Friday, August 9, 2019

Gannett and GateHouse plan to merge, creating newspaper mega-group

Posted By on Fri, Aug 9, 2019 at 3:59 PM

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New Media Investment Group, the holding company that owns New York-based GateHouse Media, plans to acquire Gannett, the media companies announced Aug. 5.  Given that GateHouse and Gannett are the two largest newspaper chains in the country, the move has potential to change the face of local news — for better or worse.

"I'd love to say the mega-merger financed by private equity is likely to mean more investment in local journalism with new hires filling more beats, expanded circulation, and deeper coverage of their communities, but I doubt that's going to happen, at least in the short term," Corey Hutchins, the Colorado-based contributor for Columbia Journalism Review's United States Project, writes in an emailed statement.

"This is just where we are now in an era of hedge-fund journalism."

Colorado's GateHouse papers include the Pueblo Chieftain and La Junta Tribune-Democrat (dailies), as well as the Fowler Tribune and Bent County Democrat (weeklies).

Virginia-based Gannett, the group behind the USA Today national newspaper, counts the Fort Collins Coloradan among its many brands.

The combined companies — which will collectively own more than 260 daily newspapers, and more than 300 weeklies — will go by the name Gannett, the New York Times reports.

"Uniting our talented employees and complementary portfolios will enable us to 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," said Michael Reed, chairman and CEO of New Media Investment Group, who was quoted in a statement.

Both companies laid off employees this year. In May, GateHouse layoffs amounted to about 200 people out of its 11,000 staff, including two at the Pueblo Chieftain. Gannett laid off dozens in January, according to media reports, though an exact number was undetermined.


The layoffs and impending merger — which many fear will bring more layoffs — reflect an industry struggling to remain financially viable.

“Since GateHouse bought The Pueblo Chieftain the paper suffered cuts. Its journalists were protesting in the streets this summer," writes Hutchins, who is also a journalism instructor at Colorado College and a journalist at the Colorado Independent. "Earlier this year, Gannett's nationwide layoffs lashed the Coloradoan in Fort Collins and the paper scrap-heaped its weekly Opinion section to cut costs. Now these two companies are conglomerating. Great."

To Hutchins and other media observers, the industry's prospects often look grim.

A University of North Carolina study found the U.S. lost nearly 1,800 newspapers between 2004 and 2018.

And newsroom employment overall decreased by 25 percent between 2008 and 2018, the Pew Research Center found. The number of newspaper newsroom employees decreased even more — 47 percent.

In May, GateHouse planned to hire an entry-level reporter at the Chieftain for $13.41 an hour ($27,892 per year). The median annual salary for reporters and correspondents across the industry was $41,260 in 2018, according to U.S. Census Bureau data.

Meanwhile, the new CEO of the combined companies, Paul Bascobert, will receive $3.9 million in Gannett stock and a sign-on bonus of $600,000, above his $725,000 salary, according to Matt Pearce of the Los Angeles Times.
According to the joint statement, the companies intend to cut costs by $250 to $300 million annually as a result of the merger. That's "not good news" for newspapers that "already have been cut to the bone," tweeted Eric Lipton of the New York Times.


Gannett and GateHouse already each have their "design hubs," which centralize design operations for local newsrooms around the country. (Disclosure: This reporter worked at Gannett's Phoenix design hub for two four-month internships.)

Presumably, by consolidating such hubs and other parts of their operations, the companies could save on overhead.

"I fear it's going to get worse before it gets better," Hutchins says. "Whatever happens to these newspapers after this deal, though, I hope they remain honest with their readers about it. I hope they let readers know the reasons why the way the papers are producing the news is changing instead of pretending it isn't happening or dressing up their own bad news in corporate Newspeak.

"I hope they bring their local readers into this conversation about one of the most challenging realities of our time. I also hope I'm totally wrong about all of this.”

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