Newsquest’s US parent company Gannett has received a takeover bid from a rival US publisher, one the National Union of Journalists has warned is “renowned for cost cutting and job slashing”.
MNG Enterprises, also known as Digital First Media, has made a cash offer for Gannett of $12 per share, having built up a 7.5 per cent stake in the publisher, which bought Newsquest in 1999.
- May 27, 2020
- May 17, 2019
- April 16, 2019
Gannett’s stock price closed at $9.75 on Friday but has been trading at $11.56 today following the bid being made public.
The NUJ said Gannet was now “being pursued by the most predatory of vulture capitalist corporate raiders who are far distant from the needs and responsibilities of a modern media company”.
Gannett owns USA Today and hundreds of local newspapers in the US, as well as Newsquest, which is the UK’s second largest regional publisher and has been expanding its portfolio in the past year.
Newsquest’s titles include the Herald titles and The National in Scotland, the News and Star in Cumbria, the Northern Echo, Bournemouth Daily Echo, Oxford Mail, and Isle of Wight County Press.
It also owns a number of local weekly newspaper series in London, including the Guardian, News Shopper and Times.
MNG is owned by New York hedge fund Alden Global Capital. It publishes about 200 newspapers in the US including the Denver Post, Boston Herald and San Jose Mercury News.
A letter sent to Gannett’s board of directors by MNG today said Gannett had “suffered from a series of value-destroying decisions made by an unfocused leadership team” since it went public two and a half years ago.
It urged Gannett to enter into discussions with MNG about a strategic combination, hire an investment bank to conduct a review of strategic alternatives, including a potential sale, commit to a moratorium on digital acquisitions and to a “feasible, strategic and financial path forward” before hiring a new chief executive to replace Robert Dickey, who retires in May.
MNG said that, “unlike other potential buyers”, it was a “proven operator in the newspaper business” and was able “to provide a home for the company’s businesses and valued employees so they can continue to serve their local communities”.
The publisher added: “MNG has invested in Gannett because we see significant value in Gannett’s assets, particularly its core newspaper business.
“However, Gannett has been moving in the wrong direction, resulting in a declining stock price and lack of confidence that the board and existing management are willing and able to take the steps necessary to turn the company around.”
In a statement, Gannett confirmed it had received an unsolicited bid from MNG and said its board of directors will “carefully review the proposal received to determine the course of action that it believes is in the best interest of the company and Gannett shareholders”.
Federica Bedendo, mother of chapel for the NUJ Newsquest group, said the union is “really concerned” about what the potential acquisition would mean for local newspapers in the UK.
“Journalists within Newsquest already think this company has hit rock bottom and the prospect of being acquired by an organisation that’s renowned for cost cutting and job slashing isn’t going to do anything to benefit our titles or indeed our working conditions.
“We already operate on a shoe-string, morale is at an all-time low, stress levels are through the roof and we lose more and more talent each day due to the way that Newsquest operates.
“What angers us most is that Newsquest is financially in a very enviable position compared to other publishers, yet its top bosses seem to be prepared to do anything for profit. NUJ members are being driven away from the newspaper industry by these money-chasing operations.”
Chris Morley, Newsquest NUJ national co-ordinator, added: “The proprietorship of Gannett over Newsquest as its UK operation has been a sorry tale of shameless cost-cutting that has threatened to bring low once mighty titles through the pursuit of unsustainable profits and starvation of investment.”
He said: “Our long-suffering members at Newsquest deserve far better than this for all their heroic efforts to maintain quality journalism in the teeth of often cynical sabotage by their own bosses over the last decade.
“In this time of great uncertainty, the NUJ will be vigilant in upholding and defending the interests of its members and the essential journalism they produce.”
A Newsquest spokesperson declined to comment.
The Wall Street Journal today described MNG as “a hedge-fund-backed media group known for buying up struggling local papers and cutting costs”.
The Denver Post published an editorial in April last year saying it had been ordered to cut 30 jobs by July and pleading for New York hedge fund – owner of Digital First Media – to “rethink its business strategy across all its newspaper holdings”.
“Denver deserves a newspaper owner who supports its newsroom,” it said. “If Alden isn’t willing to do good journalism here, it should sell The Post to owners who will.”
But MNG claimed in its letter to “save newspapers and position them for a strong and profitable future so they can weather the secular decline”.
It claimed that the Orange County Register and Boston Herald, its latest acquisitions, had both been “left for dead and put into bankruptcy by their former owners which could have caused a liquidation and a loss of all the jobs”.
“MNG stepped up and invested in them when others wouldn’t, saving many of those jobs and providing for new jobs,” the company said.
“We improved operations and made them viable and profitable by providing them with new leadership, a seasoned executive team and a new strategy when others clearly had failed.”
Picture: Reuters/Larry Downing