GateHouse Media to Buy The Boston Herald for $4.5 Million in Cash

On Friday, Boston Herald publisher Patrick J. Purcell told staff that GateHouse Media LLC would acquire The Herald and its assets for $4.5 million

Subscription News: GateHouse Media to Buy The Boston Herald for $4.5 Million in Cash

Source: Boston Herald

On Friday, Boston Herald publisher Patrick J. Purcell told staff that GateHouse Media LLC would acquire The Herald and its assets for $4.5 million in cash, subject to court approval. To maximize the company’s value, Boston Herald Inc. (BHI) filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Delaware to maximize the company’s value.

The court will require BHI to hold an auction to allow other potential buyers the opportunity to bid on the company. According to The Boston Globe, filing bankruptcy will allow BHI to renegotiate its debts.

In the bankruptcy filing, BHI reported liabilities of $31 million, primarily pension and severance liabilities, and assets of $6 million, primarily from cash and accounts receivable.

Subscription News: GateHouse Media to Buy The Boston Herald for $4.5 Million in Cash

Source: GateHouse Media

The Herald cited competition from alternative news sources, a general decline in newspaper advertising spending, and competition from online advertising alternatives as reasons for the decline in revenue. To try to mitigate this revenue loss, the newspaper has tried to curb spending, cutting back on staff, reducing expenses, and diversifying operations and revenue sources to grow readership.

‘Despite the Debtors’ best efforts to increase revenues and decrease expenses while continuing to maintain the highest quality product, the Debtors have been unable to fully achieve their financial goals to such a degree that would enable them to continue to operate under their current capital structure and comply with their current pension and employment obligations,’ said BHI in the bankruptcy filing.

‘The Debtors believe that a sale of their assets and operations will maximize the potential return for creditors while ensuring the ongoing viability of their news and information products and the ongoing employment of hundreds of people,’ the filing said.

Founded in 1846, The Boston Herald is one of the oldest daily newspapers in the United States. In 1982, Rupert Murdoch bought the newspaper and, in 1984, named Purcell the publisher. Purcell bought the newspaper from Murdoch in 1994.

Subscription News: GateHouse Media to Buy The Boston Herald for $4.5 Million in Cash

Source: Boston Herald

In a letter to employees, Purcell said, ‘I am very proud of the spectacular management team with whom I have worked hand in hand over the years. And I am equally as proud of the excellent staff in all areas of our company who have worked tirelessly to make the Boston Herald a relevant and respected provider of local and regional news for Boston and the area.’

‘Boston is a better city for the Herald’s unique and fearless local reporting. Because of all of you, we are well known for our influential political, community, business and sports coverage across the region and beyond,’ Purcell said.

‘In addition to great news and advertising coverage for our dedicated readers over the years, all I ever wanted to do was keep the Boston Herald alive. And it is with this pending sale that I am able to do that in these difficult newspapering times,’ added Purcell.

Subscription News: GateHouse Media to Buy The Boston Herald for $4.5 Million in Cash

Source: Boston Herald

The Herald reported that BHI has struggled to fund pension and retirement liabilities while revenue has declined. At its peak in 2000, the company had 900 employees. It now has 240 employees with more than half of them working in the newsroom. According to The Boston Globe, GateHouse will keep approximately 175 of those employees.

As of September 2017, GateHouse Media owned 130 daily newspapers with total paid circulation of about 1.4 million. They also own more than 640 communication publications with a weekly reach of about 21 million. They own publications in 36 states and in 540 markets.

Insider Take:

Another newspaper stalwart has failed to thrive in the ever-evolving digital news age. This is a sad situation for The Herald, its history, its employees and its readers, but it is a business necessity when money going out exceeds money coming in. We hate to see this happen with any news organization, and unfortunately, this will continue to happen as media organizations try to find the right business model to sustain themselves.

 

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