Two of the largest U.S. newspaper companies, GateHouse Media and Gannett, have agreed to combine for roughly $1.4 billion on Monday.
What We Know:
- GateHouse Media (a fast-growing chain backed by an investment firm) is buying USA Today owner Gannett. Both companies say they are committed to “journalistic excellence” — while also receiving $300 million in cut costs every year.
- Local newspapers have been have been trying to keep up with the switch to the digital age of reporting while bigger corporations like “The New York Times” have successfully added more digital subscribers and content. Hundreds of local papers have closed and newsrooms have slashed jobs.
- With a print circulation of 8.7 million, this merger makes the company the largest newspaper company by far. A study by the University of North Carolina stated that the U.S. has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research, and layoffs have continued this year.
- Both GateHouse and Gannett are known to buy other papers and this merger will help cut costs (via newsroom layoffs and other measures) as well as centralize operations. The combined company would have more than 260 daily papers in the U.S. along with more than 300 weeklies.
- However, this merger will not magically solve all of their problems internally within their new company. Butler University journalism professor Nancy Whitmore stated “I don’t think, just by these companies merging, they’re going to somehow magically find a new business model, make everything all right and produce robust journalism at a local level…Still, a bigger, combined newspaper company could sell more national ads and boost their ad revenue.”
- However, GateHouse’s owner, New Media, is taking on new debt to get the deal done — a $1.8 billion loan from private equity firm Apollo Global Management to eventually be paid back, adding more to the combined debt the companies now have.
- The combined company would take the Gannett name and keep its headquarters in Gannett’s current home of McLean, Virginia.
This is going to take the newspaper industry by storm.