Journal Sentinel Will Lose All Local Control
Gannett purchase will make it part of national chain, integrated into USA Today-centered operation.
Just months after it was created, and before it even gave birth to its first annual report, Journal Media Group [NYSE:JMG] announced it was being acquired for $280 million by Gannett, a nationwide publishing giant.
Judging from the statements by Journal management, you’d think the Milwaukee Journal Sentinel and our city would continue to have a strong role in the new corporate heirarchy. Don’t count on it.
That has not been the history of Gannett, the firm that brought us USA Today and is known for relentless cost-saving measures and homogenized news outlets The extent and severity of its layoffs (1,400 in 2009 alone, with more since) are legendary in an industry where layoffs are commonplace.
Still the management at 333 W. State Street sounds upbeat. Tim Stautberg, president and chief executive officer of Journal Media Group said, “Both Journal Media Group and Gannett are guided by a vision of strengthening lives and communities, and we’ll be better stewards in our local markets by sharing ideas, content and best practices among our new and larger family.” Whatever that means.
Although the paper’s story mentioned that Milwaukee will lose a corporate headquarters as a result of the purchase, Journal Sentinel publisher Betsy Brenner, in her statement, was emphatic that Milwaukee will not be subsumed into Gannett, but would be an independent outpost:
“We’re still here. We make our decisions and run our newsrooms out of Milwaukee, not anywhere else. We serve our advertisers and subscribers out of Milwaukee, not anywhere else. And we support causes that are important to our community from this building. So all of that, it’s not going to change.”
Stautberg added that “at the end of the day here in Milwaukee, it’s going to be Betsy Brenner, (Editor) George Stanley — the local leadership — that’s going to be making the decisions about how to operate and run this newspaper.”
This is highly unlikely, and it is doubtful that Stautberg would make the same confident statement to the company’s 14 other papers, all in much smaller markets [see list at end of story].
Chances are the Journal Sentinel and the others will soon resemble Gannett’s existing Wisconsin papers and websites in Sheboygan, Fond du Lac, Manitowoc, Appleton, Green Bay, Wisconsin Rapids, Stevens Point, Marshfield, Oshkosh and Wausau. They all look alike. They all look like USA Today.
Jim Romenesko, a Milwaukee native who is a nationally respected observer of journalism tells me:
“While some newspaper companies say they’re committed to print, Gannett execs have said they realize the end of print is probably near, and all efforts should be on digital. I expect the Journal Sentinel website will soon switch to the Gannett/USA Today template and constantly remind readers that the Milwaukee product is part of a national chain – no longer homegrown.”
In fact, Gannett, in an SEC filing today says as much: “JMG’s local brands will leverage Gannett’s content and national USA TODAY brand and have their content integrated onto Gannett’s Digital Platform.”
I think this means we can say goodbye to the Green Sheet again.
Big Bucks for Corporate Officers
Stautenberg has 94,301 restricted shares of Journal Media Group stock, and 55,779 shares he owns directly. In mergers, restricted stock often becomes immediately vested, so he likely has about 150,000 shares worth $12 each, or about $1.8 million, at zero out-of-pocket cost. Brenner has 38,323 restricted shares, and 45,245 fully vested shares, together worth about $1 million.
Marriage of Sports Departments Could Provide Synergy, Conflict, Loss of Jobs
Gannett also publishes Packers News, relying heavily on the reportage by the sports desk of the Green Bay Press Gazette. No professional sports team is located in a smaller city, so the Press Gazette’s sports department is likely larger than those in other similar sized cities. The other Gannett papers rely on the Gazette reporters and columnists for their Packers coverage it appears, judging from a random sampling of the bylines of the writers and columnists.
The Journal Sentinel produces Packers Plus, and has its own sports department covering the Packers. It will be interesting to see how the new corporate overlord will take to having a surfeit of football reporters on its staff, once the merger takes place. It is highly doubtful the paper will retain its stand-alone Packers staff. Something’s got to give.
Valuable Real Estate Included
So what does $280 million buy Gannett? The list of newspapers below is just a portion of Gannett’s new stake.
The Journal Media Group owns some significant real estate assets in Wisconsin and in the other states in which it does business. The value of the company’s real estate may represent a considerable portion of the purchase price, since the intangible and goodwill assets of news organizations are virtually worthless today.
A quick calculation shows the assessed value of Journal real estate in the Milwaukee area totals some $30 million. That’s more than ten per cent of the amount Gannett paid for the entire company.
The Journal Sentinel headquarters downtown is assessed at about $9 million. An adjacent property, home to Major Goolsby’s tavern is assessed at over $1 million. The Journal Sentinel printing plant in West Milwaukee, located on 41 acres, is valued at $20 million.
The downtown headquarters, which is nearly vacant and functionally obsolete, is considered to be a prime development site in Milwaukee, and had been mentioned as a possible location for the arena.
It is possible that the publishing company’s buildings in its other markets, including high-growth states like Texas, California and Florida, may also face some of the challenges of the Journal building and could be sold for development, possibly at a hefty premium to assessed valuation.
In addition to The Milwaukee Journal Sentinel, Journal Media Group owns:
- (Redding CA) Record-Searchlight
- Ventura County (CA) Star
- Naples (FL) Daily News
- Treasure Coast (FL) Newspapers
- The Evansville Courier & Press in Indiana
- The (Henderson KY) Gleane
- (Anderson SC) Independent Mail
- Knoxville (TN) News Sentinel
- The (Memphis TN) Commercial Appeal
- Abilene (TX) Reporter-News
- Corpus Christi (TX) Caller-Times
- San Angelo (TX) Standard-Times
- Wichita Falls (TX) Times Record News
- Kitsap (WA) Sun.