GateHouse Media, one of the largest newspaper publishers in the United States, is laying off as many as 200 employees in a company reorganization. Of those 200 or so employees, a large majority of non-reporting positions will be moved to reporting positions, said Mike Reed, CEO of GateHouse parent New Media Investment Group (NYSE: NEWM), in an interview with Poynter.
We are doing a small restructuring – at least thats what I would call it – that Im sure will be misreported. We have 11,000 employees. This involves a couple of hundred, Reed told Poynter.
In an internal memo shared with Business Insider, GateHouse CEO Kirk Davis said, I dont take these reductions lightly; many committed colleagues, who played important roles in our company, were impacted. A painful reality is that difficult decisions must be made to enable the company to invest in the future.
SUBSCRIPTION SHOW 2020 (Online)
Learn how to convert, retain, and scale your
Business Insider reports that, so far, at least 37 newsrooms have been impacted. Following Business Insiders story on the layoffs, Mike Reed sent this memo to employees which was shared on Twitter by Andrew Pantazi (@APantazi), a reporter for the Florida Times-Union, a GateHouse newspaper. Pantazi has been tracking the layoffs as they were reported on Twitter.
Poynter shared some of the layoff numbers. Here is a small sampling:
- The Columbus (Ohio) Dispatch – six positions
- The (Lakeland, Florida) Ledger – five positions including both assistant managing editors
- The Daytona Beach (Florida) News-Journal – six positions
- (Worcester, Massachusetts) Telegram & Gazette – six positions
- The (Spartanburg, South Carolina) Herald-Journal – three positions
This is the second round of layoffs this year for GateHouse, reports Business Insider. After the companys $30 million acquisition of Schurz Communications in the first quarter, the company laid off another 60 employees. The acquisition included 10 daily newspapers, nine weeklies and 17 niche publications across Indiana, South Dakota, Michigan, Maryland and Pennsylvania, with average daily circulation of 105,000 and Sunday circulation of 94,000.
As of March 2019, GateHouse published 156 daily newspapers and 464 community publications in more than 615 local markets in 39 states. The company estimates its newspapers reach more than 22 million people every week. The company also owns UpCurve, UpCurve Cloud, ThriveHive and the Center for News & Design in Austin, Texas.
News of the layoffs comes three weeks after parent New Media Investment Group announced its first quarter 2019 results which included total revenue of $387.6 million. The company also reported a net loss of $9.1 million, compared to a net loss of $0.7 million in the first quarter of 2018.
Despite the results, the board of directors declared a cash dividend of $0.38 per share of common stock to shareholders of record as of May 22. Reed spoke optimistically of the first quarter results in a May 2 news release.
Our results this quarter reflect both solid performance in our growth businesses and continued progress in stabilizing our traditional print business. Our revenue of $387.6 million was up 13.7% over the prior year, Reed said. Our growth businesses, UpCurve and GateHouse Live, accounted for $34.9 million of total revenue, an increase of 27.3% compared to last year. We are excited about the continued opportunity for growth in both of these businesses for 2019 and beyond.
In related news, last Thursday New Media Investment held its annual shareholders meeting. In addition to other business, the majority of shareholders voted against an executive pay plan for GateHouse CEO Kirk Davis, reports the Boston Business Journal. In 2018, that compensation package was worth $1.7 million, including $550,000 in salary, a $400,000 bonus and restricted stock valued at $750,000.
It seems investors are losing faith in the company too. On May 29, 2018, New Media Investment Group stock was valued at $16.86 per share. As of 4:35 p.m. EDT on May 24, stock was valued at $9.00 per share, 46.6% drop.
As one of the largest publishers in the United States, GateHouse Media has an opportunity to lead change in the publishing industry with quality local journalism. However, with repeated layoffs at community papers across the country, it is gutting what it professes to value. They continue to ask newsrooms to do more with less, and now they are asking non-reporting positions to become reporting positions to fill the gaps. Reporting and newsroom support are two valuable but very different skillsets. It must be a bitter pill for laid off employees to swallow when they see million-dollar payouts for their CEO, a $30 million acquisition and a $9.1 million first quarter loss. Who is investing in them?