It will be hard to improve Gannett's performance organically. The company offers some digital marketing services to advertisers, which has some potential in local markets. But too much growth in that business could cannibalize the company's print revenue.
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And while some deep-value investors will be attracted to Gannett's ability to pay dividends, the attraction could soon fade. It will be risky to borrow too much against a declining earnings base, and rates may soon rise.
The good news is that Gannett will be "virtually debt free" after the spinoff, giving it flexibility to pursue acquisitions. The separation from the TV stations will also help because some geographic overlap would have prevented Gannett from buying local newspapers in the same places.
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But it's risky to count too much on acquisitions to turn the business around. The newspapers that would fit best with Gannett are probably other local and regional papers rather than large metropolitan dailies. Other potential buyers such as Warren Buffett have already shown interest in local print assets and might make any auctions crowded.
Indeed, it may be hard for Gannett to move the needle with acquisitions anytime soon. Janedis expects the print business to generate $460 million of Ebitda in 2014. Assuming the company trades near the industry average of about five times Ebitda, it will have a market capitalization of $2.3 billion. Unless Gannett rustles up a large surprise acquisition target, investors will probably wish they had canceled their subscription.
—By CNBC's John Jannarone.