GateHouse parent New Media Investment Group, owner of The Dispatch, is purchasing Gannett for the equivalent of $12.06 per share in cash and stock, creating a company that will span 47 states with ownership of more than 250 daily newspapers. The deal is worth an estimated $1.2 billion.
Shareholders of Gannett and GateHouse Media approved a merger Thursday that will form the largest newspaper company in the country.
In the deal, GateHouse parent New Media Investment Group, owner of The Dispatch, is purchasing Gannett for the equivalent of $12.06 per share in cash and stock, creating a company that will span 47 states with ownership of more than 250 daily newspapers including USA Today, The Austin American-Statesman, The Palm Beach Post, The Milwaukee Journal Sentinel and The Indianapolis Star, plus hundreds of weekly and community papers.
The new company — run by GateHouse's management under Gannett's name — will be under pressure to find $300 million in annual savings within the first two years of the deal, as GateHouse management pledged when it announced the deal in August.
In Ohio, GateHouse owns The Dispatch, The Akron Beacon Journal, The Review in Alliance, The Times-Gazette in Ashland, The Jeffersonian in Cambridge, The Repository in Canton, The Record-Courier in Kent, The Independent in Massillon, The Times-Reporter in New Philadelphia and The Daily Record in Wooster.
Gannett owns The Cincinnati Enquirer, The Telegraph-Forum in Bucyrus, The Chillicothe Gazette, The Coshocton Tribune, The Fremont News-Messenger, The Lancaster Eagle-Gazette, The Mansfield News Journal, The Marion Star, The Newark Advocate, The Port Clinton News Herald and The Zanesville Times Recorder.
"We in the GateHouse family of newspapers look forward to working with the talented journalists in Gannett newsrooms across Ohio," said Dispatch Editor Alan D. Miller, who is executive editor for the 10 daily newspapers and several dozen weekly newspapers in GateHouse Media Ohio. "While there is a competitive spirit among journalists, our newsrooms have long been united through membership in the Associated Press and by collaboration to leverage our assets and benefit readers across the state."
Miller noted, for example, that The Dispatch and Gannett’s Media Network of Central Ohio joined with Your Voice Ohio, another media collaborative, to host community forums in Columbus, Marion and Newark last year to talk about coverage of the opioid crisis.
"We are stronger and better when we work together in reporting topics that have broad appeal and a significant effect on the lives of most Ohioans," he said.
And the Dispatch Media Group has been printing Gannett’s Ohio papers under a contract that was in place before the Wolfe family of Columbus sold The Dispatch to GateHouse in 2015.
"We appreciate the support we have received from New Media and Gannett shareholders for the merger," said Michael Reed, chairman and chief executive officer of New Media.
"This combination will create the leading U.S. print and digital news organization with deep local roots and national scale," Reed said. "Together, we will be stronger, with a more viable path to growth for our shareholders and employees, while sustaining journalism in hundreds of markets across the country and enhancing the services we provide to small and midsized businesses nationally. We are extremely excited to embark upon this new chapter together as the new Gannett."
New Media and Gannett expect to complete the merger Tuesday, subject to the satisfaction of customary closing conditions.
The deal has come under fire for proposing cuts some view as too drastic and others view as not aggressive enough, a signal of the tightrope publishers of local news have been forced to walk as the industry struggles financially.
Critics have warned that the deal will benefit GateHouse's private equity backers while further eroding the number of reporters, editors and photographers covering local communities.
And some of GateHouse's top shareholders have criticized the deal for their own reasons, and the stock price of its parent company, New Media, fell by 29% during the past week, to an all-time low of $6.68 when markets closed Wednesday. As a result the deal, originally valued at $1.4 billion, is now closer to $1.2 billion.
"Neither company has digital chops that have you jumping out of your seat," media analyst Doug Arthur of Huber Research told The Washington Post. Gannett has been pushing to bring in digital advertising and subscription revenue, but Arthur said both firms missed his most recent revenue targets.
"At the end of the day, there's got to be some revenue magic somewhere," he said.
The new company has a nine-member board that includes no current or former journalists.
Joining Reed are former gambling executive Kevin Sheehan, marketing executive Mayur Gupta, finance executive Theodore Janulis, Gannett Chairman John Jeffry Louis, marketing executive Maria Miller, marketing consultant Debra Sandler, former footwear executive Laurence Tarica and Barbara Wall, chief legal officer at Gannett. Six members are from New Media and three are from Gannett.
Two journalists who until the deal closed served on the Gannett board are not on the new board: Stephen Coll, dean of the Columbia University graduate school of journalism, and Larry Kramer, former president of USA Today.
Media executive Paul Bascobert has been named chief executive of the combined company.
Founded in 1906, Gannett became one of the Washington area's biggest corporate names in the heyday of the newspaper industry, introducing the country to a national newspaper in USA Today and erecting a glistening tower overlooking the Capital Beltway in Tysons Corner.
As the print media industry struggled financially in the past two decades, Gannett enacted numerous cost-saving measures before spinning off its broadcast and marketing units into a separate company. Gannett was last on the Fortune 500 list in 2014, and in the past two years alone the number of employees at the company has fallen by one-fifth.
Since Gannett spun off four years ago from Tegna, its broadcasting arm that now owns WBNS-TV (Channel 10) in Columbus, it has been looking to grow through mergers or acquisitions.