Gannett Plans To Merge With New Media Investment Group

Aug 5, 2019
Originally published on August 5, 2019 7:16 pm
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ARI SHAPIRO, HOST:

Two of the country's largest newspaper companies are merging. The first you might've heard of. Gannett owns USA Today and more than a hundred local papers. The second is called New Media Investment Group. It is buying Gannett, and the new company will take Gannett's name. It will be by far the largest newspaper publisher in the country. NPR media correspondent David Folkenflik joins us now.

Hi, David.

DAVID FOLKENFLIK, BYLINE: Hey, Ari.

SHAPIRO: Many people have heard of Gannett. New Media is much less well-known. Tell us about them.

FOLKENFLIK: Well, New Media operates in the journalism space. GateHouse - they own a small smattering of sort of papers in larger cities like Austin, Palm Beach, Akron, Columbus. But they basically own, you know, about 150 smaller dailies and some 600-plus weekly community newspapers across the country. That's their bread and butter.

Gannett, you know, has major presence all over the country. They often publish under the USA Network banner. But you think of Detroit, Indianapolis, Des Moines, Phoenix. These are major papers in major cities, or good-sized cities, that Gannett has served for some time.

SHAPIRO: Newspapers all over the country have, of course, been downsizing or just closing up shop within the last few years. That - explain the logic of this merger.

FOLKENFLIK: The logic of this merger is that Gannett has really run out of time to figure out how to replace all the advertising it's lost. You think of national advertising for places like USA Today. You think of classified ads, among others - auto ads, all kinds of advertising. That's the warp and woof of the bottom-line huge profits local newspapers enjoyed, much of which vanished in the digital age. And so they haven't been able to pad their revenues with the kinds of huge gains in digital subscribers that you've seen on the national level from The New York Times, The Wall Street Journal, The Washington Post, in particular.

And they're just looking for a longer runway. They feel like they can save $275 million to $300 million in sort of backroom savings, accounting, HR and also by consolidating printing at some of these newspapers. These are in adjoining but not identical markets. They don't really compete, these two companies, and so they can consolidate printing in the same places for underused presses, hope to save a lot of money that way.

SHAPIRO: And so the companies, as is often the case in mergers like this, say that they have a bright future together. I mean, is it your assessment that these two companies coming together will help to solve some of the problems that have plagued the whole newspaper industry as a whole?

FOLKENFLIK: You know, I've talked to a couple of people in both companies, including current and former executives - news executives, and they say they're worried about the ability of the company to do it. One of the corporate directors of Gannett spoke to me on the record - Steve Coll, former managing editor of The Washington Post, a current journalism dean at Columbia Graduate School of Journalism. He said that he is - I asked if he were confident about this. He said nobody's committed to this because he believes it will be best for the journalists as well as the journalism. But let me say he thought that the ability to service the debt was not that big a deal, that he thought that they'd be able to reach these savings.

SHAPIRO: And what does this mean for journalism in these local communities?

FOLKENFLIK: You know, they're keeping the Gannett name. Gannett is the more distinguished of the two. It's actually been known for a rigorous bottom line and cost cutting over the years, but it has distinguished itself with a lot of good journalism on the local level. Think of the Indianapolis Star and the work they did exposing the gymnastics coach that sexually abused young women for years. These are newspapers that are very important.

You know, from the Gannett side of things, they said, we need to sell off to someone else because they were going to be able to find a way to give us more time to solve this problem. I don't think the problem is lifted. I think the problem is still with them. And if they have a lot longer runway, it may just be with them for a little longer time.

SHAPIRO: That's NPR's David Folkenflik.

Thank you.

FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.