Yesterday, the largest US newspaper chain was created when Gatehouse And Gannett completed the deal at 4:10 p.m. GateHouse completed its $1.1 billion take-over of USA giant Gannett, and in the process becoming the country’s largest newspaper company by some distance. Both companies had earlier pledged to cut significant costs at a time when print publications are in swift decline.
The merger brings about 260 daily papers together, which includes the likes of the Arizona Republic, the Providence Journal and the Austin American-Statesman, including hundreds of weeklies.
Layoffs Imminent
The merger though will come at a cost with executives of the combined company, which will keep the Gannett name, saying that there will be layoffs and the company has committed to cutting $300 million in annual costs.
Talking on the cost reduction, current Gannett CEO, Paul Bascobert said,
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Bascobert said that “duplication of management” and potential excess costs in financial, printing and advertising divisions are avenues where opportunities to reduce costs exist. He said that the company will further centralize editing and newspaper and web design functions.
Mike Reed to be the new CEO
Mike Reed, who heads GateHouse’s parent company, is going to be the new CEO of the newly combined company. Bascobert, who has a background in e-commerce as well as media, will instead serve as chief executive of the new company’s operating subsidiary.
“We believe we have a strategy that will result in …not just preserving local journalism, but letting local journalism thrive,” Reed said. “National journalism as well. And fortunately, we’re going to be able to impact at least 260 communities.”
What lies in the Future
The merger would allow Gannett to slow its revenue decline. As per the reports, the combined company’s revenue will drop 3.6% next year and less every subsequent year until 2023, when it will grow less than 1%. That would be a big turnaround: The old Gannett’s revenue fell 9.5% over the last nine months.
The company is looking to grow in digital operations although the print advertising declines and traditional online ads continue to be dominated by Facebook, Twitter, and Google. The executives foresee a revitalization of the classified advertising model on newspaper websites that could offer an alternative to Yelp in helping readers find local businesses.