Gannett, GateHouse tie the knot in $1.4B deal
Two of the largest print media companies in the United States have agreed to merge in a deal valued at $1.4 billion.
AP’s Tali Arbel had the news:
Two of the largest U.S. newspaper companies have agreed to combine for roughly $1.4 billion, creating a new industry giant that hopes to manage the crisis of print’s decline through sheer size.
GateHouse Media, a fast-growing chain backed by an investment firm, is buying USA Today owner Gannett, promising to speed up a digital transformation as readers shift online. The companies say they are committed to “journalistic excellence” — while also cutting $300 million in costs every year.
The resulting company 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 expert Ken Doctor.
Marc Tracy of The New York Times touched on the implications of the news for the national media industry:
An agreement between two large newspaper chains on Monday laid the groundwork for a new publishing behemoth while raising questions about future investments in local journalism.
New Media Investment Group, a holding company that controls GateHouse Media, announced that it had agreed to buy Gannett, the owner of USA Today and more than 100 other publications nationwide, in a transaction valued at roughly $1.4 billion.
Once combined, GateHouse and Gannett will publish more than 260 daily newspapers in the United States, along with more than 300 weekly publications, in 47 states, as well as Guam. The new company will go by the name Gannett.
The companies expect that savings from the merger, which is expected to be completed by the end of the year, would total as much as $300 million annually. And though they said the merger would “enhance quality journalism,” both companies have cut costs in recent years by laying off journalists.
The planned merger comes more out of perceived weakness than strength: With a few exceptions, newspapers are struggling as readers abandon ink and paper in favor of websites and news apps. Print advertising revenue has plummeted, and the money publishers have made from digital advertising has fallen short of what newspapers used to bring in from print ads.
CNN’s Oliver Darcy detailed the savings the deal will effect:
The merger will result in an estimated annual savings of approximately $275 to $300 million, the companies said in a press release. Mergers and acquisitions of newspapers in recent years have typically resulted in layoffs in both the newsroom and on the business side. The combination of two big public companies can help the new company save on technology and human resources, and accelerate its “digital transformation,” the press release said.
“We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism,” said Michael Reed, the chief executive of New Media.
Reed, who said New Media was “honored to become a part of Gannett’s storied history,” explained that the merger will help “expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations.”
Reed will remain in his position as CEO and chairman of the new company. Paul Bascobert, the chief executive of Gannett, will transition to chief executive of “the combined company’s operating subsidiary.”