TEGNA announces Cars.com spinoff, stock up

TEGNA, the company that owns TV broadcasting stations and digital businesses, said Wednesday it will split into two publicly traded companies by spinning off car-buying site Cars.com.

The company (TGNA) also said it will evaluate "strategic alternatives" for CareerBuilder, a job search site.

Shares of TEGNA, based in McLean, Va., are surging 5.2% in morning trading.

The company, which used to be called Gannett until it spun off its newspaper business last year, also said CEO Gracia Martore will retire after the spinoff is completed, expected to be done in the first half of 2017. The spun-off newspaper business is now called Gannett, and it owns USA TODAY.

(Editor's note: TEGNA owns KHOU-TV.)

Martore completed the spinoff of the publishing business in June of last year, hoping to shield its TV stations and the digital businesses from declining print advertising.

But with the broadcasting market also sluggish, TEGNA's shares have fallen about 30% since the split last year.

By splitting into two companies, TEGNA and Cars.com will be "positioned to take advantage of differentiated opportunities in the rapidly evolving broadcast and digital landscape," the company said.

"The spinoff we are announcing today is the next logical step in our ongoing transformation to best position our market-leading businesses and continues are strong track record of creating value for shareholders," Martore said in a statement.

By splitting the two main units, Martore said the businesses will have "increased strategic, operating and financial flexibility at a time when the broadcast and digital sectors are both rapidly evolving."

Cars.com will look to grow its existing business and pursue more acquisition opportunities in the digital automotive market.

TEGNA will have "a strong balance sheet and cash flow" and will also look for acquisition targets, she said.