The penny-pinching owner of the local daily newspapers is gobbling up the storied Gannett chain.
Gatehouse Media, which is under the control of Japan-based Softbank and overseen by holding company New Media Investment Group, announced Monday afternoon that they will be acquiring Gannett as part of a deal reportedly worth $1.38 billion. The announcement confirmed a previous Wall Street Journal report and rumors for weeks in the media sphere.
Gatehouse Media owns the Bucks County Courier Times, The Intelligencer, and Burlington County (New Jersey) Times along with about 150 other daily publications. Gannett owns eight newspapers across New Jersey, several titles in the central part of Pennsylvania, USA Today, about 100 daily publications, and roughly 150 titles in the United Kingdom.
At the Bucks County Courier Times and The Intelligencer, and Burlington County Times, it is unclear the impact of the combination of the companies, which is expected to take place by 2020.
The combined company expects to realize about $275 to $300 million in savings annually across the organization, according to a press release.
“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 Mike Reed, the CEO of the holding company that oversees Gatehouse Media.
The two newspaper companies also are connected to marketing firms and subsidiaries that use the publications’ bonds with communities to sell services. The companies said the firms will provide “multiple, diversified marketing and revenue solutions” as part of the purchase.
Two-years-ago this summer, family-owned Calkins Media sold the Bucks County Courier Times, The Intelligencer, Burlington County Times, and some of its other publications to Gatehouse Media for $17.5 million.
Gatehouse Media is known across the journalism industry for cutting the size of daily newspapers, raising copy prices for customers, and also reducing staffing at publications. Earlier this year, they also cut some publications that they said were underperforming.
At the Bucks County Courier Times, The Intelligencer, and Burlington County Times, Gatehouse Media has reduced the headcount by more than 70 percent since 2017, sources have said.
Just this year, layoffs have hit employees at the local newspapers that share staff twice this year.
Over the past two years, the regional newspapers have exited their offices in Doylestown, New Jersey, and Tullytown and opened smaller ones in Middletown and across the river.
Under the massive acquisition announced Monday, Gatehouse Media will take the Gannett name. In the early part of the 20th century, Frank Gannett grew his media empire and added well-respected newspapers.
Ken Doctor, a media industry analyst, wrote for Nieman Lab that the combination of the two companies would create a massive brand that would cover one-sixth of the remaining daily newspapers. The new company, which would still need approval from regulators, would be the largest newspaper publisher based on circulation in the country.
“For the journalists inside what will become the new Gannett, and for their readers, the immediate future is hard to chart. Financial realities drive this deal — and that means cutting,” Doctor said.
The joining of the two companies likely means cuts would be found through reducing administrative staff and also finding savings at already hard hit local newspapers. It could also mean more content and resource sharing between Gatehouse Media and Gannett newspapers in the region.
“We all pray that it works,” Nancy Whitmore, a professor of communication at Butler University in Indianapolis, told USA Today. “Those of us that see the immense significance of local news certainly hope it works.”
While the newspaper industry has been plagued by declining circulation and advertising, it has also fallen victim to large firms that own many local papers, and in some cases, strip away profits while selling off assets like real estate for healthy profits.
In a late Monday morning afternoon earnings call, New Media Investment Group, which oversees Gatehouse Media, reported an increase in revenues year-over-year as it acquired more publications and cut costs while reporting a 15 percent decrease in same-store sales and a 5.5 percent decrease in circulation. It did report a 12 percent increase in digital revenue and nearly 10 percent increase in revenues from commercial printing and distribution and hosted events.
The deal with Gatehouse Media combining with Gannett is funded through a combination of cash on hand and new debt. All existing debt from the two companies will be retired, New Media Investment Group (the firm that operates Gatehouse Media) announced in the earnings call.
In the last fiscal year, Gatehouse Media’s revenue was about $1.53 billion, while Gannett’s was larger at $2.92 billion.
Earlier this year, Gannett beat back a bid by hedge fund Alden Global Capital, which owns the Bucks County Advance, Trentonian, and other newspapers across the country.