Bid for Gannett latest challenge for newspaper industry
NEW YORK >> A hedge-fundbacked bid to buy Gannett Co., the publisher of USA Today and several other major dailies across the U.S., is renewing fears of consolidation in the already battered newspaper industry.
MNG Enterprises, better known as Digital First Media, parent company of The Trentonian, offered $1.36 billion on Monday for Gannett, saying in a letter that it can run the company more profitably via tight cost controls and consolidation of operations such as printing and administration.
Gannett said its board will review the proposal.
Investors gave the deal a vote of confidence, immediately pushing Gannett stock up more than 20 percent to almost $12, the amount Digital First is offering.
The proposed deal is the latest indication newspapers aren’t done suffering from the punishing effects of the internet. Over the past decade, U.S. newspapers have struggled as giants like Google and Facebook siphoned off readers and advertising dollars.
Many publications have already made dramatic cuts in their newsroom staffs and scaled back coverage. Even then, acquirers still often swoop in and make even deeper cuts. In July, for example, Tribune Publishing, then known as Tronc, cut half of the New York Daily News’ newsroom staff, including the editor in chief.
Gannett is one of the country’s largest newspaper chains, publishing more than 100 papers around the country, including USA Today; the Detroit Free Press; The Record in New Jersey; The Tennessean in Nashville; the Milwaukee Journal Sentinel; the El Paso Times; The Des Moines Register; and the Arizona Republic.
USA Today’s daily circulation was 3.1 million in 2017, down from 3.6 million in 2016, a count that includes both print and digital readers.
Overall, estimated U.S. daily newspaper circulation, print and digital combined, fell 11 percent to 31 million in 2017, according to the Pew Research Center. As recently as 2000, weekday subscriptions totaled 55.8 million.
Gannett has faced declining profits for years. Its annual profit fell 97 percent to $6.9 million between 2013 and 2017, although the company spun off part of its business during that period. In November, it cut its 2018 profit and revenue forecast. Its CEO, Robert Dickey, announced plans to step down by May.
That’s despite several years of buying media companies and slashing costs. Gannett has substantially increased its digital ad revenue, and its journalism has won critical acclaim, including three Pulitzer Prizes last year.
Digital First is one of the biggest U.S. newspaper chains, too, with about 200 newspapers and other publications, including The Denver Post and the Boston Herald. Analysts said it is seizing on Gannett’s weakness by making the offer now.