What will happen to the Journal News if Gannett Co. agrees to be bought out by MNG Enterprises Inc., a newspaper group backed by a hedge fund with a reputation for making deep cost cuts without investing sufficiently to bolster a papers’ long-term sustainability?
The New York Hedge Fund MNG Enterprises is backing a hostile takeover bid for Gannett, the publisher of USA Today and 100 other newspapers. The unsolicited offer, worth more than $1.3 billion, would create the largest newspaper company in the United States.
The newspaper industry has been struggling for years with printing costs and shrinking advertising dollars. In an open letter to the Gannett board, MNG, which is owned by the hedge fund Alden Global Capital, offered on Monday to pay $12 cash per Gannet share, a 23 percent premium on the company’s closing price on Friday. Gannett shares were trading about 19 percent higher around midday.
“I guess what goes around comes around.”
The New York Times reports that the letter from MNG, which is known in the industry as Digital First Media to Gannett, which also owns The North Jersey Media Group (The Record) and the Poughkeepsie Journal, and other newspapers in three dozen states “had suffered from a series of value-destroying decisions made by an unfocused leadership team.” The letter also reveals that Digital First Media had taken a 7.5% stake in the company.
Gannett has confirmed that it received the offer and is reviewing the proposal. The company has been laying off staff across its papers. Media experts worry about further consolidation of the industry. Four of the 10 largest U.S. newspaper chains are owned by investment groups.
Digital First Media, which has been majority controlled by Alden Global Capital LLC since 2012 owns about 50 dailies. Among its 12 papers that are represented by unions, the company has whittled down newsrooms to less than one-third the size they were when they were acquired.
A former reporter from the Digital Media-owned Monterey Herald, who tracks the company for DFMworkers.org, said the hedge fund has come as close to destroying them without actually shutting them down.
Journal News and NorthJersey reporters worried about the fate of their jobs.
“Maybe it’s time for an exit strategy,” said one reporter from NorthJersey.com, who spoke on the condition of anonymity.
Another reporter who is concerned saw the irony in the situation. “I guess what goes around comes around,” he said, referring to USA Today’s Gannett, which over the decades gobbled up scores of local newspapers and marginalized local coverage.