Merger of GateHouse and Gannett is Official - Projo's 3rd Owner in 5 Years, More Cuts Expected

Merger of GateHouse and Gannett is Official - Projo's 3rd Owner in 5 Years, More Cuts Expected

Two of the largest newspaper groups have merged and it creates the largest newspaper company in the history of America. Shareholders of the two companies approved the deal on Thursday.

The merger between GateHouse -- who owns the Providence Journal and Worcester Telegram and 150 other daily papers and Gannett, the company that owns USA Today -- will create a company with 263 daily media organizations across 47 states.

The merged company will operate under the Gannett name going forward -- but will be managed by the GateHouse management team led by Mike Reed. 

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The deal between the two shrinking newspaper companies is dependent on “synergies of $275 - $300 million” — synergies meaning staff reductions.

Financing the deal is Apollo Global Management - led by Leon Black — a close associate of Jeffrey Epstein. Apollo is providing $1.79 billion in financing on a 5-year short-term note at 11.5% interest.

Many media experts have questioned the financial viability of the deal. “No one believes the numbers,” said billionaire investor Leon Cooperman on an earnings conference call on October 31.

In Providence, Rhode Island — the Providence Journal’s newsroom has shrunk over the past ten years from 150 to just 15 reporters today.

The circulation has declined from about 200,000 two decades ago to just 30,000 plus and is now just 3 percent of the state’s population.

Newspaper advertising spending is expected to continue to decline -- down 17.9% according to E-Marketer. Both companies are unprofitable during a period in which media spending is dramatically increasing.

GateHouse stock had lost more than 50% of its stock value in the past 12 months. “The deal is bad for journalists, it’s bad for readers and it’s bad for the future of local journalism,” said NewsGuild-CWA's Bernie Lunzer, “Local papers will likely vanish, jobs will be slashed, and reporting will suffer.”

The Providence Journal will have its 3rd owner in 5 years. Worcester Telegram has its 5th owner in 6 years. “Neither company has digital chops that have you jumping out of your seat,” said media analyst Doug Arthur of Huber Research to WaPo.

The final closing is expected on November 19, 2019.