Moment of truth draws closer for debt-riddled GateHouse

Since coming together in the middle of the last decade, GateHouse Media has been struggling with $1.2 billion in debt that it took on to assemble a chain of more than 300 community newspapers.

In 2008, I wrote in CommonWealth Magazine that company officials claimed they had no problems making debt payments — yet they were in the midst of dramatically downsizing their operations, including at about 100 newspapers in Massachusetts.

A year ago, Jack Sullivan, also in CommonWealth, found GateHouse was warning shareholders that bankruptcy was an option, even as the company was paying out $1.4 million in bonuses to top executives.

Now, it seems, the moment of truth is at hand. According to Emily Glazer and Mark Spector of the Wall Street Journal, GateHouse appears likely to undergo a “prepackaged bankruptcy” with the cooperation of its creditors in the hopes of emerging from the proceedings debt-free. (Non-subscribers may read the Journal story by searching for it on Google News. Don’t worry: Rupert already knows, and he says it’s OK.)

If GateHouse could put itself on sounder financial footing, that would certainly be good news for employees and readers of papers such as the Patriot Ledger of Quincy, the Enterprise of Brockton, the MetroWest Daily News and the myriad weekly papers the company continues to operate.

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3 thoughts on “Moment of truth draws closer for debt-riddled GateHouse

  1. Jackie Caulkins

    I think this company should have to file bankruptcy. I own a small shopper that competes with them. They have tried to run us out of business by offering special deals to advertisers that are below the cost to produce the product. I have avoided the price war and have stayed in business basically because most of our advertisers are loyal. We pay our debts, why should this company be able to offer services below cost then not pay their bills and survive? It’s not right and I suspect they have done the same in other markets to drive out competition.

  2. Larz Neilson

    Trying to cobble a history of this group of newspapers would be like catching fish and stringing them through the gills. Sorry if that’s a bit graphic, but that is how this chain has come together. You could start with any of the small papers in the Boston suburbs 40 years ago, the Lexington Minuteman group, the Ipswich weeklies, Beacon Publications, the Framingham News, the Quincy Patriot Ledger. The mergers began in the 1970s. Joe Stuart bought Beacon, and then he bought Lexington, purely as a turn-around scheme. Local newspapers had become pawns in a big-money game.
    Then a couple of fast operators convinced Fidelity’s Ned Johnson to create a large group of newspapers. (Fidelity Capital, not Fidelity Investments — same people, different pocket.) Fidelity bit, not realizing the limits of advertising for small businesses. The Globe was doing well with ads from Jordan’s and a beefy classified section from the booming 128 high-tech belt. But the market did not exist for selling ads for a store in Braintree to people in Marblehead. Most chain stores weren’t about to restructure their marketing plans around the new chain of papers. Readers knew that the papers were not local — the nearest office was about five towns away.
    Fidelity had created what might be called a “Chinese water clock”, a large impressive thing that just did not work — a Rubegoldberg.
    Fidelity finally managed to unload its string of fish onto the Herald, but the papers were still no better than before. By then, most of them were nearly dead. In the new century, the group became part of Gatehouse, and we’re seeing the results. The world of newspapers is upside-down. The internet has greased the skids, some people have made big money in the process, and the Bay State, like the rest of the nation, has lost most of its really good newspapers.

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