August 19, 2019

Thoughts on the proposed Gannett-Gatehouse merger


Just "wow," especially as they seem to have diametrically opposite core cultures. Craphouse taking over Dead Fucking Media or vice versa? Yes. Ditto on, say, McClatchy or Hearst taking on Gannett or vice versa. But this? But here we are, and here's my take 10 days in, as both Gatehouse and Gannett sell this to investors etc.

Here's the company announcement, here's Ken Doctor's initial take at Nieman, and here's his follow-up analysis, complete with the "maybe" becoming more serious now that Alden Global Capital, owner of Digital First Media, aka Dead Fucking Media, apparently missed over Gannett's earlier rebuff of its takeover attempt, is spitting in the soup by allegedly taking a 9.4 percent stake in the new merger.

In his initial piece, Ken notes the two companies had become more comfortable with one another, and in the follow-up, that some sort of merger kind of fit both. Fortress Capital, still the de facto owner of Craphouse, was seeing its investment strategy run out of steam. A big acquisition helped. Gannett, kind of puttering around even before Alden's attempted takeover, probably could use a gray, if not totally white knight, and one further down the digital "transformation" road than it.

Later on, in talking to USA Today, Doctor says he thinks Alden might be looking at dumping its papers. Color me skeptical, with it's milking the Denver Post not for money for other papers, but for flailing and failing non-newspaper enterprises it owns. (Unless it thinks the last easy dollar has been milked out of that turnip.) Another angle, which I think more likely, is that Alden will do its best to cock-block this unless the combined company takes its papers off its hands.

And, where will they get that kind of money from, other than a potentially extortionate loan from Alden? So, Dead Fucking Media and Craphouse could have a dual between their hedge-fund owners, which would include Gannett being the piñata in a three-way bashing. (On the third or fourth hand, the apparently lying sacks of shit at Alden said 5 years ago they were looking to sell DFM.)

Now, the fallout?

First, Ken notes, the merged company (assuming federal approval) has to raise money to pay off loans.

Some of that comes through making two HQs into one. Some comes through whacking middle managers, especially, it seems, at Gannett.

And some will come from selling semi-orphan papers and concentrating on areas where one or both chains are already somewhat clustered.

Ken lists Florida, Wisconsin and Ohio. I see that.

But, why he missed Texas, I don't know. Gannett already had a number of properties here after its Journal-Sentinel takeover. Gatehouse, ditto, even before the Statesman buy in Austin. Combined, they'll own every 7-day west of I-35 except Plainview, Midland and Odessa. They'll have several five-day and six-days in North Central and West Central Texas.

Hearst owns Midland and Plainview. Dunno if it will sell or not. AIM Texas Media owns Odessa; all of its other papers are in the Valley. Would they swap Odessa, and maybe a little cash, for Alice? Would they sell out entirely, to the new chain owning Alice and Corpus now? Would Hearst swap Midland, or Midland and Plainview for Corpus, which would let it cluster more than now in Gulf Coast (plus San Antonio) Texas?

Finally, which of the two corporate cultures (assuming Alden remains spurned) wins out? Read Ken for that.

As far as what this will mean? There will be more local cutbacks. Probably at Gannett's papers; don't see how you can do much of that at Gatehouse, although they keep trying; Craphouse just laid off 14 at the Oklahoman, following on 37 cuts after it bought the paper a year ago. CNHI-type furloughs wouldn't totally surprise me if other savings don't materialize.

Gatehouse has an uphill slog on its side; Gannett has been sucking for years on ad revenue (more here); the most recent tumbles are sucking squared.

(Gannett may face one other problem; if its papers lose the Cars.com local exclusive rights like happens to the Snooze next year, in a couple of years, its auto ads money takes another hit.

As for online solutions? Yeah, Gannett may be behind the curve of Gatehouse, but when even the AP whores itself out to Taboola (and other) website clickbait as well as running its own clickbait stories, after whoring itself out to the advertorial world, any online "solution" is only going to be a possible bean-counter solution, not better news.

So, whether it's Gatehouse or Alden that takes over, if you live in most places in Central or West Texas, be prepared for your newspaper to go further in the gutter.

John Temple says Gannett and Gatehouse could suck either other down, with the combo of McNewspaper Gannett and corner-cutting cheapness Gatehouse. Temple, the last editor of the Rocky, recommends something like a public benefit corporation, noting the Philly Inquirer is run by one. I note that Hucksterman created a PBC that I even did a sonnet about and California laws on them — and seemingly many others states' — are pretty loose.

That said, speaking of bean-counters? A decade ago, the C-suite newspaper brass were still very much getting their own. I'm sure that's not totally changed. Long-time St. Louis Post-Distpatch columnist Bill McClellan, years after the date of that piece, continued to call out Lee Enterprises CEO Mary Junck for her corporate bonuses. (LOTS more about Lee at CJR.) Gannett's most recent CEO before the current one got a huge golden parachute a few years back.

Meanwhile, if this goes through, how will this affect current Gannett staff, readers and customers?

For you the employee?

Given that Craphouse has had its design shop for years, and from what I know, it sucking about as bad as Granite Newspapers' small one sucked (and yes, I believe it was done to spin off Gatehouse), if you're a graphic artist, you'll lose your job. You may be given "first-in-line" status to apply for the new (and lower paying) ones that Craphouse will create in Austin, but that's it. If you're not white, from what I've heard before, you might not want to work there anyway.

Given that Craphouse was aggressive enough on expanding its pagination shop to take on the Snooze on contract even before buying the Stateless, the same's going to happen to you as a copy editor. On, and their layout is get-it-out-the-door crappy once you get past section fronts.

Craphouse may consolidate some printing presses, too.

And, don't be surprised if the merged New Gannett adopts CNHI type furloughs.

For you the business?

Your ads will be crappier. You'll likely get one proof copy to review. Whatever errors you don't spot the first time around won't get fixed, or else you'll be charged extra.

For you the publisher?

Tighter paywall may bring more revenue to San Angelo, Abilene etc. Cross your fingers that Craphouse doesn't screw up ads enough you lose customers.

For you the reader?

Tighter paywall online. Deal with it. If you like the print version, and appreciate good design, you'll get less of that once you get away from section fronts. Also be prepared for fewer staff writers again. Breaking news? Late night sports? Look for it on the web; print deadlines will be earlier because of these new Gannett acquisitions being funneled through Gatehouse design and pagination shops, especially if more presses are consolidated. Hope you like your San Angelo paper being printed in Abilene.

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