A new powerhouse

Another Statesman shake-up as owners finalize unprecedented deal

Another Statesman shake-up as owners finalize unprecedented deal

Austin American Statesman masthead August 5 2019
The cover of the Austin-American Statesman on August 5, 2019. Photo courtesy of Austin American Statesman

The owner of the Austin American-Statesman and the owner of USA Today are combining in a cash-and-stock deal worth roughly $1.4 billion, the companies said August 5.

Technically, New Media Investment Group Inc., owner of the Statesman, is acquiring Gannett Co. Inc., owner of USA Today, to become the country’s largest newspaper publisher. New Media owns GateHouse Media LLC, which bought the Statesman for $47.5 million in 2018. New Media shareholders will own 50.5 percent of the stock of the new company, which will adopt the Gannett name, and Gannett shareholders will own 49.5 percent.

Today, GateHouse employs about 500 people locally between the Statesman and the company’s national editing and design center in North Austin. It remains to be seen how those numbers might change after the merger is completed; such deals often result in staff reductions aimed at cutting costs.

In all, Pittsford, New York-based GateHouse owns 154 daily newspapers and more than 460 non-daily newspapers across the country, including two dozen in Texas. McLean, Virginia-based Gannett — publisher of 109 daily newspapers around the country including USA Today — owns five daily newspapers in Texas, but none are in the Austin area.

Neiman Lab media analyst Ken Doctor, who tracks developments in the news business, says the marriage of GateHouse and Gannett “will produce an unprecedented giant in American daily journalism.” The new Gannett will own about one-sixth of the remaining daily newspapers in the U.S., according to Doctor.

The GateHouse-Gannett combination “will exert a profound impact on the news industry itself, hundreds of communities, millions of readers, and on the very future of the craft of journalism,” Doctor writes.

A Gannett release about the merger says that combining the operations of GateHouse and Gannett is expected to generate $275 million to $300 million in annual cost savings within two years. Expenses will be trimmed in “a judicious manner,” according to the release, while the new Gannett continues to invest in its news operations.

“A number of top Gannett executives are likely to lose their jobs, and many more positions in business departments will disappear as consolidation takes root,” writes Rick Edmonds, a media analyst at the Poynter Institute. “The impact on newsrooms is less clear. I would not expect reductions right away — but cuts related to weak revenues, combined with restructuring plans, may be on the horizon.”

The two companies say the new Gannett will crank up their combined digital platforms in a rocky environment where print publications are bleeding money.

“New Media and Gannett believe that a digital transformation of the newspaper industry is vital to the preservation of journalism, and the [deal] will accelerate the combined company’s digital transformation,” the release says. “The breadth and depth of each company’s digital offerings will make the combined company a leading digital media player and a stronger partner for advertisers and [businesses].”

The deal is scheduled to close by the end of 2019.