GateHouse gobbles up more newspapers
Remember when GateHouse Media officials sent out memos cutting back on buying things like coffee and office supplies like, oh, paper, and the company’s stock went from an initial offering of about $20 a share to dropping like a rock to a penny and being delisted on the New York Stock Exchange? Apparently, they don’t either.
The once-bankrupt newspaper giant has reemerged as a Pac-Man-type conglomerate, devouring media properties up and down the coast that the sellers are all too willing to part with. GateHouse’s endgame is anybody’s guess but it’s clear the Rochester, New York-based company, which got its start by buying the former Community Newspaper chain from Boston Herald owner Pat Purcell and some of the more prominent regional dailies in Massachusetts, is looking to be the last man standing in the print business. For what it’s worth.
The latest acquisition for GateHouse, through its corporate overseer New Media Investment Group, is the Halifax Media Group, based in Florida. Among the 35 properties in the $280 million deal, which includes 24 dailies to add to their stable, is the Telegram & Gazette in Worcester, the third time that paper has changed hands in less than a year and a half. Boston Globe owner John Henry, who bought the paper from the New York Times Company, flipped it to Halifax in a deal panned by locals who remembered his promise to sell to locals. Well, now it’s sort of happened in a roundabout way.
The sale is notable on a number of levels, not least of which is the acknowledgment by GateHouse CEO Kirk Davis, the former publisher of the Patriot Ledger and Brockton Enterprise who helped engineer the creation of GateHouse, of the journalistic bona fides of the new members of the family, including the Pulitzer pedigree of several of the southern papers in Alabama and Florida. In previous acquisition announcements, GateHouse officials often only cited the business benefits of the deals, a nod to investors in the publicly traded company.
The purchase expands the GateHouse footprint into the southeastern corner of the country, an area that had largely escaped their reach. With the new deal, which is expected to close in the early part of next year, the company now has a formidable presence in all four corners of the country as well as a healthy standing in the Midwest and central United States.
But unlike its early strategy of buying bulk, which included hundreds of weeklies and penny-savers, the last few years since emerging from bankruptcy have seen the company pick off daily newspapers in some very significant markets. In September, GateHouse bought the Providence Journal for $46 million and last year scooped up the Dow Jones Local Media Group that included eight dailies and 16 weeklies, including the Cape Cod Times and the Standard-Times of New Bedford, for $87 million. Since restructuring its debt last year, coinciding with the Dow Jones purchase, New Media will have written more than $430 million in checks when the Halifax deal closes.
Adding Halifax’s 635,000 daily circulation to its current 550,000 gives GateHouse a formidable daily circulation of 1.1 million newspapers. In addition, the 80 websites included in the purchase bring the total to more than 430 hyperlocal sites, with hundreds of millions of eyeballs every month. It’s also notable that GateHouse’s biggest presence, including with this purchase, is in regions that have a high concentration of older readers, such as New England and now the retirement communities in Florida and the Carolinas, target audiences who have remained among the most faithful of newspaper consumers.
But, when you lay out that much money, you have to cut costs, and GateHouse has been notorious for slashing employees and expenses. Some of the work at the T&G has already been done for them by John Henry and Halifax, but few will be surprised if there are more cuts on the way. GateHouse has a central copy editing and layout desk in Austin, Texas, that handles the bulk of editing, making some local copy editors redundant. Just ask those at ProJo.
Locally, the deal also has financial implications for the Globe and Boston Herald. When Henry sold the T&G to Halifax, he kept the paper’s printing plant in Millbury for himself for the time when he could sell the Globe‘s Morrissey Boulevard property and move the printing out that way. But part of the Globe‘s business is printing a number of area dailies, including the Herald, Ledger, T&G, and Enterprise. With the purchase of the relatively new printing presses of the ProJo as well as its own presses on the Cape and in Auburn, GateHouse may no longer be in need of the Globe‘s services.
It’s unclear what the printing contract the company inherited says about termination, but you can bet when GateHouse can save money by doing it in-house, they’ll find a way. They always do.
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