Commitments Contingencies and Other Matters

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments, Contingencies and Other Matters

Commitments, contingencies and other matters

On June 12, 2013, Gannett entered into a merger agreement for the acquisition of Belo Corp. (Belo) for aggregate cash consideration of approximately $1.5 billion, plus the assumption of $715 million of existing Belo debt (the Merger). Belo is the owner of 20 television stations (nine in the top 25 U.S. markets) that reach more than 14% of U.S. television households, including ABC, CBS, NBC, FOX, CW and MyNetwork TV (MNTV) affiliates and their associated websites. Belo also has three local and two regional news channels. Upon completion of the merger, Gannett will operate the fourth-largest English-language television station group in the United States, reaching nearly one-third of all U.S. households.

The Merger will nearly double Gannett’s broadcast portfolio from 23 to 43 stations, including stations Gannett expects to service through shared services or similar arrangements. Upon completion of the Merger, Gannett will achieve greater geographic diversity, operating or servicing 21 stations in the top 25 U.S. markets. Gannett’s broadcast group will become the #1 CBS affiliate group, the #4 ABC affiliate group and will expand its already #1 NBC affiliate group position. In connection with the Merger, Gannett and Belo have arranged that, simultaneously with the consummation of the Merger, there will be a restructuring of certain of Belo’s media holdings pursuant to which their stations located in the Louisville, Kentucky; Phoenix, Arizona; Portland, Oregon; St. Louis, Missouri; and Tucson, Arizona television markets (the Assigned Stations) will be conveyed to third parties (the Restructuring and, together with the Merger, the Transaction). Gannett will enter into shared services and similar support arrangements with the third party owners of these stations.

Closing of the Transaction is expected to occur by the end of 2013 and is subject to regulatory approvals and customary closing conditions. The closing of the Merger is subject to a condition that the merger agreement be approved by the holders of Belo common shares representing at least two-thirds of the voting power of all outstanding common shares entitled to vote in accordance with the Delaware General Corporation Law. Belo’s directors and executive officers, who collectively own approximately 42% of the voting power of Belo’s outstanding shares, have entered into voting and support agreements to vote their shares in favor of the Merger. Closing of the Merger also is subject to the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the grant by the Federal Communications Commission (FCC) of its consent to the consummation of the Transaction, and other customary closing conditions. The Merger will be funded through a combination of available cash as well as debt financing to be undertaken by the Company. The merger agreement does not contain a financing condition.

The Company incurred expenses in the second quarter of 2013 related to the Merger which are included in the “Other non-operating items” line in the Condensed Consolidated Statements of Income.

Since the announcement of the Company’s acquisition of Belo Corp. on June 13, 2013, Belo, Belo’s directors and the Company have been named as defendants in four substantively similar putative class action lawsuits brought by and on behalf of shareholders of Belo. The actions are: Jacob Hulsebus v. Belo Corp., et al., Cause No. DC-13-06601 (District Court of Dallas County, Texas), which was commenced on June 14, 2013; IBEW Local 363 Pension Trust Fund, et al. v. Belo Corp., et al., Civil Action 8649-VCL (Delaware Chancery Court), which was commenced on June 17, 2013 (the IBEW Case); Oakland County Employees’ Retirement System v. Belo Corp., et al., Civil Action No. 8677-VCL (Delaware Chancery Court), which was commenced on June 24, 2013 (the Oakland Case); and Norfolk County Retirement System and Plymouth County Retirement System. v. Judith L. Craven, et al., C.A. No. 8732-VCL (Delaware Chancery Court), which was commenced on July 16, 2013 (the Norfolk County Case). The IBEW Case, the Oakland Case and the Norfolk County Case have been consolidated into In re Belo Corp. Stockholders Litigation, C.A. No. 8649-VCL (Delaware Chancery Court). The actions allege, among other things, that Belo’s directors breached their fiduciary duties in connection with the Merger. In addition, the plaintiffs allege that the preliminary proxy statement filed by Belo in connection with the stockholders’ meeting to approve the Merger fails to provide all material information and/or provides misleading information to Belo’s stockholders. The actions allege that the Company aided and abetted the alleged breaches of fiduciary duty. The actions seek, among other things, to enjoin the Merger. The Company believes these lawsuits are meritless and intends to vigorously defend all pending actions relating to the Merger.

The Company and a number of its subsidiaries also are defendants in other judicial and administrative proceedings involving matters incidental to their business. The Company’s management does not believe that any material liability will be imposed as a result of these matters.