Report: Gannett, owner of the Press-Citizen and Des Moines Register, will be bought by rival GateHouse

Iowa newspapers published by Gannett and GateHouse Media. — illustration by Jav Ducker

According to multiple reports, GateHouse Media is preparing to buy Gannett, the media company that owns the Press-Citizen and the Des Moines Register.

GateHouse is the largest owner of daily newspapers in the country with 156 dailies, mostly in small markets. It also owns 328 weeklies. Gannett, which owns 109 daily papers across the country, has the largest circulation of any American newspaper chain. Between them, the two companies publish one out of every six daily newspapers in the country, with a combined daily print circulation of approximately 8.7 million.

The deal is expected to be concluded within the next several weeks.

“That’s an unprecedented concentration of control in the history of the American press,” said Ken Doctor, a media analyst at the Nieman Journalism Lab, who has been covering the potential deal since talks between the two companies were first reported in May.

GateHouse would purportedly buy Gannett in a cash-and-stock transaction. GateHouse is a holding company for New Media Investment Group, which is controlled by Fortress Investment Group, a New York City-based investment management firm. Fortress is owned by SoftBank, a Japanese holding company, best known for its ownership stakes in tech companies.

GateHouse has spent more than $1 billion since 2014 to acquire newspaper groups in small markets. In Iowa, it currently owns two daily newspapers (the Ames Tribune and The Hawk Eye in Burlington) and five weeklies (the Boone News-Republican, Dallas County News, Hamburg Reporter, Nevada Journal and Perry Chief). The Register and the Press-Citizen are the only Iowa newspapers Gannett owns.

“Gannett and GateHouse makes sense from the standpoint that Gannett has papers near GateHouse markets,” Michael Kupinski, an analyst with Nobel Capital, told the New York Post in May. “Consequently, there would be operating efficiencies from consolidation of facilities.”

GateHouse has pursued an aggressive strategy of consolidation with the newspapers it owns. The most recent example occurred in May, when GateHouse consolidated 50 Massachusetts newspapers into just 18.

A leaked memo from GateHouse executives said “this consolidation will reduce production expenses and represents a necessary next step in our evolution, while creating a stronger product for both our subscribers and advertisers.”

The Massachusetts merger was the most dramatic aspect of a nationwide GateHouse cuts in May that eliminated approximately 200 jobs at its publications.

“We are doing a small restructuring — at least that’s what I would call it — that I’m sure will be misreported,” Mike Reed, CEO of GateHouse’s parent company, New Media Investment Group, told Poytner at the time. “We have 11,000 employees. This involves a couple of hundred.”

Gannett has also repeatedly cut jobs as its publications in recent years, closing newspapers and consolidating operations at others.

“Since January 1, Gannett and GateHouse already cut more than 600 positions between them,” according to the Columbia Journalism Review.

Neither GateHouse nor Gannett will comment on the ongoing negotiations. Gannett would not even respond to questions from its flagship publication, USA Today.

The New York Post reported last week that three private equity firms that have ownership stakes in both Gannett and New Media are pushing for the deal to move forward. “Private equity firm Blackrock holds a 14.64-percent stake in each company,” according to the Post. “Vanguard Group holds 11.64 percent of Gannett and 10.09 of New Media; while Dimensional Fund Advisors holds 8.23 percent of Gannett and 7.33 percent of New Media.”

The Post said one the biggest obstacles remaining between the two companies “involves GateHouse/New Media’s assumption of Gannett’s costly pension liabilities.”

According to Ken Doctor, executives at both companies “think a mega-merger buys two or three years — ‘until we figure it out.’ The ‘it’ is that long-hoped-for chimera of successful digital transformation.”

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