Gannett Foundation May Sell 10% Stake in Publisher

Gannett Foundation said Wednesday that it may sell the stock it holds in Gannett Co., the nation’s biggest newspaper publishing company, in order to raise funds needed to meet tax obligations.

The Arlington, Va.-based foundation, which is the largest information-based foundation in the nation, said in a statement that it plans to engage an investment banking firm to negotiate the possible sale of its 10% stake in Gannett Co.

The foundation is the largest single shareholder of the publishing company. Gannett Co., which publishes 83 daily newspapers, including USA Today, and 52 non-daily publications, and operates 10 television stations, 16 radio stations, a news service and an outdoor advertising company, has 150.9 million shares of common stock outstanding.

The foundation said its stake is valued at $566 million, based on the stock’s Tuesday closing price on the New York Stock Exchange of $35.50 a share.

“Within the limits of our fiduciary responsibility, we would prefer a transaction that puts the block in the hands of the Gannett Co. or an employee stock ownership plan. But our financial advisers will explore all alternatives,” the foundation said in a statement.

The foundation announced the decision to consider the sale of the stock at its annual meeting in Los Angeles, which was held in connection with the annual convention of the American Newspaper Publishers Assn.

“We are confident the media in general and Gannett in particular are poised for unprecedented financial success in this decade.

Foundation Chairman Allen H. Neuharth and President and Chief Executive Charles L. Overby issued a joint statement indicating that tax regulations were forcing the foundation to sell its stock.

“IRS regulations, which require foundations to pay out an amount equal to 5% of their assets annually, force us to seek higher income than common stock dividends pay,” the statement said.