Keep the vultures away
Just last month, Gannett offered voluntary buyouts to staffers across the once-muchbigger media company. That initiative was distinct from the layoffs at its flagship paper, USA Today, several years ago. And it was distinct from Gannett’s buyout package offered to up to 665 newspaper employees back in 2012, its layoff of 700 newspaper workers in 2011, and its 2008 bloodbath.
The point: Gannett has contributed its share of downsizing to the disappearing U.S. newspaper workforce.
Now, however, a company even more “accomplished” in this sphere seeks to acquire the newspaper colossus. MNG Enterprises on Monday issued a $1.36 billion takeover proposal of Gannett for $12 per share in cash, or 23 percent higher than Gannett’s Friday closing price.
MNG already has a 7.5 percent ownership stake in Gannett, enough to qualify as its largest active stockholder. In a letter to the Gannett board, MNG attacks its target’s current management, noting that the company’s stock has lost significant value since it was spun off from Gannett broadcasting properties.
“During this period, Gannett suffered from a series of value-destroying decisions made by an unfocused leadership team—overpaying for a string of non-core aspirational digital deals and pursuing an ill-fated hostile (takeover) for Tribune Publishing, all while Gannett’s core revenue, EBITDA, margins and Free Cash Flow continue to decline,” notes the MNG letter.
MNG operates about 200 publications, including The Denver Post, The San Jose Mercury News, The Orange County Register and The Boston Herald; Gannett is home to the USA Today Network, a group of “more than 100 local media brands.”
So what’s left to cut at the Gannett properties? “I honestly don’t know what the next step . . . looks like and what additional costs cuts or savings (MNG) would be able to find,” says Paul Singer, former politics editor for USA Today. “My fear is that it would involve Bangalore.”
Despite all the flak that Gannett takes for its own layoffs and buyouts, Singer says the chain still knows why it’s in business. “There’s still an understanding that there’s a love of the papers, a love of the product, a love of the news,” says Singer, who now works as investigations editor for WGBH and the New England Center for Investigative Reporting. “I have believed at times that people at Gannett were out of their minds, but I never believed they were in it just to try to make a buck. That’s what worries me about (MNG).”
Over his six-year tenure at Gannett, Singer watched as management squeezed the organization for every last redundancy. One example: In 2015, Gannett closed the Washington bureau of The Louisville Courier-Journal, which was essentially one guy: James Carroll, who’d been on the Washington beat for the newspaper for more than 17 years.
As Singer recalls, Carroll had the “best sourcing” and the best stories about Kentucky Republican Mitch McConnell and adjacent topics. When the company closed the bureau, the thinking went like this, according to Singer: “We’re just going to take our coverage from rest of the Gannett Washington bureau, from USA Today,” recalls Singer. “The problem is that USA Today had been leaning on Jim Carroll.”
The lesson: “You can’t keep saying, ‘We’ll pull that resource from somewhere else,’ until you’ve finally realized that there’s nowhere to pull it from,” he says.
Gannett issued a statement about the move: “Consistent with its fiduciary duties and in consultation with its financial and legal advisers, the Gannett board of directors will carefully review the proposal received to determine the course of action that it believes is in the best interest of the company and Gannett shareholders. No action needs to be taken by Gannett shareholders at this point.”
Or ever, for that matter. Keep these hedgefunders away from our journalism.