The Department of Justice has given New Media Investment Group, parent of GateHouse Media, and Gannett Co., Inc., owner of more than 100 local media brands, the green light to merge in a cash and stock deal worth $1.4 billion, reports Fox Business. New Media is buying Gannett for $12.06 per share. This is a premium over the Gannett stock price of $10.26 per share as of 4:38 p.m. EDT yesterday.
The companies are still awaiting approval from European regulators and stockholders. New Media and Gannett both have special meetings to vote on deal set for November 14. Boards of both companies unanimously approved the deal, which is expected to close by the end of 2019. Once the merger is finalized, Gannett shareholders will own approximately 49.5% of the new company, and New Media shareholders will hold the remaining 50.5%.
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The combined company, which will retain the Gannett name, will be the largest newspaper company in the United States with print circulation of about 8.7 million in 265 markets. It will be based in McLean, Virginia where Gannett headquarters are currently based.
When the merger agreement was announced in August, J. Jeffrey Louis, chairman of the Gannett board, said, We see numerous opportunities to leverage the combined companys enhanced scale and financial strength to continue to drive growth in the digital future. Importantly, we have found in New Media a strong partner and cultural fit for Gannett as we continue delivering on a shared commitment to journalistic excellence for the communities we serve.
Michael Reed, the chairman and CEO of New Media, will remain chairman of the board and CEO of the new Gannett, while Gannetts CEO Paul Bascobert will serve as CEO of the combined companys operating subsidiary. In addition to Reed, New Media will contribute five independent members to the new board and Gannett will have three.
We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism. Gannett is an innovative, digitally-focused media and marketing solutions company with well-known brands worldwide, said Reed in the August announcement. Uniting our talented employees and complementary portfolios will enable us to expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations.
In the media world, what does this merger really mean? It means that GateHouse and Gannett are likely to continue their sometimes-drastic cost-cutting measures, laying off staff, and eliminating redundancies. They will also take advantage of operating efficiencies, as any merging companies would do, but those efficiencies are likely to also result in job cuts.
Newsonomics Ken Doctor predicts the megamerger will result in significant cuts, but not necessarily from newsrooms. They will be cuts on the business side of the house.
More than 10% 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. How big a cut will that be? If the headcount reduction reaches 3,000 – which would be 12% of the workforce – thats the equivalent of McClatchys entire employee count, said Doctor in an October 9 column for Nieman Lab.
Whether the new cuts will come from newsrooms or not, GateHouse and Gannett have been gutting their newsrooms for years, scaling back their local coverage and letting long-time veteran journalists go to stay afloat. It seems likely that the new Gannett will be looking to prove shareholder value early, even if that means sacrificing quality.
Sigh. What else can we say? Job cuts. Slashing of local coverage. Behemoth media company with too much power and control. This merger could very well change the media landscape as we know it today – that it is already vastly different than the one we grew up with. While this merger might make sense for Gannett and GateHouse, it is terrifying for the rest of us, whether we are news consumers, on the business side of media or on the newsroom side of media.