Gannett, rival OK fusion of 2 chains

GateHouse deal valued at $1.4B

NEW YORK — Two of the largest U.S. newspaper companies have agreed to combine, creating a new industry giant.

New Media Investment Group, which controls GateHouse Media, is buying USA Today owner Gannett Co. for $12.06 a share in cash and stock, or about $1.4 billion. The combined company would have more than 260 daily newspapers in the U.S. along with more than 300 weeklies. The new company will go under the name Gannett.

It would be the largest U.S. newspaper company by far, with a print circulation of 8.7 million, 7 million more than the new No. 2, McClatchy, according to media analyst Ken Doctor.

The companies said Monday that the deal will result in up to $300 million in annual cost savings and help speed up a digital transformation.

Newspaper consolidation has picked up as local papers struggle to survive.

According to a study by the University of North

Carolina, the U.S. has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research, and job cuts have continued this year.

Both GateHouse and Gannett are known as buyers of other papers. Bulking up lets companies cut costs — including job eliminations in newsrooms — and centralize operations.

“I don’t think, just by these companies merging, they’re going to somehow magically find a new business model, make everything all right and produce robust journalism at a local level,” Butler University journalism professor Nancy Whitmore said. Still, a bigger, combined newspaper company could sell more national ads and boost their ad revenue, she said.

In Arkansas, Gannett owns the Baxter Bulletin in Mountain Home.

According to GateHouse’s website, its “daily” newspapers in Arkansas are in Pine Bluff, Fort Smith and Stuttgart,

although only the one in Fort Smith is published seven days a week.

The same website listed GateHouse ownership of weekly papers in Booneville, Charleston, Greenwood, Gurdon, Helena-West Helena, Hot Springs Village, Paris, Van Buren and White Hall.

EFFECT IN STATE

Ashley Wimberley, executive director of the Arkansas Press Association, said in a statement, “It’s too soon to speculate what impact, if any, this merger will have on Arkansas newspapers. We all know this is a time of transition for our industry and this merger reflects that. I take the companies at their word that this merger will better position their newspapers for the future and will ensure quality newspapers for years to come.”

GateHouse once had a stronger presence in Arkansas, built primarily in early 2015 when it bought most of the assets of Stephens Media LLC for $102.5 million.

The Stephens Media properties included 19 Arkansas holdings, including seven weeklies in Pulaski

and Lonoke counties. About two years later, GateHouse merged those papers into just two — the North Little

Rock Times and the Lonoke

County Democrat. (The towns that lost weeklies in those mergers were Jacksonville, Maumelle, Sherwood and Carlisle.)

GateHouse also closed its state Capitol bureau in 2017.

In September 2018, GateHouse shuttered the North Little Rock Times and the Lonoke County Democrat, along with papers in Arkadelphia, Hope and Prescott.

It also had earlier closed one of the two papers it operated in White Hall, near Pine Bluff.

In June, GateHouse sold the Log Cabin Democrat in Conway, which it had purchased in 2017, to Paxton Media Group of Paducah, Ky. Paxton also bought GateHouse weeklies in Clinton, Heber Springs and Newport.

MERGE AND CONQUER

Consolidation is nothing new to Gannett or GateHouse. Gannett’s last big U.S. 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, published in Phoenix. Its more recent merger efforts have been unsuccessful. It failed in an unsolicited bid for newspaper chain Tribune. Gannett then fended off an unwanted bid by MNG Enterprises, better known as Digital First Media, a hedge-fund-backed media group with a slash-and-burn reputation for cutting jobs and letting papers wither.

GateHouse filed for Chapter 11 bankruptcy protection in September 2013, reporting debt of $1.3 billion and assets of $433.7 million.

GateHouse emerged from bankruptcy restructuring in November 2013 under the control of publicly traded investment company New Media Investment Group, which is managed by investment firm Fortress Investment Group. Fortress, in turn, is owned by Japanese tech giant SoftBank. Gannett and New Media said Monday that Fortress will 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 156 daily newspapers, most in smalland mid-sized towns.

New Media is taking on new debt to get the Gannett deal done — a $1.8 billion loan from private equity firm Apollo Global Management.

Several experts said they do not expect the Justice Department to have a problem with the deal, as the two companies have papers in different markets. The companies expect it to close this year.

The combined company would keep its headquarters in Gannett’s current home of McLean, Va.

Gannett shares added 2.7%, to $11.04, in afternoon trading. New Media stock lost 7.6%, to $9.89.