The Rural Blog
America’s two largest newspaper chains, GateHouse Media and Gannett Co., announced their long-anticipated merger Monday afternoon.
“Gannett shareholders will receive consideration of $12.06 a share in cash in stock, based on New Media [Investment Group]’s Friday closing price, with a promise of $6.25 in cash and 0.5427 of a New Media share for each Gannett share,” MarketWatch reports.
“Gannett investors will hold about 49.5% of the company after the transaction and New Media investors will own the rest,” according to the announcement.
Gannett publishes the Louisville Courier Journal and The Henderson Gleaner in Kentucky and The Cincinnati Enquirer in Ohio.
The new company, which will reportedly take the Gannett name and D.C.-area headquarters, would own and operate 265 dailies and thousands of weeklies — more than one in every six newspapers in the United States. Print circulation would hit 8.7 million, making McClatchy No. 2 at 1.7 million.
Digital audiences would follow a similar pattern, media business analyst Ken Doctor writes in a “Newsonomics” piece for the Nieman Lab at Harvard University. He speculates that the deal, which GateHouse is driving, could generate $200 million to $300 million in annual cost savings.
The deal will require federal approval because of antitrust concerns.
Though the Department of Justice is unlikely to nix the merger, it may introduce some hoops to jump through, Doctor writes: “Tronc/Tribune found itself stymied by DOJ’s antitrust division in two deals — one for the Orange County Register, the other for the Chicago Sun-Times — a couple of years ago. Those two cases focused on claimed monopolistic limitation in regard to advertisers and/or subscribers in a single market. But GateHouse and Gannett’s holdings, as numerous as they are, may not be considered as competing head-to-head in any single market. The big question is how DOJ will look at the substantial regional clustering of properties this deal would bring.”
Doctor says it’s worth wondering whether the Justice Department’s anti-trust division might consider questioning national market domination, since this merger will create a truly nationwide newspaper company, and what comes next on the consolidation front.
“This merger produces a new cascade of questions,” he writes. “The first: What are the next dominoes this transaction sets up in the consolidation of the newspaper industry this transaction? Eyes are focused squarely on McClatchy and Tribune, though both Lee Enterprises and MNG Enterprises— the latest name for the collection of papers owned by Alden Global Capital — are also drawing attention. Back in January, I dubbed the industry-wide urge to merge the 2019 Consolidation Games, and this deal certainly sits atop the medal podium just past mid-year.”
