US media merger to create newspaper giant

Gatehouse and Gannett, two of the largest newspaper companies in the US, announced a $1.4 billion- (€1.2 billion) merger on Monday. The ensuing newspaper giant will operate 263 daily newspapers with a print circulation of 8.7 million. The deal is expected to close by the end of the year.

In the merger, Gatehouse media's parent company, New Media Investment Group, will buy USA Today-owner Gannett, and the new company will keep the well-known Gannett brand.

Michael Reed, New Media chairman and chief executive, said the deal would help papers owned by the firms accelerate the move to digital readership and would "transform the landscape in the print and digital news business."

Gannet has dealt with declining revenues and has invested millions in the last few years to increase its digital media footprint.

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Local papers struggle

The merger announcement comes as local papers in the US face the challenge of converting their formats for digital readers and building business models that replace print-based advertising.

In a race to survive, many newspapers in the US are consolidating. But critics say it comes at the expense of newsroom jobs, and journalistic quality

Gannett and Gatehouse have said they are committed to "journalistic excellence" — while also expecting to cut costs   $275-300 million annually.

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"We've been hearing for years and years about the glories of cost efficiencies," Northeastern University professor Dan Kennedy told the Associated Press, adding that it is not clear, based on past media mergers, whether those savings will benefit the papers, its employees or their readers.

Gatehouse and Gannett are known for buying and consolidating newspapers. Gatehouse recently acquired Palm Beach Post in Florida, and the Austin American-Statesman.Gatehouse currently  publishes 154 daily newspapers, most in small- and mid-sized towns

According to a study by the University of North Carolina cited by the Associated Press, the US has lost almost 1,800 local newspapers since 2004 and newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research. 

wmr/rt (AP, Reuters, AFP)

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