NEW YORK -- GateHouse closed its $1.1 billion takeover of USA Today publisher Gannett, becoming the country's largest newspaper company by far and pledging significant cost cuts.
The merger unites the parent companies of about 260 daily papers, including the Arizona Republic, the Providence Journal and the Austin American-Statesman, as well as hundreds of weeklies.
In an interview with The Associated Press, executives of the combined company, which will keep the Gannett name, acknowledged there will be layoffs -- the company has committed to cutting $300 million in annual costs.
Current Gannett Chief Executive Officer Paul Bascobert said front-line reporters are "the last place we want to touch" when it comes to job cuts. He cited "duplication of management" and potential excess costs in financial, printing and advertising divisions as opportunities to reduce costs, and said the company will further centralize editing and newspaper and web design functions.
Mike Reed -- the media veteran who leads GateHouse's parent company, New Media Investment Group -- will be CEO of the newly combined company. Bascobert, who has a background in e-commerce as well as media, will now serve as chief executive of the new company's operating subsidiary.
"We believe we have a strategy that will result in ... not just preserving local journalism, but letting local journalism thrive," Reed said. "National journalism as well. And fortunately, we're going to be able to impact at least 260 communities."
In August, New Media sparked concerns that the deal's cost cutting would further erode the country's beleaguered local news market.
"This merger will hurt the communities these media organizations serve," NewsGuild-Communications Workers of America President Bernie Lunzer said in a statement this month. "To fund the merger, local papers will likely disappear, jobs will be slashed, and journalism will suffer."
The deal unites what were already the two biggest U.S. daily newspaper chains. The new company will own more than one-sixth of all daily papers in the country. It will reach nearly 9 million print readers, according to industry analyst Ken Doctor.
Gannett investors have been pleased that the long-struggling newspaper chain found a buyer, sending shares up 14% this year. But New Media shareholders have been skeptical that the deal will pay off. Its stock has dropped 45% this year. Starting today, what had been New Media shares will trade under the Gannett ticker symbol, GCI.
Bascobert declined to give an estimate on how many layoffs were coming. The two companies have about 25,000 employees, said a Gannett spokeswoman, down from 27,600 at the end of last year.
Information for this article was contributed by Tali Arbel of The Associated Press; and by Gerry Smith of Bloomberg News.
Business on 11/20/2019