Gannett Co. buying Midwest, South newspapers for $280M.
MILWAUKEE (AP) — Gannett Co. has reached an agreement to acquire newspaper company Journal Media Group for $280 million, giving the media giant control of publications in more than 100 local markets in the U.S., company officials announced Wednesday evening.
The deal, announced by the companies Wednesday evening after The Wall Street Journal broke news they were nearing a deal, values Journal Media at $280 million. Journal Media publications dot the Midwest and South and include the Milwaukee Journal-Sentinel, Memphis (Tennessee) Commercial-Appeal and Knoxville (Tennessee) News Sentinel. Gannett’s “prevailing strategy is economy of scale,” which involves reducing local costs and consolidating or regionalizing many operations, analyst Ken Doctor said. “Undoubtedly, there will be some (layoffs) in any areas that can be centralized,” including technology, newsrooms, human resources, finance and some advertising, said Doctor, who is president of Newsonomics, a website that monitors consumer media. Gannett this summer became a company that runs newspapers exclusively, having moved all of its television companies into a separate company, Tegna Inc.
The company, with its television assets now in a separately traded public company called Tegna Inc., TGNA 7.07 % has a new chief executive, Robert Dickey, who has said the company is on the hunt to acquire newspapers in markets that have populations between one and three million people. Bill Haslam said he visited Volkswagen’s Chattanooga plant on Wednesday to let its workers know the state is on their side amid an emissions cheating scandal involving the German automaker that he says has nothing to do with them. “Everybody knows about Volkswagen’s struggles,” Haslam told the news media. “What is getting lost in that story is that there are some men and women right here in Chattanooga that are producing a great product, who have nothing at all to do with the problems that have been created.” Haslam added: “One of the purposes today was to tell them, ‘The state of Tennessee is not going anywhere in terms of supporting you all. We want this to be a success.'” The governor said he still has confidence in the plant and believes it can still successfully push out vehicles — including the production of a new sports utility vehicle — despite the scandal in which Volkswagen was caught outfitting diesel cars with software to defeat emissions tests. Software installed on 2009-2015 diesel Volkswagens sensed when the cars were hooked up to testing stands, and switched the emissions system to pollution controls that reduced the output of nitrogen oxides that contribute to smog and other pollution, the U.S.
Tegna, whose former name was Gannett, sought the spinoff to focus mainly on television broadcasting and its digital businesses, Cars.com and CareerBuilder.com. Our merger will combine the best of each of our organizations to create a journalism-led, investor-focused company which will provide substantial value to the shareholders of both companies. Since the split, Gannett took control of some additional newspapers in Texas, New Mexico and Pennsylvania as part of an asset swap with Digital First Media, and it acquired 28 weekly and a daily newspaper in the U.K. When the split was announced in August 2014, then-Gannett executives said the new Gannett would begin operating largely without debt and was poised to be an acquirer in an industry ripe for consolidation. That’s because currently an assault on staff where no one is injured is classified as “staff-inmate provocation,” which is considered a nonviolent offense.
In the immediate aftermath of the splits, most of the deal-making has been done on the television side, as broadcast-station owners look to bulk up to negotiate higher fees from pay-TV operators and content providers. Speaking at a Wednesday meeting of the Senate Corrections Subcommittee, Stalder explained the recommended change this way: “If I swing a baseball bat at your head and just barely miss you, it should be sanctioned the same way whether I hit you or not.” The association is recommending the Correction Department add new disciplinary offenses that include “staff assault with weapon” and “staff assault without weapon.” The proposed definitions for the offenses makes clear that the inmate does not even have to make contact with staff, much less injure the person, for it to be considered assault. But slowly, over the past year, consolidation has come to the newspaper industry as well in part because prices for newspaper assets have fallen so precipitously and because of the cost and other synergies that such combinations promise.
Critics of the department have claimed that the administration is using the “staff-inmate provocation” category as a way to hide the number of violent assaults in the prisons. New players like Gannett and New Media Investment Group NEWM 2.45 % —launched in 2013 with assets of GateHouse Media Inc. and the Dow Jones Local Media Group—are snapping up newspaper assets they see as undervalued. Opportunity for approximately $25 million of additional operating synergies to be fully realized over the next two years via the consolidation of corporate and administrative operations, integration with the Gannett shared service centers and consolidation of certain printing and distribution assets in multiple adjacent markets. NASHVILLE, Tenn. (AP) — More than 200 music-related businesses are still in operation on Nashville’s Music Row, and 66 music-business properties are worthy of a spot on the National Register of Historic Places, a recent study says. While Journal Media Group’s shares have fallen about 19% since the new company began trading in April, in August it reported that its second quarter revenue rose 26% year over year to $115.8 million as both subscription and advertising sales rose.
More findings by the National Trust for Historic Preservation are being unveiled in detail at a community meeting Wednesday, The Tennessean reported (http://tnne.ws/1ZbyJJF). Gannett pointed out that the acquisition would add about $450 million to Gannett’s yearly revenue and about $60 million of “adjusted EBITDA,” or earnings before interest, taxes, depreciation and amortization. With more than 110 markets internationally, it is known for Pulitzer Prize-winning newsrooms, powerhouse brands such as USA TODAY and specialized media properties. Investors and security holders will be able to obtain these materials (when they are available) and other documents filed with the SEC free of charge at the SEC’s website, www.sec.gov.
Information regarding Journal Media Group’s directors and executive officers is available in Journal Media Group’s registration statement on Form S-4 (Registration No. 333-201540). Forward-looking statements include all statements that are not historical facts and can typically be identified by words such as “believe,” “expect,” “estimate,” “predict,” “target,” “potential,” “likely,” “continue,” “ongoing,” “could,” “should,” “intend,” “may,” “might,” “plan,” “seek,” “anticipate,” “project” and similar expressions, as well as variations or negatives of these words. The matters discussed in these forward-looking statements are subject to a number of risks, trends, uncertainties and other factors that could cause actual results and developments to differ materially from those projected, anticipated or implied in the forward-looking statements.