In a statement on Tuesday, Gannett said that it “had a number of financing options available and determined to terminate discussions with Tronc after considering both accretion to shareholders and whether the terms make sense for the company.”
Shares of Tronc tumbled more than 20 percent on Tuesday, before closing down more than 12 percent. Shares of Gannett declined 2.3 percent. Its stock price has declined more than 50 percent since it made its acquisition proposal public in April.
For the newspaper industry broadly, the collapse of the deal was another indication of the financial uncertainty facing it.
An acquisition of Tronc would have been an aggressive bet by Gannett, which has traditionally bought newspapers in small or midsize markets. A deal for the owner of newspapers like The Los Angeles Times and The Chicago Tribune could have helped Gannett attract more lucrative national advertising and achieve savings by combining some operations.
Gannett’s deal making has been watched closely in a media industry that is desperately trying to find new sources of revenue as print advertising income continues to decline. Part of its strategy has been to offset advertising declines by acquiring more papers and the revenue that comes with them.
“What Gannett’s trying to do is aggregate as many eyeballs as they can to become big enough to be the last one standing,” said Alan D. Mutter, who teaches media economics at the University of California, Berkeley and writes about the media on the blog Reflections of a Newsosaur.
Earlier this year, Gannett acquired the Journal Media Group for about $280 million, adding 15 daily newspapers including The Milwaukee Journal Sentinel. It also recently bought the North Jersey Media Group, which owns The Record of Bergen County, N.J.
But as it has spread across the United States, Gannett has garnered a reputation as a brutal cost-cutter, stripping out excess and sometimes cutting to the bone in a quest for profit.
Over the years, it has bought newspapers, then consolidated printing operations at regional presses and shuttered redundant facilities. It has moved newspaper production to central hubs, sold off real estate and laid off thousands of employees.
When asked about Gannett’s appetite for acquisitions during its earnings call last Thursday, Mr. Dickey, the chief executive of Gannett, said the company was “committed to the strategy of building out our local footprint.”
There are a dwindling number of potential targets left that could give Gannett greater scale.
Lee Enterprises, which owns more than 40 daily newspapers, including The St. Louis Post-Dispatch, has a market capitalization of about $150 million, less than half the size of Tronc.
Both A. H. Belo Corporation, which publishes The Dallas Morning News, and the McClatchy Company, publisher of The Miami Herald and The Fresno Bee, are even smaller.
For Tronc, the collapse of the deal gives the company a chance to see through some of the investments it has made in technology.
Michael W. Ferro Jr., a technology entrepreneur who in February took a $44 million stake in Tribune Publishing and became its executive chairman, has promoted a technology-driven approach with concepts like artificial intelligence and new bureaus for The Los Angeles Times in cities like Lagos, Nigeria, and Hong Kong that he has insisted will increase the value of the company beyond Gannett’s offer.
In June, Mr. Ferro changed the company’s name to Tronc, which stands for Tribune Online Content, and moved the stock listing to the Nasdaq stock market from the New York Stock Exchange to make it seem more like a dot-com-era technology start-up.
On Tuesday, Justin Dearborn, Tronc’s chief executive, noted “the distractions” the company has faced in pursuing a sale to Gannett.
He added, “While we are in the early stages of executing our strategy, we remain confident in the strength of our core brands and assets and committed to our go-forward plans.”
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