This Media Merger Will Create Massive US Newspaper Owner

New company will have the biggest US circulation by far
By Newser Editors and Wire Services
Posted Aug 5, 2019 3:43 PM CDT
This Media Merger Will Create Massive US Newspaper Owner
A paper box for the Clarion-Ledger, a Gannett newspaper, in Jackson, Miss.   (AP Photo/Rogelio V. Solis)

Two of the country's largest newspaper companies have agreed to combine in the latest media deal driven by the industry's struggles with a decline in printed editions. GateHouse Media, a chain backed by an investment firm, is buying USA Today owner Gannett Co. for $12.06 a share in cash and stock, or about $1.4 billion, the AP reports. The combined company, to be called Gannett and to use the current Gannett headquarters in McLean, Virginia, would have more than 260 US daily papers and more than 300 weeklies. It would be the largest US newspaper company by far, with a print circulation of 8.7 million, 7 million more than the new No. 2, McClatchy, said media analyst Ken Doctor. The companies said Monday that the deal will result in up to $300 million in annual cost savings and speed up a digital transformation. Gannett has been searching for possible mergers or acquisitions since it separated from Tegna, its broadcasting arm, four years ago, per the Washington Post.

Newspaper consolidation has picked up as local papers find it hard to grow digital businesses and replace declines in print ads and circulation. Although papers with national readerships like the New York Times and the Post have had success adding digital subscribers, local papers have not. Hundreds of such papers have closed, and newsrooms have slashed jobs. According to a study by the University of North Carolina, the US has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by one-fourth from 2008 to 2018, according to Pew Research. Bulking up lets companies cut costs—including layoffs in newsrooms—and centralize operations. Several experts said they do not expect the Justice Department to have an issue with the deal, which required GateHouse owner New Media to take out a $1.8 billion loan, as the two companies have papers in different markets. The companies expect it to close this year.

(More newspaper industry stories.)

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