Shareholders voted to approve a deal that will have the owner of the Bucks County Courier Times and The Intelligencer overtake one of the most storied brands in the newspaper industry.
Shareholders of New Media Investment Group, which controls newspaper owner Gatehouse Media, and Gannett approved a plan to acquire the second firm as part of a deal worth $1.1 billion. Japan-based Softbank, which was the focus on a New York Times expose this week, is the overall operator of New Media Investment Group.
The deal is backed by a $1.7 billion loan from Apollo Global Management, which has previously expressed interest in buying the company that publishes The Trentonian and Bucks County Advance newspapers. The loan behind the Gatehouse Media deal features a whopping 11.5 percent interest rate.
Gatehouse Media is expected to take the Gannett name when the deal closes in the coming weeks. The company has its roots in 1906 when Frank Gannett and business colleagues became involved with the Elmira Gazette in New York.
Gatehouse Media publishes 154 daily newspapers and Gannett operates close to 110 local news organizations and USA Today. The combined company will be the largest daily newspaper publisher in the country and own one-sixth of the remaining daily newspapers.
In an earnings call last month, executives for Gatehouse Media has said the acquisition of Gannett will create $275 million to $300 million in “synergies” in the next two years.
“We feel great about the synergies,” New Media Investment Group CEO Mike Reed said on the call.
“More than 10 percent of the chains’ combined workforce — about 25,000 in the United States — will likely get the dreaded call from HR that their services will no longer be needed,” Ken Doctor, a media industry analyst, wrote for Nieman Lab last month.
On Thursday, Doctor reported that leaders were upping their cuts to more than $400 million.
“How much? In any room of eight people at a current GateHouse or Gannett operation, one is likely to see her job gone in 2020,” he said.
At the Bucks County Courier Times and The Intelligencer newspapers, the majority of the newspaper’s staff have been cut since summer 2017. The newspapers, which closed their Tullytown and Doylestown offices for a merged one at the Oxford Valley Mall in Middletown, have held multiple rounds of layoffs and buyouts in recent years. There has been no word on how the deal with impact jobs at the local newspapers.
“The deal is bad for journalists, it’s bad for readers and it’s bad for the future of local journalism,” union NewsGuild-CWA President Bernie Lunzer said. “Local papers will likely vanish, jobs will be slashed, and reporting will suffer.”
“The combined operations will have a broad local-to-national network of incredibly talented, experienced journalists who can continue to deliver unique award-winning content for both local communities and national audiences,” Gannett CEO Paul Bascobert said earlier this month, according to USA Today.
In summer 2018, 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.
The Bucks County Courier Times weekday circulation has dropped from 23,000 to 15,299 in the more than two years Gatehouse Media has owned them, while The Intelligencer has gone from 19,000 to 11,858 daily circulation, according to public statements from New Media Investment Group and the newspapers. The news organizations have also seen their web traffic drop.
The newspapers, like many owned by Gatehouse Media, published a short article on the deal written by a reporter from Austin, which is also where the publications and designed. The city serves as a major hub where Gatehouse Media’s newspapers from around the country are put together.
In advance of the deal, New Media Investment Group’s stock dropped from $10.70 to $6.68, which vaporized hundreds of millions in market cap. By Thursday’s afternoon, the stock price dropped to $6.57.
Billionaire investor Leon Cooperman raised alarm over the deal late last month. On the New Media Investment Group earnings call, he raised concern about the 11.5 percent interest rate being used to finance the deal.
While the local newspaper industry has seen readers and advertisers flee, Gatehouse Media and Gannett have seen their losses grow at a fast pace, according to their publicly available financial records.The two companies have seen some success with local event and digital marketing businesses that are run through their newspapers.
Between online and digital media outlets, more than 3,000 jobs have been lost this year with more losses expected.