Gannett Purchased By GateHouse Media For $1.4 Billion
New Media Investment Group, a holding company that controls GateHouse Media, has agreed to buy Gannett, the owner of USA Today, The Journal News, and more than 100 other publications nationwide, in a transaction valued at roughly $1.4 billion.
Altogether, 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.
Gannett owns The Journal News, The Bergen Record, The Asbury Park Press, The Detroit Free Press, The Arizona Republic, The Milwaukee Journal Sentinel and other prominent newspapers in small, midsize and large cities. GateHouse Media, which owns 154 daily newspapers and operates in 39 states, has been on a buying spree in recent years, striking deals to acquire The Austin American-Statesman, The Palm Beach Post and The Akron Beacon Journal.
The planned merger is borne out of a period of weakness for traditional newspapers. Newspapers are struggling as readers migrate to online 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.
Although print newspapers are in steep decline, Wall Street-backed companies like GateHouse Media and MediaNews Group, see them as still valuable, if distressed, assets.
In 2018, the print business still brought in $25 billion, according to a study by the University of North Carolina. New Media Investment Group, a publicly traded company with headquarters near Rochester, N.Y., has put money into journalism through GateHouse Media.
In recent years, GateHouse Media has shrunk newsrooms while pursuing shareholder value, in part by consolidating operations in regional hubs and merging newspapers. Gannett, which has been in the news business for nearly a century, laid off journalists all across the country earlier this year.
In a conference call Monday, Michael Reed, the New Media chairman and chief executive who will run the combined company, declined to specify how cost savings would result from the merger, citing “efficiencies” and “cost reallocation.” New Media is managed by the New York investment management firm Fortress Investment Group through an affiliate. Fortress is owned by SoftBank, a Japanese conglomerate.
John Jeffry Louis, the chairman of Gannett, said in a statement, “We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future.”
Media analysts predict layoffs are all but guaranteed.
Even before the merger, the two companies were the two largest chains in terms of both number of newspapers owned and circulation, according to researchers at the University of North Carolina. Combined, their papers would have a circulation of more than eight million.
Gannett has been a sought-after property. Earlier this year, it fended off a takeover attempt by MediaNews Group, a company controlled by the hedge fund Alden Global Capital.
The agreement on Monday calls for Gannett shareholders to receive $12.06 per share in a combination of cash and New Media shares, for a premium of about 18 percent.