GateHouse-Gannett merger creates US newspaper giant
NEW YORK: Two of the largest US newspaper companies have agreed to combine for roughly $1.4 billion, creating a new industry giant that hopes to manage the crisis of print’s decline through sheer size.
GateHouse Media Inc, a fast-growing chain backed by an investment firm, is buying USA Today owner Gannett Co, promising to speed up a digital transformation as readers shift online.
The companies say they are committed to “journalistic excellence’’ — while also cutting $300 million in costs every year.
The resulting company would be the largest US newspaper company by far, with a print circulation of 8.7 million, seven million more than the new No. 2, McClatchy Co, according to media expert Ken Doctor.
Local papers, faced with the complex and expensive process of building digital businesses to replace declines in print ads and circulation, have been consolidating madly in recent years.
Although papers with national readerships like The New York Times and The Washington Post have had success adding digital subscribers, local papers with local readerships find it much more difficult. Hundreds of such papers have closed, and newsrooms have slashed jobs.
According to a study by the University of North Carolina, the US has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research Center, and lay-offs have continued this year.
Both GateHouse and Gannett are known as buyers of other papers. Bulking up lets companies cut costs — via newsroom lay-offs and other measures — and centralise operations.
The combined company would have more than 260 daily papers in the US along with more than 300 weeklies.
Several experts said they do not expect the Justice Department to have an issue with the deal, as the two companies have papers in different markets.
The combined company would take the Gannett name and keep its headquarters in Gannett’s current home of McLean, Virginia.
Consolidation is nothing new to either company. Gannett’s last big US print purchase was in 2016, when it bought papers in the Journal Media Group chain for $280 million, including the Milwaukee Journal Sentinel and the Commercial Appeal in Memphis.
Gannett also owns dailies in major cities such as the Detroit Free Press and The Arizona Republic.
Its more recent merger efforts have been unsuccessful. It failed in an unsolicited bid for newspaper chain Tribune Media Co.
Gannett then fended off an unwanted bid by MNG Enterprises Inc, better known as Digital First Media, a hedge-fund backed media group with a slash-andburn reputation for cutting jobs and letting papers wither.
GateHouse, a little-known name to US readers, is also controlled by an investment company, but it doesn’t have the same scalding reputation as Digital First.
It is owned by the publicly traded New Media, which is managed by investment firm Fortress Investment Group. Fortress, in turn, is owned by Japanese tech giant SoftBank Group Corp.
Gannett and New Media said on Monday that Fortress would no longer manage New Media after 2021.
GateHouse has grown quickly in recent years, and its buying spree includes The Palm Beach Post, bought last year for $49 million, and the Austin American-Statesman, on which it spent $47.5 million. It publishes 154 daily newspapers, most in small- and mid-sized towns.