Newsquest’s US parent company Gannett has been bought out by a rival media group in a deal reportedly worth $1.4bn (£1.1bn).
Gannett said the merger with New Media Investment Group could speed up its digital transformation, which is “vital to the preservation of journalism”.
- March 24, 2020
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New Media has said it will rebrand as Gannett once the deal is completed by the end of the year. It will own 263 daily newsbrands in 47 US states, including USA Today, making it the largest news group in the country.
It will also own Newsquest, the second largest regional publisher in the UK. Gannett bought the regional publisher, which owns the Herald titles in Scotland, in 1999 for £1.6bn.
An email from Newsquest chief executive Henry Faure Walker to staff this morning, seen by Press Gazette, said: “…in New Media we have found a strong partner for Gannett with a shared mission to create the largest local media organisation and best-in-class marketing solutions partner – something which is of course at the heart of our Newsquest strategy in the UK”.
The email was accompanied by three documents explaining the merger to staff, but Federica Bedendo, Newsquest’s mother of the chapel for the National Union of Journalists, said she was “still none the wiser” about what it meant for the UK titles.
“At a time when morale is at an all-time low, the last thing we need is more uncertainty.
“I’d like to think that those who negotiated this deal looked at all aspects of the business in great detail, yet here we are wondering what tomorrow will bring.
“I sincerely hope that the investment they talk about will reach the UK operations because after all the cuts of recent years we are in desperate need of it.”
The companies said in a joint press release that they expected the merger to lead to savings of $275m to $300m (£225m to £245m) every year, with a pledge to keep investing in “product development, training for newsrooms and understanding readers’ needs”.
A Newsquest reporter, who asked to remain anonymous, told Press Gazette they had learned about the takeover from reports in the press some ten hours before Faure Walker’s email to staff.
“Newspapers are in trouble. Management has abandoned us, consumers have abandoned us, politicians (and even some columnists) have railed against us all as ‘fake news’,” they said.
“We’ve been cut back so much, with pages filled by best efforts and goodwill of remaining staff that any new potential cuts can’t go much further without closing papers.
“I’m no more worried about the future than yesterday, but expect many local papers have less than five years to go and it’s only a question of how long it takes for US cuts to turn their focus on the UK.”
A Newsquest spokesperson pointed Press Gazette to a representative of Gannett in the US for comment, who has yet to respond.
Michelle Stanistreet, general secretary of the National Union of Journalists, said the takeover deal would mean “months of further uncertainty” for hundreds of its members while the merger is approved.
“Little is known about New Media Investment on this side of the Atlantic and today’s announcement barely mentions Newsquest, so we don’t know at this stage what the new company leadership will bring for our hard-working members in this country,” she said.
“While it is positive that New Media talks about a ‘shared commitment to journalistic excellence’ we note that it is thought the combination of the two companies could bring savings of up to $300m (£245m) annually.
“We would urge that this publicly pledged support for high-quality journalism should come with greater investment in journalists and journalism.”
Gannett and New Media said the deal would “meaningfully enhance” their joint financial profile “by leveraging nationwide reach and local presence to expand and deepen relationships with consumers and businesses”.
“As a result, we will accelerate the growth of the combined company’s digital revenue through innovative customer experiences and new marketing solutions for businesses, while creating an expansive journalism network with the resources required to deliver unique and award-winning content.”
Gannett chairman John Jeffry Louis said the board had unanimously decided the deal would provide “significant and immediate value” for shareholders, employees and audiences.
“We see numerous opportunities to leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future,” Louis said.
“Importantly, we have found in New Media a strong partner and cultural fit for Gannett as we continue delivering on a shared commitment to journalistic excellence for the communities we serve.”
After the deal is closed Gannett shareholders will hold 49.5 per cent of the combined company and New Media shareholders will hold 50.5 per cent.
According to the Colombia Journalism Review, New Media’s operating company Gatehouse is the second biggest newspaper group in the US after Gannett. The website also claimed more than 600 jobs have been cut across the two companies already this year.
The potential buyout raised fears Newsquest could become “collateral damage” in any deal as the UK company was repeatedly omitted from public statements on both sides.
Picture: Reuters/Larry Downing