Gannet-Gatehouse Merger and the Decline of Newspapers

The merger of two large media conglomerates, Gannett and Gatehouse Media, is stoking fears about media consolidation and the decline of local newspapers.  

As of August 6, according to USA Today, Gannet was bought out by New Media Investment Group, the holding company that owns Gatehouse, in a $1.38 billion dollar deal. 

Combined, the new company controls one-sixth of all newspapers in the United States, including more than 100 local newspapers, from AZCentral.com in central Arizona, to the Portsmouth Herald in Portsmouth, N.H. 

This merger was even noted in a report on news deserts by the UNC School for Media and Journalism. In it, they note that this is only the latest of Gatehouse’s history of buying struggling media outlets in an attempt to raise Gatehouse’s revenues. 

Unsurprisingly, the next step after the purchase is cost reduction to ensure a stable revenue. This typically means senior reporters are laid off and newsrooms shrink. 

It should be noted that Gatehouse has been doing this for years. As far back as 2007, according to Editor&Publisher, Gatehouse bought 14 daily papers for a total of $115 million. They also engaged in a purchasing spree just after the Great Recession, purchasing papers at fire sale prices. 

Columbia Journalism Review noted that this deal is not only about consolidation but is also about the race for time many legacy media outlets have against the decline in revenue that has occurred across the industry. 

In Gatehouse and Gannett’s case, as referenced by CJR, both outlets have cut more than 600 jobs combined in 2019 in an attempt to rein in expenses. 

Another problem surrounding this deal is the role that investment groups have to play in owning and cutting jobs in media companies. 

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While Gatehouse Media was not owned by a private equity firm, it was held by an investment holding group, meaning that Gatehouse is less focused on creating good local news and more focused on appeasing the profitability needs of New Media Investment Group. 

At the moment, the most controversial private equity group in this regard is Alden Global Capital. Alden Global Capital, according to The Washington Post, owns newspapers such as The Denver Post and the Boston Herald, and has engaged in unethical behavior such as moving pensions into funds which Alden Global Capital controls, along with a trend of cannibalizing the papers it owns. 

Last May, for example, as reported by The Denver Channel, the members of The Denver Post protested against Alden Global Capital. These demonstrations were triggered by the layoffs that the paper suffered in the name of reducing costs. 

The irony of this, as noted in The Hustle, is while the newspapers are downsizing, the owners of the private equity firms are raking in large profits. This is seemingly a throwback to the 1990s. In a  Nieman Report from 1999, media criticism journals like CJR in articles such as  “Money Lust,” already noticed that media companies were cutting their news budgets in the search for larger profits. 

With the usage of quotes stating that journalism was heading to “a fatal erosion of the ancient bond between journalists and the public,” what is old is new again in an age of falling profitability.

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