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Is bigger better? Gannett merger will test whether local news can be saved.

The deal raises questions about what’s next for other newspaper chains.

Gannett headquarters will remain in McLean, Va., following a planned merger with GateHouse. (Andrew Harrer/Bloomberg News)

When the Ohio family who owned the Columbus Dispatch for 110 years finally decided to sell the newspaper four years ago, among the final bidders were two chains: GateHouse Media and Gannett.

The sale would mean that for the first time since the Dispatch was founded in 1871, it would not be under local control. But as Michael J. Fiorile, who handled the sale for the Wolfe family, pointed out, “It’s kind of slim pickings these days if you’re out there trying to sell a newspaper."

Other newspaper sellers may not even have those choices available to them, as GateHouse’s parent — New Media Investment Group — announced Monday that it was buying Gannett for $1.4 billion to create the largest publisher in America.

Whether the merger would help combat the erosion of reporting jobs in America or accelerate it quickly became a matter of intense debate in the journalism industry, which remains mired in a two-decade-long search for a sustainable business model for local news.

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Some experts predict the deal, if successful, will lead to a much more dramatic consolidation of newspaper ownership, with Tribune Publishing, McClatchy and other chains discussed as companies that may join others.

From a journalism perspective, readers and employees of the publications have reason to be skeptical of the deal. New Media and Gannett have shed thousands of newsroom jobs in the face of dropping circulation and advertising revenue over the years. The result is thinner publications filled with more non-local stories, for which subscribers are paying higher rates.

Three months after the Wolfes sold the Dispatch to New Media, the chain and its private equity manager almost immediately instituted newsroom buyouts and quickly moved out of its downtown building. This year, New Media cut another six Dispatch positions, including reporters, a feature columnist and an editorial cartoonist, as it slashed hundreds of jobs nationwide.

Fiorile does not begrudge New Media. He’d already tried some of the same cost-saving tactics, cutting staff in 2009 and agreeing to print the Cincinnati Enquirer at its plant. “All in all I think they’re doing pretty well,” he said. “The changes are inevitable no matter who is coming in.”

Indeed, whether your town’s newspaper is owned by a local family, a regional group or a national chain, your experience since the Internet began offering free content and widespread advertising probably means you are being charged more for a worse product, if you are still a subscriber at all.

While there have been numerous media mergers, the idea behind the New Media and Gannett deal is that by creating a large-enough company — one capable of securing millions of digital subscribers and national advertising that could come with it — newsroom cuts may no longer have to be the central strategy of survival.

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In recent years, the New York Times, The Washington Post and the Wall Street Journal, by selling millions of digital subscriptions between them, have become the envy of many other publishers.

But those titles are selling mostly national and business news. Principals behind the new Gannett will be trying to convince more people to pay for local news online.

So far, they say, they are committed to producing quality journalism. New Media Chairman Michael Reed told shareholders that, should the deal be approved, it will “not only preserve but actually enhance the journalism in our local markets.” Gannett chairman Jeff Louis, having recently fended off a hostile takeover attempt by a more cost-focused chain, MediaNews Group, said that “together, we will deliver on our shared commitment to journalistic excellence.”

How would that work?

Executives from Gannett declined to comment for this story and New Media did not return requests for comment, but Reed told investors that over the next two years he can find between $275 million and $300 million in annual savings. Much of that would come from eliminating duplicate jobs or spending in accounting, technology, marketing, human resources and the like, according to New Media.

Analysts say more savings are to be had in further consolidating printing and distribution operations as well as selling excess real estate, though both chains have already done some of both.

Of that $300 million however, $115 million in savings is expected to come from “Newspaper Operations,” according to New Media. Both companies have already centralized editorial functions such as copy editing and page design. If a significant portion of new savings has to come from newsrooms, a large number of editors, reporters and photographers could lose their jobs. New Media recently rescinded a job offer to a 25-year-old sportswriter who’d just accepted a position at the Oklahoman, belatedly telling him there was a hiring freeze.

On top of that, New Media financed the deal on an expensive 11.5 percent interest rate by taking out a $1.8 billion loan from New York investment firm Apollo Global Management (though it can be prepaid and refinanced). Analysts said the loan demonstrates the confidence the two companies have in their plan, but that it could add costs if things go south.

Some analysts said they didn’t expect a major effect on journalism jobs as a result of the deal. “There is excess capacity in multiple areas -- printing and distribution and certainly in corporate overhead,” said Lance Vitanza, who analyzes top media companies. “I think it’s achievable without too great an effect on the [newsroom] head count.”

Journalism experts are much more concerned, largely because a digital salvation has been dangled by corporate newspaper owners for years, with thousands of job cuts to show for it but not the touted audience or revenue growth.

“To expect digital revenue to contribute to your overall business is totally unrealistic when we’re talking about local papers,” said Iris Chyi, an associate professor at the University of Texas at Austin who studies the industry. “After more than 20 years still there is this unrealistic expectation.”

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There remain about 12,000 newspapers in the country, and many of them remain in decent financial health, according to Knoxville, Tenn., media consultant Kevin Slimp. A survey he did of around 400 publishers last year found that for successful papers, “Job number one is to put out a good product. Job number two is to realize that your business is still mainly on the print side.”

Slimp is a longtime critic of newspapers’ rush to cut their staffs and race to digital platforms once the Internet began cutting into business. When that failed, he said, private equity investors and Wall Street sharks arrived and further gutted the papers for profits.

“They should not have ignored their main products, and they should not have reduced their staffs,” he said. “When you start getting rid of reporters, no one wants to read your paper.”

There is some data to suggest that this time around could be different: that newspapers — while nowhere near as robust as they once were -— could find some stability in balancing their print and online businesses as part of large chains. Gannett increased digital-only subscriptions by 34 percent from the same time last year to 561,000. New Media, which owns much smaller papers, has 195,000 digital-only subscribers.

If the new company does succeed, others such as McClatchy and MediaNews Group (formerly Digital First) may follow suit.

The same goes for Tribune Publishing, owner of the Chicago Tribune, Baltimore Sun and dailies in six other larger markets. It was once targeted for acquisition by Gannett. Since then, it has grown digital-only subscribers from 112,000 two years ago to 300,000 today.

Asked this week by an analyst whether he felt compelled to combine with another chain after the Gannett-Gatehouse deal, Tribune Publishing chief executive Timothy Knight said “if there’s a strategic opportunity for us to match up with somebody else certainly our board would consider that.” Tribune has virtually no debt and more than $100 million in cash on hand to make moves.

McClatchy, which operates 30 titles including the Miami Herald and Sacramento Bee, has also been discussed as a merger partner, but its stock has lost more than three-quarter of its value in the past 12 months. Chief executive Craig I. Forman, also asked about what the Gannett-GateHouse deal could mean for its future, declined to answer.

If Gannett and Gatehouse complete their deal and follow through on their “synergies,” it is expected to free up the better part of $300 million each year, plenty of money to make further deals.

For now, the union representing journalists, NewsGuild-CWA, is on high alert out of concern that savings will come “through layoffs and more cookie-cutter journalism” as they have in the past, said Bernie Lunzer, the union’s president.

Lunzer agrees that the future of local news largely relies on success online and a degree of corporate efficiency. But he’s worried more financial machinations from Wall Street and out-of-town owners will short circuit the required solutions.

“Creating real ties to the community — that’s the only way these things are going to work,” he said. “And I just don’t think that corporations think that way.”