Erik Gunn

What Does GateHouse Deal Mean for the Journal Sentinel?

Layoffs? Cost cutting? Consolidation?

By , Wisconsin Examiner - Aug 8th, 2019 11:36 am
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Milwaukee Journal Sentinel Headquarters

Milwaukee Journal Sentinel Headquarters

It became official Monday: Gannett and New Media Investment Group, the parent company of GateHouse Media, will merge to form the largest newspaper chain in the nation, owning one of every six newspapers in the country, including Wisconsin’s largest daily newspaper and 10 more in the state.

But what that means for the newsroom at the Milwaukee Journal Sentinel and Gannett’s 10 other Wisconsin papers remains uncertain.

“We have yet to see the purchase agreement,” Tom Silverstein, president of the Local 51 of the News Guild, the union representing Journal Sentinel newsroom employees, told the Wisconsin Examiner. “There are often clues in there about how the two sides plan to go about the merger. There hasn’t been a lot released on the merger, but they’ve promised to provide more information in the days, weeks and months to come.”

The possibility of additional cuts to the Journal Sentinel staff, which is close to one-quarter the size it was when the newspaper was formed from the merger of the morning Milwaukee Sentinel and evening Milwaukee Journal in 1995, is on many minds, however.

Gannett is the larger of the two companies, with $2.92 billion in revenue in 2018 to GateHouse’s $1.53 billion. GateHouse owns more papers — 451, including dailies, weeklies and others — while Gannett owns 216, of which 109 are dailies. But overall circulation is higher at Gannett. With the merger, the combined companies’ circulation of 8.7 million will be more than five times that of the nearest competitor, the McClatchy chain.

The merger announcement forecast anticipated savings of $275 million to $300 million a year over the first two years from “increased scale of the new organization, sharing of best practices, leveraging existing infrastructure, facility rationalization and other judicious cost reductions,” a report in Gannett-owned USA Today said.

Both Gannett and GateHouse have gone through repeated rounds of staff reductions over the last several years, reflecting a trend across the newspaper industry, and GateHouse has a particular reputation for aggressive staff reductions after acquiring new properties.

GateHouse also has a pattern of consolidating publications it owns that are in close proximity to each other. Although there have been no announcements, the cluster of papers it owns in the Fox Valley would appear to be a rich target for such a strategy.

Ken Doctor, who writes “Newsonomics” for NiemanLab at Harvard’s Nieman Foundation, observed Sunday in his column that the inclusion of private equity financing, provided through Apollo Global Management, means “limiting how much any cost savings can be invested into newspapers’ future. Financing in the merger must both pay off Gannett shareholders partly in cash and essentially refinance both companies’ debt.”

Silverstein alluded to the prospect of further cuts. “All we can tell our members is that we’ve been through this before and we won’t be alone,” he said. “There are numerous Gannett and GateHouse Guild papers involved in the merger, and we’re going to continue to stress that we can’t do more with less.

“We have to keep our newsrooms staffed and keep the company focused on good journalism instead of quarterly profits. In Milwaukee, we’re starting to make headway with digital subscription numbers and we’re not going to continue in that direction if we cut staff again.”

Merger details

  • The new company will take the Gannett name and headquarters in McLean, Va.
  • The top job at the new company goes to Mike Reed, CEO of New Media Investment Group.
  • The cash and stock transaction was valued at $1.38 billion, with a new private equity loan of $1.792 billion providing financing.
  • Shareholders of New Media will own 50.5% of the new company in the transaction, while Gannett shareholders will own 49.5%.

Reprinted with permission of Wisconsin Examiner

One thought on “What Does GateHouse Deal Mean for the Journal Sentinel?”

  1. Barb- West Bend says:

    This isn’t good for readers. We will get less local, in-depth investigative reporting. More generic news, and more ”soap-opera” sensational news.

    Thank goodness for Urban Milwaukee and the Wisconsin Examiner with their excellent investigative articles.

    NPR and PBS are also excellent sources for news.

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