Gannett this morning. At approximately 9 a.m. EDT, Dow futures are off nearly 50 points, with the NASDAQ and the S&P numbers also looking equally anemic.
There’s nervousness over Chinese expansion news this morning along with all the other usual international catalysts—including the apparently imminent fall of Iraq. It’s this turbulence, along with other certain uncertainties, that looks to negate yesterday’s relief-rally gains, at least in the first hour of trading.
Corporate earnings news is another overhang, although many companies have reported “better than expected” numbers leaving numerous pessimistic pundits with egg on their faces. All will be forgotten by tomorrow’s headlines, however.
We remain on the sidelines for the most part, waiting for the market to sort out its current malaise, which was not helped by yesterday’s testy exchange between big business CEOs and President Obama who effectively told them to stop bitching about the government’s policies.
Happily, various CEOs volunteered that they’d keep on bitching, however. Look for them to get audited by the IRS, and soon. It’s a hell of a country we’ve turned into under this regime.
Today’s Trading Tips
Again, no real trading tips today. Stay in cash to the extent you’re already there. Also, if you have any large positions that look iffy but still profitable, you might hedge them with covered calls if you want to protect them. Your only risk here is that you’ll miss some profitability if the underlying stock chances to soar. But we’re thinking this is unlikely for most stocks at the moment.
We described the covered call transaction in an earlier article when we were with another publishing entity, but we’ll run another article describing this conservative tactic soon as it’s quite useful in over-extended markets like this one. And it’s relatively risk-free as well.