A potential deal to unite the country’s two biggest newspaper publishers would have an especially enormous impact on Austin.
GateHouse Media LLC and Gannett Co. Inc. are in the midst of merger talks, according to The Wall Street Journal and New York Post. If the deal goes through, it would marry the largest newspaper publisher in the U.S. (GateHouse) and the second largest (Gannett).
Pittsford, New York-based GateHouse maintains a significant presence in Austin. It owns the Austin American-Statesman, which employs about 200 people, and operates a national editing and design center in Austin that employs more than 300 people. GateHouse bought the Statesman in 2018 for $47.5 million. In all, GateHouse owns 156 daily newspapers and 464 non-daily newspapers across the country, including two dozen in Texas.
The McLean, Virginia-based Gannett — publisher of USA Today and 108 other daily newspapers around the country — owns five daily newspapers in Texas, but none in the Austin area.
Under the potential merger, GateHouse’s parent company would scoop up Gannett in a cash-and-stock transaction.
As noted by The Wall Street Journal, GateHouse “has a reputation for aggressively slashing expenses” at newspapers that it buys. The Statesman has undergone at least one round of staff buyouts since GateHouse purchased it. Such cost-cutting measures could persist if GateHouse and Gannett join forces.
“By combining, GateHouse and Gannett should realize big savings and also some increases in revenue as they build out an audience for national ads. That is the basic logic that drives a calculation that they will be worth more together than they are separately,” Rick Edmonds, media business analyst at the Poynter Institute, wrote on the nonprofit journalism organization’s blog.
Representatives of GateHouse and Gannett couldn’t be reached for comment.
Ken Doctor, news industry analyst at the Nieman Foundation, a nonprofit journalism organization, reports that the GateHouse-Gannett deal could be formalized by the end of this summer, with the merger completed in early 2020. The megachain, as Doctor describes it, would own more than one-sixth of the country’s daily newspapers.
Speculation about a GateHouse-Gannett mash-up comes amid the continuing plunge in newspapers’ ad revenue and the ongoing consolidation of media companies. Perhaps the biggest challenge the new company would face involves ramping up revenue from digital news platforms, which increasingly are displacing print products.
“Gannett and GateHouse, like all their industry brethren, look at ever-bleaker numbers every quarter; the biggest motivation here [for a merger] is really survival, which in business terms means the ability to maintain some degree of profitability somewhere into the early 2020s,” Doctor wrote.