WSJ: USA Today, Lohud owner mulls big merger
USA Today publisher Gannett is nearing a merger agreement with GateHouse Media, according to the Wall Street Journal, a deal that would pair the two largest newspaper publishers in the United States.
Gannett has its headquarters in McLean, Va., with its newspaper holdings including White Plains, N.Y.based The Journal News and its Lohud.com affiliate that covers the lower Hudson River valley region.
GateHouse is run from offices in Pittsford, N.Y., just outside Rochester, with the Norwich Bulletin its lone publication in Connecticut. The company also has more than 150 daily newspapers nationally that include the Providence Journal in Rhode Island and the Worcester Telegram & Gazette in Massachusetts.
Gannett’s board has been under pressure in the past year from investor Digital First Media, which had made a $1.4 billion offer to acquire Gannett and a direct appeal to investors rejected this past spring as part of a proxy contest. At the time, a Digital First Media affiliate held less than 8 percent of Gannett shares, with BlackRock and Vanguard the two largest stockholders with respective holdings of 15 percent and 11 percent of shares outstanding.
On the heels of the Wall Street Journal report, Gannett shares were up 10 percent to $8.65 ahead of the New York Stock Exchange’s opening bell on Friday, with the stock having traded at $11.80 in March.
Reports surfaced in May of GateHouse interest in a combination, with the publisher controlled by the New York Citybased hedge fund Fortress Investment Group and its Japanbased parent SoftBank Group. Fortress is led by coCEOs Pete Briger Jr. and Wes Edens, the latter a coowner of the Milwaukee Bucks.
Gannett CEO Bob Dickey retired in May, with the company managed currently by Barbara Wall, its chief operations and legal officer as it continues a search for a permanent CEO. According to the Wall Street Journal, GateHouse CEO Mike Reed would lead the combined company, with the report citing at $200 million the target savings the companies would seek by cutting overlapping jobs and other costs.
In addition to USA Today, Gannett’s major newspapers nationally include the Arizona Republic, Detroit Free Press and Milwaukee Journal Sentinel. Gannett’s Northeast publications include the Poughkeepsie Journal, the Ithaca Journal and Democrat and Chronicle in Rochester, N.Y.; The Record in Bergen County, N.J.; and the Burlington Free Press in Vermont.
Under Dickey, Gannett had been chasing the goal of signing up a million subscribers to its digitalonly products by the end of next year, with 46 percent growth last year to get to the halfway mark. The company lost $11.9 million in the first quarter of this year as revenue dropped 8 percent from a year earlier to $663 million.
“There’s some percentage of ... folks who are adopting digital from our previous, fullaccess subscriber base,” said Maribel Perez Wadsworth, publisher of USA Today, speaking on a May conference call. “We are being much more aggressive. We are tightening up meters across a variety of our markets ... that allow for more personalized messaging to our users (and) that we believe drive stronger conversions.”