Shareholders cleared the way for the New Media Investment Group and today's US owner Gannett on Thursday to jointly sign a deal that will create the largest US media company in print distribution the largest online news audience nationwide.
In separate votes, shareholders of each company approved New Media's $ 1
The combined company is called Gannett and will have over 260 daily publications as well as hundreds of weekly magazines. The new company will reach an average monthly online audience of more than 145 million unique visitors, according to data computor Comscore.
The deal "gives us a much broader platform to build our digital business and help each one of them" Local markets are driving growth for us from a digital perspective, "said Paul Bascobert, CEO of Gannett, on Thursday at the shareholder meeting of the company on which the voting results were announced. "Our commitment to building these brands is even greater than ever."
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The deal is expected to close on Tuesday, November 19 , "subject to fulfillment of customary closing conditions," New Media said in a statement.
Success will depend on the ability to reduce overlapping costs and that what is termed a "digital transformation" based on higher revenues from digital products and marketing services. The new Gannett aims to reduce costs per year by $ 275 to $ 300 million within 18 to 24 months, in a variety of areas, including facilities, business functions and messaging
"I think 300 Millions of dollars are a small sum for the cost savings, "said Newsonomics media analyst Ken Doctor said. "The number will be even higher."
Doug Arthur, an analyst at Huber Research Partners, Connecticut, estimates that annual cost savings of $ 245 million are possible from the third year the new company is founded.
"Achieving economies of scale in any case" and "generating a lot of savings in corporate offices" and print sites, "he said, but he does not believe the company will achieve its cost savings goal.
Mike Reed, CEO of New Media , who will be CEO of the new Gannett, told investors on October 31: "We look great on the synergies." 19659003] "We've worked intensively on integration planning and are now even more confident that we can deliver the high levels of savings he said.
Gannett's current CEO, Bascobert, will retain this title as head of the operating subsidiary of the new company, also known as Gannett, and he said he was Confident to reach the savings target.
This is crucial as the Apollo loan could be annoying at an interest rate of 11.5% if it does not ht is repaid quickly, said Tim Hynes, head of the North American debt service Debwire.
"The whole goal is to get rid of that," he said.
Under the agreement, Apollo has the right to appoint two observers to the company's board of directors and appoint one or two voting directors if the company's debts exceed its profits too much.
"If the management team disobeys its plans, it will become more self-confident over time," Hynes said of Apollo.
Apollo, however, believes that the new Gannett can afford to settle the debt on time or potentially, according to data from persons with knowledge of the Apollo financing agreement who spoke on condition of anonymity because they were not authorized to publicly speak, early without prepayment penalty.
In addition to its US national presence TODAY, the new Gannett will operate news organizations in 47 states and Guam, as well as in the United Kingdom.
"The combined operations will have a broad local-to-national network of incredibly talented, seasoned journalists who can continue to deliver unique, award-winning content to local and national audiences," Bascobert told investors in a conference call on April 4 November.
For the new Gannett, the biggest challenge will be lifting its continuation of the print decline with digital revenue.
In recent years, Gannett has pursued a unified journalism and business strategy by promoting the USA TODAY Network, which includes all US publications. Under this brand, the company has won several Pulitzer Prizes, broadening its investigative reporting and joint journalism resources. New Media, which acts as Gatehouse Media, has also expanded its investigation team.
Gannett and New Media have both cut costs in recent years and made a number of acquisitions to increase sales and gain in volume Digital Advertising and consumer revenue were less lucrative than in print.
New Media and Gannett were able to successfully add online subscriptions early on, which are considered key to replacing lost subscriptions. In the third quarter, Gannett's digital subscriptions increased 27% year-on-year to 607,000, while New Media's digital subscriptions increased 65% to 217,000 over the same period. Michael Silberman, Senior Vice President, Strategy for Subscription Commerce and Tech Providers Piano, which counts New Media as a customer.
"In the early days, the focus will be on integration and cost savings, as well as on the key to success." Silberman, former general manager of digital media at New York Media's parent company, New York, will eventually see how and much of the cost savings can ultimately be channeled back into the product itself and the local communities. "Magazine said that the question from a subscription perspective is whether these investments are sufficient to" produce news worth paying
In addition to USA TODAY, Gannett owns 109 local media assets operating as the USA TODAY Network – including the Arizona Republic, Detroit Free Press, Milwaukee Journal Sentinel, and Indianapolis Star, as well as the UK-based Newsquest Media Group and digital marketing resources such as WordStream.
New Media owns 152 daily publications – including The Palm Beach Post and The Columbus Dispatch, The Oklahoman and Austin American-Statesman – as well as 284 weekly newspapers that operate as GateHouse Media and digital marketing like ThriveHive.
Together, the new company's publications and digital marketing services will be under pressure to curb revenue declines. Arthur said he believes the combined company's sales projections are "way too optimistic" due to the continued decline in pressure.
"I do not think this will be a delay," he said.
But an area for growth is events in which the new media conduct a particularly strong business. Another example is digital marketing services, where Gannett's recently appointed CEO, Bascobert, is developing a growth strategy.
According to Dr. Gannett's success in building the USA TODAY Network, which shares journalism resources and national advertisements, is also critical.  "Digitally, the USA TODAY Network is one of the reasons for this deal," Doctor said. "They're big enough to run a good amount of national digital business, and the added GateHouse real estate gives them more scalability."
New Media shareholders will own 50.5% of the combined company, while Gannett shareholders own 49.5%. The company will be based at Gannett's headquarters in McLean, Virginia.
Gannett had approximately 16,980 employees at the end of 2018, while GateHouse employed approximately 10,638 people according to the securities submitted.
The nine-man board of the new Gannett will consist of Reed and five new media representatives and three Gannett representatives.
As part of the merger, Fortress Investment Group, the operator of the New Media Investment Group, will continue to operate the combined company. Fortress, which belongs to the Japanese conglomerate SoftBank, has negotiated a liquidation fee at the end of 2021 to resign.
Accurate voting results were not immediately available, but Mike Reed, CEO for New Media, said about 99% of 75% of votes failed. Shareholders of the new media who voted were in favor of the deal.
At least 82% of Gannett's shares were voted in favor of the deal, said Gannett chairman J. Jeffry Louis.
Contribution: Sarah Taddeo  Follow US TODAY reporter Nathan Bomey on Twitter @ NathanBomey .