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Home / Business / The merger of Gannett and GateHouse further reduces the cost of the news

The merger of Gannett and GateHouse further reduces the cost of the news




NEW YORK (AP) – Just over a week after announcing Gannett's $ 1.4 billion acquisition, GateHouse Media again dismissed journalists and other staff in its newspapers GateHouse and Gannett assume the merger It will enable GateHouse to accelerate the transition of its newspapers to digital media while paying large sums borrowed from GateHouse to finance the acquisition. However, it is unclear how exactly this should happen.

Last week, more than two dozen newsroom workers and other staff members were reportedly released in ten newspapers, from Providence, Rhode Island, to Brockton, Massachusetts, to Oklahoma City. The Associated Press confirmed several of these layoffs among affected employees, others in their newsrooms or union representatives. GateHouse did not announce the downsizing and neither the company nor its owner New Media commented on this story.


Gannett also declined to comment, but referred to earlier public statements by Mike Reed, CEO of New Media The merged company will "not only preserve quality journalism, but even improve it".



Recent layoffs may not be directly related to the merger. GateHouse reportedly fired dozens of employees in May and this winter. The earnings reports show that sales decline as the impact of acquisitions ceases.

Further cuts in the newsroom show that "GateHouse has no vision for revenue growth but only for cost reductions," said Andrew Pantazi, a Florida Times-Union reporter, a GateHouse newspaper in Jacksonville, Florida, and head of one union chapter. "Eventually they will run out of costs."

Many in the newsrooms and communities dependent on these newspapers mourn the changes caused by GateHouse's earlier cutbacks. Others claim that both readers and advertisers have failed newspapers for more than a decade, and that belonging to a larger chain is the only way to survive for smaller newspapers that often have difficulty migrating their publications online.

In the Past For fifteen years, GateHouse has closed five dailies and closed or merged dozens of weeklies, according to The Expanding News Desert, a study by the University of North Carolina on local news coverage.


GateHouse, whose leadership includes current affairs, and former Associated Press board members seek to reassure employees and investors. The merger of the two companies will result in annual cost reductions of approximately $ 300 million, and promises multiple digital revenue streams to maintain the merged entity and continue its commitment to quality journalism.

Some argue that such consolidation is key to saving local journalism, which also competes with TV and Facebook for people's attention. "Ultimately, they support hundreds of individual publications that have no chance to stand alone," said David Chavern, CEO of the news publishing group News Media Alliance.

But first, GateHouse must reduce debt, including $ 1.8 billion, borrowed from private equity firm Apollo at a high interest rate to complete the Gannett business. It has also promised to maintain a shareholder dividend and expects an increase.

GateHouse has left the competition behind in adapting to a post-print world. The digital business accounts for only 12% of sales, compared to 36% for Gannett. These digital earnings include online subscriptions and advertisements on newspaper websites as well as revenues from separate companies such as online marketing and productivity tools for small businesses. Reed Phillips, managing partner of investment bank Oaklins DeSilva + Phillips, said: "The trend line for newspapers is leading to a sustained Erosion of revenue, "he said, which is likely to lead to further reductions in the newsroom

According to Pew Research, newsroom staffing levels in US newspapers dropped 47% from 72,000 in 2004 to 38,000 in 2018. The edition has fallen at the same time. Pew estimates that weekday time has dropped nearly 48% to 28.6 million over the same period.

While some national publications such as The Washington Post, The New York Times, and The Wall Street Journal have been successful online, the situation is quite different with smaller local newspapers across the country.

After GateHouse has bought a newspaper, cost reductions usually follow. Features such as page design and copy processing are moved to remote hubs, which do the work for multiple newspapers. (Other news chains also have hubs for editing and designing pages.) Critics say that media companies that are supported by financial firms like GateHouse are particularly aggressive when it comes to closing or selling newspapers in decline.

Publishing in Massachusetts, the second largest city since 1866, has been operated by four owners over the past decade, including GateHouse, which acquired it in early 2015.

In total, 25 reporters, editors and photographers from 47 countries have shrunk in newsrooms during its four years under GateHouse, said Rick Eggleston, editor and head of the local union. "The mantra at GateHouse does more with less."

Less reporters from outside Boston who asked questions from state officials "hurt the rest of the state," said Tim Murray, president of the Worcester Chamber of Commerce and former lieutenant governor of the state. "It's hard to hold people accountable."

Despite the cost reduction, GateHouse newspapers are trying to attract readers who are increasingly receiving news on their phones. The Cape Cod Times of Hyannis, Massachusetts, and Columbus Dispatch of Ohio have been cited by the editorial magazine Editor & Publisher as "10 Newspapers That It Right," citing innovative digital projects that have increased readership.

The Cape So Cod Paper launched a program in which readers were invited to submit proposals for investigative stories. Similarly, The Fayetteville Observer has launched a new feature in North Carolina that asks readers to answer a recent question they ask each Sunday.

Observer, acquired by GateHouse in 2016, has problems. Buyouts followed the acquisition, and last week, GateHouse dismissed the publisher of the newspaper and transferred that responsibility to an executive that already oversaw four other newspapers in North Carolina.

The Cape Cod newspaper, meanwhile, released court reporter Wheeler Cowperthwaite last week. Cowperthwaite said GateHouse had only offered him a $ 400 compensation – which, if he had agreed, would have prevented him from applying to GateHouse newspapers for two years.

He refused.


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