The consolidation of the U.S. daily newspapers continued with New Media purchasing Gannett Co. for $1.4 billion in cash and stock. The company will command 8.7 million in circulation compared to McClatchy in second place with 7 million. New Media’s news company GateHouse Media released this statement on the acquisition, “Uniting our talented employees and complementary portfolios will enable us to expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations.” (Courthouse News Service, August 5, 2019, by Nick Rummell)
Peter Cohan in Forbes, August 6, 2019, applies four tests that mergers must pass to succeed and finds the New Media/Gannett merger fails on two of the tests and predicts onerous barriers to success on the other two. First, the new company must deal with the swing of ad money to such as Google and Facebook with online editions failing to make up for the loss of print subscribers. Consolidation and centralization are not enough to reverse sinking revenues. Second, both GateHouse and Gannett are getting smaller and will not be able to reverse that trend. Third, it is problematic that the merged companies can generate enough revenue to compensate for the costs of the merger. And fourth, merging two corporate organizations presents difficult choices of who gets to take over what jobs and what to do with the 1,500 union workers.
Whatever the prognosis, the venture is crucial in determining the future of journalism in the U.S. It hinges on whether the merged company can achieve a profitable digital transition. (NiemanLab, August 4, 2019, by Ken Doctor)
For recent FAC coverage on the problem, click here and here.