GateHouse Makes More Staffing Cuts After Merger Announcement

Will Gannett and GateHouse-owned newspapers expect more cuts and consolidations?

A week after announcing a merger with Gannett in a deal valued at $1.4 billion, GateHouse Media cuts close to 20 reporters at least four papers, reports Poynter. Publishers Daily says the newsroom cuts affected The Oklahoman, Palm Beach Post, Cape Cod Times and the Worcester Telegram and Gazette. The Oklahoman lost 14 employees, including five from the newsroom. GateHouse purchased The Oklahoman last fall, laying off 37 employees, including 15 from the newsroom, according to Poynter.

This is the third round of layoffs for GateHouse this year. In February, GateHouse laid off at least 60 employees, a few weeks after the companys $30 million acquisition of 10 Indiana papers from Schurz Communications.

In May, GateHouse laid off 200 at least 60 different newsrooms in Florida, Pennsylvania, Texas, Ohio, California and Massachusetts. Mike Reed, CEO of GateHouse parent New Media Investment Group, called the layoffs a small restructuring compared to the companys total employee base of 11,000.

The May layoffs came after a disappointing first quarter 2019 for the period ended March 31, 2019. During New Medias fiscal first quarter, they reported total revenue of $387.6 million, an operating loss of $1.4 million and a net loss of $9.1 million. During the prior year quarter, the company had revenue of $340.8 million, operating income of $7.1 million and a net loss of $700,000. Operating costs grew to $229.5 million, compared to $196.4 million in fiscal Q1 2018. Despite the losses, the company declared a dividend of $0.38 per share of common stock.

In a detailed report called The Expanding News Desert by UNC Center for Innovation and Sustainability in Local Media, Penelope Muse Abertnathy, Knight Chair in Journalism and Digital Media Ethics, does a thorough analysis of New Media and GateHouse.

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GateHouse has been on a shopping spree, buying papers like the Erie Times-News, The Columbus Dispatch, the Rochester Business Journal, the Fayetteville Observer and the Pueblo Chieftain. By the end of 2018, New Media and GateHouse owned 451 papers with total circulation of 4.3 million by the end of 2018. Since then, theyve added the Indiana papers to the mix. The companys modus operandi is acquiring small papers and cutting costs to make them profitability. In some cases, this has been through layoffs, including veteran journalists and columnists, reducing operational expenses and centralizing operations. Essentially, GateHouse is asking each publication to do more with less.

Insider Take:

The big question is whether Gannett- and GateHouse-owned media organizations should be concerned about additional layoffs and what a combined organization will look like. When the merger was announced, the companies said they expected to identify cost savings of $275 million to $300 million annually within the first two years. That most assuredly will include more staff cuts. Sixty layoffs here and 20 there will not get the companies to those cost synergies.

As for a new Gannett (the agreed-upon name after the merger), it is hard to say what the American media landscape will look like. However, as the two largest newspaper chains in the nation, it will likely have a significant impact on print and digital journalism. We will see even fewer local media outlets, more general and less specialized reporting, and more regional reporting and consolidated operations. What might be a profit center and near monopoly to the combined GateHouse-Gannett could change American journalism – and the newspaper business model – forever.