When GateHouse and its parent company, New Media Investment, completed the deal Monday to acquire Gannett, the expectation was that the GateHouse crew would be running the new company, instituting their systems across the board.
Not so fast.
Two of the top three executives of the merged company (to be called Gannett rather than GateHouse) are from Gannett, including a new operating CEO from outside the industry.
And now that the agreement is public, several executives who I respect tell me that they do not foresee scorched earth for the Gannett papers.
George Stanley, editor of the Milwaukee Journal Sentinel, one of Gannett’s largest and most decorated metros, wrote me in an email exchange:
“I tend to be optimistic because each new leadership team has placed a high value on doing great reporting that’s unavailable from other sources and worth the price of a subscription. They’ve encouraged us to continue to be us. Experienced, professional media executives will be in charge of the new Gannett, running it as an independent news company, seeking to build out a business model that supports the reporting of local news essential to our democracy. They’re saying the right things in a way that makes sense. They’re emphasizing the unique combination of national with local markets. They’re looking for growth and see consumer revenue — reader revenue — as a key growth area.”
Like other metro editors — including those at independent papers like the Boston Globe, Minneapolis Star Tribune and Seattle Times — Stanley said he thinks the Journal Sentinel is making good progress on its paid digital subscription base, which could be the cornerstone of stronger business results.
“We’ve learned — thanks to best practices shared by Lenfest, API, Poynter and our Table Stakes colleagues — how important it is to serve and gain that next generation of subscribers. Since we launched our digital circulation growth initiative two years ago, we’ve nearly tripled our digital subscriptions.
“Folks who say digital subscriptions will only work at the national level, due to the success of The (Washington) Post and (The New York) Times, aren’t considering how recently regional news organizations began focusing on growing them — we’re several years behind the Times and Post but on the same trajectory. The Boston Globe started from scratch a few years before us and now makes enough money through digital subscriptions to support one of the nation’s best regional newsrooms.”
Stanley stayed on when Gannett acquired the Journal Sentinel in April 2016. Its staff is now smaller than then, but the Journal Sentinel has not lost its investigative bite. Stanley also speaks with some authority for the industry as vice chair of the American Society of News Editors.
Another of my sources, a former editor who still keeps a close eye on the industry, emailed to suggest I should rethink my prediction in a piece Sunday evening that the Gannett executive team would be washed away.
New Media Investment chairman and CEO Mike Reed has the top job in the new company. But Gannett chief financial officer Alison Engel stays on (GateHouse’s CFO left abruptly in February). And a new Gannett hire, Paul Bascobert, will run the operating company for 250-plus dailies.
Bascobert has deep marketing and publishing experience earlier in his career at Bloomberg and Dow Jones, but not, as far as I can tell, in newspapers. His most recent job was as president of XO Group, a vertical for weddings, which has also operated as The Knot.
I have not been able to schedule an interview with Bascobert (or other busy top execs), but his background fits with a digital transition push and may be a particular match to USA Today sports verticals and others at both companies.
The new company’s choices for other slots on the top management team have not yet been announced. But it may be if Gannett is stronger in a given function, its managers will be assigned the lead.
In writing about completion of the deal yesterday, I failed to mention the financing, including a $1.79 billion loan from Apollo Global Management, a private equity fund, at (ouch) 11.5% interest. Even with the $300 million a year savings Reed expects, interest and principal will be formidable to pay down, while simultaneously reserving capital to invest in new digital revenue streams.
Other big qualifiers for the likely success of the deal would be that both companies reported Monday yet another quarter of deep revenue losses.
Wall Street did not stand up and cheer for the merger, either. New Media shares were down 18.6% for the day and Gannett’s down 7.6%.