Report: Gatehouse, Gannett Talking Cash-Stock Deal

USAToday publisher Gannett Co. is nearing a deal to combine with rival GateHouse Media, reports The Wall Street Journal citing people familiar with the matter, a move that would join the nation’s two largest newspaper groups by circulation at a time local media is in a battle for survival.

The companies are grappling with a brutal environment for local newspapers around the country. Private-equity-backed GateHouse has a reputation for aggressively slashing expenses at titles it acquires.

Local papers have suffered particularly sharp declines in circulation compared to national outlets as readers look elsewhere for news and classified ads disappear. They have also lost more of their online-advertising business to tech giants such as Facebook Inc. and Alphabet Inc. ’s Google.

Nearly 1,800 newspapers closed between 2004 and 2018, leaving 200 counties in the U.S. without a paper and roughly half the counties in the country with only one, according to a University of North Carolina study. That has stoked concerns that a crucial source of reporting around the country is being starved.

These trends have sparked consolidation and prompted financial investors to hunt for bargains as they accumulate empires that can benefit from economies of scale—derived in large part from layoffs.

GateHouse and Gannett are discussing a cash-and-stock deal in which GateHouse’s parent would likely buy Gannett.

Gannett has been without a permanent chief executive since May, when former CEO Robert Dickey retired. He had led the company since 2015, after Gannett split its newspaper-publishing business from the company’s broadcast-television stations.

Since the split, factors buffeting the industry have eaten away at the company’s value. Gannett’s shares have lost nearly half their value as the company struggled to develop a strategy to revive its sagging fortunes.