Why this week is a ‘major turning point’ for America’s daily newspapers
Let’s take a close look at what’s happening at three of the biggest newspaper owners in the United States.
Because, after all, changes at local newspapers have ramifications for communities big and small, from coast and coast and all the points in between.
“This week marks a major turning point in the already-churning U.S. daily business,” news industry analyst Ken Doctor told me on Tuesday night.
“As the year, and woeful decade, close, financial players have taken control of much of the daily press,” Doctor wrote in an email. “This week, GateHouse closed on its acquisition of Gannett, creating a single company of 256 dailies, and 18% of the press — and it is controlled by PE Fortress Investment Group. McClatchy, looking at default on its pension plan funding obligations, faces either financial restructuring, or bankruptcy — and its primary shareholder and debtholder Chatham Asset Management is in the driver’s seat.”
And that’s not all. On Tuesday afternoon “the industry’s bete noire Alden Global Capital shocked the industry by buying out the quarter share of Tribune Publishing owned by (almost equally disdained) Michael Ferro’s ownership group,” Doctor wrote.
His point: “At a time when local news is needed more than ever, it is the bankers who are deciding what will be defined as news, and who will be employed to report it.”
The New Gannett
Kerry Flynn writes: Gannett and GateHouse officially combined on Tuesday. Is the merger going to cause local journalism to suffer? That was my first question when I met with Gannett execs Paul Bascobert and Mike Reed at USA Today’s office in Midtown Manhattan on Monday. It was blunt, but it’s the real fear media reporters and advocates have been writing about now ever since the deal was announced in August. It’s what employees are talking about.
Bascobert’s hard-to-believe answer was “no.” He elaborated, “At the starting point, there’s some economics associated with combining two companies together. There’s duplication of expenses.” So… Yes?
Reed jumped in to argue that if this merger hadn’t gotten through, more journalism jobs could have been lost.
But there WILL be layoffs. Soon. Florida Times-Union reporter Emily Bloch tweeted a bleak TikTok, highlighting that a FAQ sent to employees acknowledged the impending cuts. The full FAQ says “Yes, there will be changes that will involve a reduction in our workforce after thoughtful review.”
But it remains to be seen where the cuts might fall. Reed told me he did see some overlapping coverage in reporters’ beats but he imagined those journalists could be “redeployed into other things.” Here’s my full story…
Coming on Wednesday…
Kerry Flynn adds: Changes to Gannett’s leadership team are expected to be announced on Wednesday. The execs wouldn’t comment on the matter to me, though Bascobert did note, “Paid circulation is another key priority for us. You’ll see us consolidating under a strong leader around circulation and pushing that hard.” I’ll be looking at the diversity of the leadership, especially given the identical gender and ethnicity of Bascobert and Reed…
McClatchy is so “weighed down…”
McClatchy is so “weighed down by pension obligations and debt” that it “could file for bankruptcy within the next year, according to analysts,” Bloomberg reported on Monday.
The company’s stock, which had been trading between $2 and $3, has fallen off a cliff in the past five days. It closed at 40 cents on Tuesday. Doctor has all the needed context in his much-read piece about McClatchy here…
Tribune staffers are newly on edge
Ferro’s sale means that Alden Global Capital — already the controlling shareholder in Digital First Media and its 200 papers — is now Tribune Publishing’s biggest shareholder. And this is being interpreted as very bad news by staffers at Tribune’s papers. “Alden has a well-established history of harming media institutions and journalists,” the Chicago Tribune’s guild said in a statement.
Nico Savidge of the San Jose Mercury News Guild observed that “reporters at Alden-owned papers in the Bay Area held a protest over the gutting of their newsrooms and dismal pay” just a couple of hours before the Alden-Tribune news hit. This photo is from the protest.
>> Flashback to Joe Nocera’s column about Alden last year: “Imagine If Gordon Gekko Bought News Empires…”
“As part of the purchase, Alden is in discussions to add two seats to Tribune Publishing’s six-member board,” the Chicago Tribune’s Robert Channick reported.
Alden’s Digital First Media wanted to gobble up Gannett, but failed. Now it seems a deal with McClatchy is quite possible. Doctor reported last week that “McClatchy and Tribune executives are talking about merging their two companies.”
However, given what’s happened to McClatchy’s stock in recent days, “Tribune seems more likely to wait out McClatchy’s drama and see what comes out on the other side,” Doctor wrote Tuesday. “The idea: Let McClatchy reorg itself, even via bankruptcy, and tidy up its balance sheet by shedding debt. Then merge…”
“There has been some bad days in journalism, but this day is especially noteworthy,” Jon Harris, a business reporter at the Tribune-owned Morning Call, wrote on Twitter. He brought up Knight and Gallup’s recent survey that said “greater awareness of the financial struggles of local news organizations can lead to a greater willingness to help them stay solvent.” And he asked: “Is there a better time than today to familiarize readers with our struggles?”