Largest U.S. publisher to buy owner of The CA
Gannett seals $280M deal for Journal Media
The nation’s largest newspaper publisher will buy Journal Media Group, owner of The Commercial Appeal.
Journal Media executives confirmed the $280 million deal Wednesday evening.
Gannett Co. of McLean, Virginia, plans to close on the purchase of Journal Media in 2016’s first quarter.
Milwaukee-based Journal Media was created in April in the merger of two newspaper chains.
In a statement released by Journal Media, executives said the new deal “heralds an era of further consolidation in the U.S. newspaper industry as newly pure-play companies take steps to meet the competitive threat of scaled digital news and advertising businesses.”
Pure play refers to news executives separating newspapers and television stations into separate companies.
The deal has been approved by the boards of directors of both companies. It still requires the approval of federal regulators and Journal Media shareholders.
“This transaction marks a critical next step in the transformation of our industry as we build local media brands that matter at a time when operational scale is a competitive advantage,” Journal Media chief executive Tim Stautberg said in the statement. “Both Journal Media Group and Gannett are guided by a vision of strengthening lives and communities, and we’ll be better stewards in our local markets by sharing ideas, content and best practices among our new and larger family.”
Under the terms of the deal, Journal Media Group shareholders will receive cash of $12 per share, representing a premium of 44.5 percent over Wednesday’s closing price of Journal Media Group stock on the New York Stock Exchange of $8.30 per share.
“The publications of both Gannett and Journal Media Group have a rich history, a commitment to journalism and a dedicaftion to informing and being active members of the communities we serve,” said Bob Dickey, chief executive officer of Gannett.
Gannett owns USA Today and newspapers in 92 markets including Detroit, Indianapolis, Louisville, Nashville, Phoenix and smaller cities. The deal will create a company with operations in 106 markets in the United States.
Newspaper owners have been consolidating their properties into chains for decades, a trend that accelerated in the 2000s as digital publishing eroded print advertising revenue.
Although newspapers have responded with an array of digital products and services, pressures remain to spread costs among an ever wider base.
In April, E.W. Scripps Co. of Cincinnati spun off its newspaper division to Journal Media, publisher of the Milwaukee Journal Sentinel. The Commercial Appeal, owned by Scripps since 1936, was the largest newspaper in the chain that owned 13 papers in cities including Corpus Christi, Texas; Knoxville; Naples, Florida; and Ventura County, California.
The Commercial Appeal, the largest newspaper in the Mid-South, is regarded as the leading source of news and advertising in the Memphis area.
The paper, which has been awarded two Pulitzer prizes, traces to 1841. It is one of the oldest continuously operating businesses in the United States.
For years the paper was available daily throughout much of Arkansas, Mississippi and Tennessee. News reporters were stationed in offices in a dozen cities throughout the region.
As the economy contracted and advertising fell away in the 2000s, the focus shifted almost entirely to metropolitan Memphis and Nashville while efforts at watchdog and analytical reporting were redoubled. In recent years, the newsroom has poured resources into its digital edition, which now provides more content than the print version.
“This is a really big deal,” said George Cogswell, publisher of The Commercial Appeal. “Together we will be the largest news gathering operation in the United States. We’ll have more resources and more expertise. I’m really excited about this.”
Although it was a surprise to learn of the Gannett transaction only six months after Journal Media was created, Cogswell said, he had expected further consolidation in the industry.
The deal originated last year when Scripps and Journal Communications Co. of Milwaukee disclosed plans to merge their broadcast operations and spin off their newspapers into a new publicly traded company called Journal Media.
In a joint news release, Gannett and Journal Media estimated $10 million in immediate savings and possibly $25 million more over the next two years through the anticipated consolidation in areas such as corporate operations, printing and distribution.
Gannett will finance the purchase with cash and a $500 million revolving loan. The deal is expected to bring Gannett about $450 million in annual revenues and about $60 million in earnings before interest, taxes, depreciation and amortization, the companies said. Milwaukee-based Journal Media employs about 3,600 people.
This is a really big deal. Together we will be the largest news gathering operation in the United States. We’ll have more resources and more expertise. I’m really excited about this.”
George Cogswell, publisher of The Commercial Appeal