Two of the largest US newspaper companies have agreed to combine for about US$1.4 billion, creating a new industry giant that hopes to manage the crisis of print’s decline through sheer size.
GateHouse Media Inc, a fast-growing chain backed by an investment firm, is buying USA Today owner Gannett Co, promising to speed up a digital transformation as readers shift online.
The companies say they are committed to “journalistic excellence” — while also cutting US$300 million in costs every year.
The resulting company would be the largest US newspaper company by far, with a print circulation of 8.7 million, 7 million more than the new No. 2, McClatchy Co, according to media expert Ken Doctor.
Local papers, faced with the complex and expensive process of building digital businesses to replace declines in print advertisements and circulation, have been consolidating madly in recent years.
Although papers with national readerships like the New York Times and the Washington Post have had success adding digital subscribers, local papers with local readerships find it much more difficult. Hundreds of such papers have closed, and newsrooms have slashed jobs.
According to a study by the University of North Carolina, the US has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to last year, according to Pew Research, and layoffs have continued this year.
GateHouse and Gannett are known as buyers of other papers. The combined company would have more than 260 daily papers in the US along with more than 300 weeklies.
GateHouse’s owner, New Media Investment Group Inc, is taking on new debt to get the deal done — a US$1.8 billion loan from private equity firm Apollo Global Management LLC. That will have to be paid back.
“We’ve been hearing for years and years about the glories of cost efficiencies,” said Northeastern University professor Dan Kennedy, a proponent of local ownership for media outlets.
However, it is unclear, based on past media mergers, whether those savings will benefit the papers, its employees or their readers, he said.
The combined company would take the Gannett name and keep its headquarters in Gannett’s current home of McLean, Virginia.
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