Tag: Rupert Murdoch Page 3 of 7

Trump and Murdoch: Who’s using whom?

On March 6, 2019

Rupert Murdoch. Photo (cc) 2015 by the Hudson Institute.

The stench of corruption emanating from the White House is so noxious that it can be hard to focus on outrages that truly matter. This matters: As long rumored, but not confirmed until this week, President Trump personally intervened in the merger of media giants AT&T and Time Warner in order to punish CNN, high on the list of “fake news” outlets with which he is perpetually enraged.

The revelation is contained within Jane Mayer’s 11,500-word examination of Fox News, which appears in the current issue of The New Yorker. As Mayer describes it (and as even the most casual viewer will attest), over the past few years Fox has metamorphosed from a right-wing news operation with a shaky grasp of the truth into something much more dangerous: a propaganda outlet for Trump that serves up steaming piles of misinformation, disinformation, and conspiracy theories to its angry, fearful audience.

Not coincidentally, Fox News’ founder and guiding light, the international media magnate Rupert Murdoch, has emerged as one of Trump’s closest confidants. And Murdoch did not want to see two of his rivals merge, especially given that he had tried and failed to buy Time Warner himself just a few years earlier. Luckily for him, his business interests dovetailed with Trump’s hatred of CNN, one of Time Warner’s crown jewels.

As Mayer describes it, in the summer of 2017 Trump told his chief economic adviser, Gary Cohn, that the Justice Department should fight the merger. Citing “a well-informed source,” Mayer reports that Trump demanded action during a meeting with Cohn and his then-new chief of staff, John Kelly. “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened!” she quotes Trump as saying. “I’ve mentioned it 50 times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!” As the meeting was coming to a close, Mayer writes, Cohn told Kelly, “Don’t you f—ing dare call the Justice Department. We are not going to do business that way.”

But the Justice Department did indeed fight the merger, all the while denying any political motivations. Trump’s opposition to the merger, though, has long been thought to be driven by his hatred for CNN. Cohn himself believed it, according to Mayer. And as I argued a year and a half ago, blocking the merger could have resulted in Time Warner’s falling into Murdoch’s hands, thus fulfilling Rupe’s ambitions and giving him an opportunity to Foxify CNN. (Not that CNN isn’t in serious need of fixing, but that’s a topic for another day.)

Adding to suspicions that Trump was acting on his wish for retribution rather than by genuine concerns about the social consequences of such massive mergers was that there really didn’t seem to be much of a legal case against it. The AT&T-Time Warner deal is something we all ought to be wary of. But under current theories of antitrust law, there was little reason to block it. In fact, the Justice Department’s efforts to stop it were shot down by the courts at every step along the way, and it recently got the final go-ahead.

As Jordan Crook and Danny Crichton explain at TechCrunch, the two companies are complementary businesses rather than competitors. Time Warner is mainly a content company; AT&T is a distributor. Their combination is regarded by many economists as a “vertical merger” that could actually benefit consumers, Crook and Crichton write, by giving them “access to a more comprehensive set of services, at a lower price, while still generating profits.” Besides, in a world in which the entire media landscape is now dominated by Google and Facebook, it may be that the only way to provide competition is by supercharging other media companies.

Now I’ll grant you that in my perfect media world, I would not only have ruled against the merger of AT&T and Time Warner but I’d break up Google and Facebook as well. But it’s the world of the corporate titans, and we’re just living in it. Given that, there is every reason to oppose governmental intervention motivated by presidential pique rather than by genuine regulatory concerns.

Mayer’s report appears destined to become part of the bill of particulars that the Democratic House is assembling as it investigates Trump’s corruption and possible crimes. U.S. Rep. Adam Schiff, chair of the House Intelligence Committee, said that he has “long feared Trump would use the instruments of state power to carry out his vendetta against the press he has attacked as the ‘enemy of the people.’”

Meanwhile, another media company seeking favors from the White House is playing it safe. According to David Fahrenthold and Jonathan O’Connell of The Washington Post, the cell-phone company T-Mobile, which is seeking to merge with its rival Sprint, has spent $195,000 at Trump’s Washington hotel since announcing the proposed deal nearly a year ago — far in excess of what the company had ever spent there previously.

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What will GateHouse Media do with the Boston Herald?

By Dan Kennedy

On December 8, 2017

In Media

There is so much local media news breaking today that it’s hard to keep it all straight. Late this afternoon came the huge announcement that Boston Herald publisher Pat Purcell, who bought the tabloid from his mentor Rupert Murdoch in 1994, was taking the paper into bankruptcy with the intention of selling it to GateHouse Media.

I’ve posted the clip of us talking about the deal on “Beat the Press.” Here is the Herald’s coverage. And here is The Boston Globe’s. The Boston Business Journal has some interesting details as well, including the bankruptcy filing. I talked with Jenna Fisher of Patch about what’s next.

At this point, we all have far more questions than answers. A friend suggested something to me a little while ago that is worth pondering: Can we be sure that GateHouse will end up with the Herald? Once a business goes into bankruptcy, it’s up for grabs. As I note in my forthcoming book, “The Return of the Moguls,” the executives who were running California’s Orange County Register took that paper into bankruptcy several years ago with the goal of buying it themselves. They lost out, and today the Register is part of the Digital First Media empire.

Other questions: Although cuts have already been announced, will the diminished Herald be its old recognizable blend of local news, good photography and sports coverage, and feisty tabloidism? Or will it be something else entirely? Will GateHouse keep Herald Radio up and running? Will it honor its printing contract with the Globe, or will it move operations to a GateHouse facility? We’ll learn the answers to all these questions in the weeks and months to come.

Interestingly, for a few years Purcell owned around 100 community papers in Eastern Massachusetts in addition to the Herald, selling all but the Herald to GateHouse about 15 years ago. Now things have come full circle.

No one wants to see hard-working journalists lose their jobs. We all hope GateHouse will keep the pain to a minimum, and that the Herald will be with us for many years to come.

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Approving the AT&T-Time Warner deal would save CNN, enrage Trump and leave Murdoch out in the cold

By Dan Kennedy

On November 15, 2017

In Media

CNN’s Jim Acosta. Photo (cc) 2016 by Gage Skidmore.

Previously published at WGBHNews.org.

Thanks to the U.S. Department of Justice, AT&T’s monopolistic dreams may not come true after all. According to media reports, the government may block AT&T’s proposed $85 billion acquisition of Time Warner. Even if the deal is approved, AT&T may be required to sell off CNN, one of Time Warner’s crown jewels.

Under normal circumstances, such action would be welcome news for those who have long opposed media concentration and its accompanying ills: fewer choices, higher prices, and more power for corporate executives to control what we watch, listen to, and read. But nothing is normal in the Age of Trump. And in this case, it appears that opposition to the deal may be driven less by antitrust law and more by the president’s ongoing fury at CNN.

Who, after all, can forget Trump’s outburst after CNN revealed the existence (though not the contents) of the infamous dossier of raw Russian intelligence, which claimed the president-elect had engaged in financial shenanigans and embarrassing personal behavior? “Your organization is terrible,” Trump told CNN’s Jim Acosta at a news conference last January, adding: “You are fake news.” The relationship has not improved since then.

Thus anti-monopolists find themselves in the awkward position of supporting Trump’s Justice Department on the AT&T-Time Warner merger while feeling obliged to point out that federal regulators may well be doing the right thing for all the wrong reasons. Timothy Karr of Free Press, a prominent media-reform organization that opposes the merger, nevertheless writes that “Trump would be dead wrong, however, to pull the levers of government to force more favorable coverage from CNN.” Los Angeles Times columnist Michael Hiltzik, who also argues that the merger should be rejected, worries that Trump’s loose lips and tawdry tweets may end up working to AT&T’s advantage: “Trump’s rhetoric about the deal, which dates back to his presidential campaign, has muddled the issues — and may even have increased the chances that the deal will go through with all its negative aspects intact.”

I’ve been writing about the threats posed by media concentration since the 1990s. Given the circumstances, though, I think the AT&T-Time Warner deal ought to be approved — and not because (or not just because) it would infuriate Trump. Much as I agree with Karr and Hiltzik in the abstract, I can think of three very good reasons why we might be better off if AT&T winds up as CNN’s corporate overlord.

• Rupert Murdoch — yes, that Rupert Murdoch, owner of the Fox News Channel and friend of Trump — has reportedly indicated an eagerness to add CNN to his empire should it become available. According to Jessica Toonkel of Reuters, Murdoch called AT&T chief executive Randall Stephenson twice during the past six months to discuss a possible deal should AT&T be forced to sell off CNN.

• A deal that would allow Sinclair Broadcast Group to acquire Tribune Media’s television stations appears to be on track, giving the company control of more than 200 stations around the country. And Sinclair is notorious for using its power in local markets to advance a right-wing, pro-Trump agenda. Over the weekend, for instance, David Zurawik of The Baltimore Sun detailed how a Sinclair-owned station in Alabama ran a deceptive report in its local newscast to try to discredit The Washington Post’s coverage of women who say they were sexually assaulted by Republican Senate candidate Roy Moore when they were teenagers and he was in his 30s.

• Bigger is not better — far from it. But given the enormous power over content and distribution amassed by the platform giants Facebook and Google, it may be that traditional concerns about media concentration are obsolete. Perhaps the best way to fight the new media giants is by empowering the old. As Josh Marshall of Talking Points Memo notes, AT&T’s Stephenson made exactly that point recently. “Essentially,” Marshall wrote, “he argued that only by combining a company with a dominant position in distribution (AT&T) with a content company (Time Warner) could anyone hope to compete with the platform monopolies Google and Facebook in the advertising business.”

Earlier this week, Bloomberg’s David McLaughlin, Scott Moritz, and Sara Forden reported that AT&T will ask a judge to provide the company with communications between the White House and the Justice Department if the government sues to stop the merger. That could make for some very interesting reading.

Murdoch lurking in the wings. A super-empowered Sinclair wreaking havoc in television markets around the country. Traditional media being hamstrung by old laws while Facebook and Google continue to reign unchecked. Those would be reasons enough to approve the AT&T-Time Warner merger. But the specter that President Trump is attempting to orchestrate this as a way to punish a journalistic enemy looms over all of this.

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How Rupe got away with it

By Dan Kennedy

On August 10, 2014

In Media

Rupert Murdoch.

HACK ATTACK: The Inside Story of How the Truth Caught Up with Rupert Murdoch. By Nick Davies. Faber & Faber, 448 pages, $27.

For one brief moment, it looked as though Rupert Murdoch’s international media empire might be on the brink of collapse.

In the summer of 2011, Britain was in an uproar over revelations that the Murdoch-owned tabloid News of the World had hacked the voice-mail messages of Milly Dowler, a 13-year-old girl who had been kidnapped and murdered in 2002. The scandal soon spread to other papers owned by Murdoch’s News Corp. And it nearly jumped the Atlantic, as allegations circulated that Murdoch journalists had tried to listen to cellphone messages of victims of the September 2001 terrorist attacks.

Yet, in the end, not much happened.

Read the rest at The Boston Globe.

Photo (cc) by the World Economic Forum and published under a Creative Commons license. Some rights reserved.

Sale of ProJo a lost opportunity for local ownership

By Dan Kennedy

On July 23, 2014

In Media

Previously published at WGBHNews.org.

The online news site GoLocalProv is taking a well-deserved victory lap now that it’s been announced that GateHouse Media will acquire The Providence Journal from A.H. Belo of Dallas for $46 million. GoLocalProv reported on June 13 that the sale was imminent. But there the matter stood until Tuesday, when we learned that the Journal had been sold to GateHouse’s parent, New Media Investment Group.

As I told Ted Nesi of WPRI.com, I think it’s a shame that some way couldn’t be found for the Journal to return to local ownership — a lost opportunity, just as it was when John Henry sold the Telegram & Gazette of Worcester to Halifax Media Group of Daytona Beach, Florida, earlier this year. There is no substitute for a newspaper that is fully invested in the community. I have no doubt that cuts will follow, just as they did when New Media/GateHouse last year purchased Rupert Murdoch’s Dow Jones community papers, including the Cape Cod Times and The Standard-Times of New Bedford.

Still, any incoming chain would make cuts, and I think the new, post-bankruptcy GateHouse, based in Fairport, New York, deserves a chance to prove it will be good steward of the Journal. Despite reductions at the Cape Cod and New Bedford papers, journalists there continue to do a good job of serving their communities. On the other hand, the more than 100 community papers GateHouse already owns in Eastern Massachusetts are strictly barebones operations.

In a full-page ad in today’s Journal aimed at reassuring his new employees, customers and the community of the company’s good intentions, GateHouse chief executive officer Kirk Davis concludes:

We know The Providence Journal plays an indispensable role in helping you live your life in and around Rhode Island. We look to uphold these great traditions and make the investments needed to thrive in the new multimedia world. The purchase is expected to close later this summer. We are looking forward to welcoming the readers, advertisers and employees of The Providence Journal to our family.

At $46 million, New Media/GateHouse paid a surprisingly high price for the Journal. Although Belo is keeping the pension liabilities, it’s also keeping the downtown property. By way of comparison, John Henry paid $70 million for the Globe, the Telegram & Gazette and all associated properties — then turned around and sold the T&G for $17.5 million, according to a source involved in the sale. One possible explanation is that the New York Times Co. sold the Globe and the T&G to the low bidder, as one of the spurned suitors, “Papa Doug” Manchester, complained at the time. New Media/GateHouse, by contrast, was presumably the high bidder for the Journal.

Another possible explanation is that the Journal is worth more to GateHouse than to other buyers because it gives the company new territory for its Propel Marketing subsidiary. According to a perceptive analysis of the deal by Jon Chesto in the Boston Business Journal, Propel is seen by GateHouse executives as “the primary engine for growth at the company.”

Yet another wrinkle: The Globe has developed a nice side business printing other newspapers, including the Boston Herald and GateHouse properties such as The Patriot Ledger of Quincy and The Enterprise of Brockton. At a time when Henry is getting ready to sell the Globe’s Dorchester plant and move printing operations to a former T&G facility in Millbury, the prospect of losing GateHouse’s business has got to be disconcerting.

Why Murdoch could prove to be the savior of CNN

By Dan Kennedy

On July 21, 2014

In Media

Rupert Murdoch at the 2009 World Economic Forum

Previously published at WGBHNews.org.

Could Rupert Murdoch turn out to be the savior of CNN?

Not directly, of course. After all, his Fox News Channel is a blight upon the civic landscape — a right-wing propaganda machine whose elderly viewers are, according to a 2012 Fairleigh Dickinson study, even less well-informed than people who watch no news at all.

Nevertheless, I felt my pulse quickening last week when I learned that Murdoch is trying to add Time Warner to his international media empire. Among Time Warner’s holdings is CNN. And according to The New York Times, Murdoch would sell the once-great news organization in order to appease federal antitrust regulators.

(Murdoch’s acquisition would not affect Time magazine, a diminished but still valuable news outlet: Time Warner recently set Time adrift after stripping it of most of its assets.Time’s future is far from secure, but at least Rupe won’t have a chance to put Fox News chief Roger Ailes in charge of it.)

As you no doubt already know, CNN in recent years has fallen into the abyss. When I Googled up its increasingly ironic slogan, “The Most Trusted Name in News,” I was taken to a page at CNN.com dating back to 2003, complete with photos of former CNN hosts such as Aaron Brown, Judy Woodruff and Larry King, the seldom-seen Christiane Amanpour and others who evoke a better, more substantive era.

These days, unfortunately, CNN is known mainly for its endless coverage of the missing Malaysian jetliner and for a series of embarrassing screw-ups, such as its misreporting of the Supreme Court’s decision on the Affordable Care Act in 2012 and its false report that a suspect had been arrested in the Boston Marathon bombing (to be fair, CNN was not alone on either mistake).

Then, too, there have been a series of mystifyingly bad hires, such as the talentless yipping Brit Piers Morgan to replace Larry King and the creepy Eliot Spitzer to cohost a talk show. Even solid choices like Jake Tapper seem to disappear once brought into the CNN fold. Of course, it’s hard not to disappear when your ratings are lower than those of Fox and MSNBC.

Is CNN worth saving? Absolutely. Its journalistic resources remain formidable. It’s still must-see TV when real news breaks, which certainly has been the case during the past week. Folks who are able to watch CNN International (I’m not among them) tell me it remains a good and serious news source. Anderson Cooper is among the more compelling figures in television news.

But domestically, and especially in prime time, CNN has utterly lost its way — starting at the top, with its self-congratulatory president, Jeff Zucker, who wants us to believe that everything is proceeding according to plan.

The time for a complete overhaul is long overdue. If Rupert Murdoch can help usher CNN into the hands of a new owner that might actually know what to do with it, then bring it on.

Photo (cc) by the World Economic Forum and published under a Creative Commons license. Some rights reserved.

Why Rupert Murdoch probably won’t buy the Herald

By Dan Kennedy

On June 25, 2014

In Media

Published earlier at WGBHNews.org.

Here’s the answer to today’s Newspaper Jeopardy question: “Maybe, if there’s a willing buyer and seller.”

Now for the question: “With Rupert Murdoch getting out of the Boston television market, is there any chance that he would have another go with the Boston Herald?”

Following Tuesday’s announcement that Cox Media Group would acquire WFXT-TV (Channel 25) from Murdoch’s Fox Television Stations as part of a Boston-San Francisco station swap, there has been speculation as to whether Murdoch would re-enter the Boston newspaper market. Universal Hub’s Adam Gaffin raises the issue here; the Boston Business Journal’s Eric Convey, a former Herald staff member, addresses it as well. I’ve also heard from several people on Facebook.

First, the obvious: There would be no legal obstacles if Murdoch wants to buy the Herald. The FCC’s cross-ownership prohibition against a single owner controlling a TV station and a daily newspaper in the same market would no longer apply.

Now for some analysis. Murdoch is 83 years old, and though he seems remarkably active for an octogenarian, I have it on good authority that he, like all of us, is not going to live forever. Moreover, in 2013 his business interests were split, and his newspapers — which include The Wall Street Journal, The Times of London and the New York Post — are now in a separate division of the Murdoch-controlled News Corp. No longer can his lucrative broadcasting and entertainment properties be used to enhance his newspapers’ balance sheets.

Various accounts portray Murdoch as the last romantic — the only News Corp. executive who still has a soft spot for newspapers. The Herald would not be a good investment because newspapers in general are not good investments, and because it is the number-two daily in a mid-size market. Moreover, the guilty verdict handed down to former News of the World editor Andy Coulson in the British phone-hacking scandal Tuesday suggests that Murdoch may be preoccupied with other matters.

On the other hand, who knows? Herald owner Pat Purcell is a longtime friend and former lieutenant of Murdoch’s, and if Rupe wants to stage a Boston comeback, maybe Purcell could be persuaded to let it happen. Even while owning the Herald, Purcell continued to work for Murdoch, running what were once the Ottaway community papers — including the Cape Cod Times and The Standard-Times of New Bedford — from 2008 until they were sold to an affiliate of GateHouse Media last fall.

There is a storied history involving Murdoch and the Herald. Hearst’s Herald American was on the verge of collapse in 1982 when Murdoch swooped in, rescued the tabloid and infused it with new energy. Murdoch added to his Boston holdings in the late 1980s, acquiring Channel 25 and seeking a waiver from the FCC so that he could continue to own both.

One day as that story was unfolding, then-senator Ted Kennedy was making a campaign swing through suburban Burlington. As a reporter for the local daily, I was following him from stop to stop. Kennedy had just snuck an amendment into a bill to deny Rupert Murdoch the regulatory waiver he was seeking that would allow him to own both the Herald and Channel 25 (Kennedy’s amendment prohibited a similar arrangement in New York). At every stop, Herald reporter Wayne Woodlief would ask him, “Senator, why are you trying to kill the Herald?”

The episode also led Kennedy’s most caustic critic at the Herald, columnist Howie Carr, to write a particularly memorable lede: “Was it something I said, Fat Boy?” Years later, Carr remained bitter, telling me, “Ted was trying to kill the paper in order to deliver the monopoly to his friends” at The Boston Globe.

Murdoch sold Channel 25, but in the early 1990s he bought it back — and sold the Herald to Purcell, who’d been publisher of the paper, reporting to Murdoch, for much of the ’80s. It would certainly be a fascinating twist on this 30-year-plus newspaper tale if Murdoch and Purcell were to change positions once again.

The reaper visits Cape Cod, New Bedford papers

By Dan Kennedy

On November 4, 2013

In Media

In September I asked (here and here) whether Rupert Murdoch’s 33 Dow Jones community newspapers might face cuts once they were sold to Newcastle Investment Corp., which is affiliated with GateHouse Media. Over the weekend we got the answer: yes, indeed.

Locally, the Cape Cod Times and The Standard-Times of New Bedford, both of which enjoy excellent reputations, will have to make do with a lot less. Seven full-time and 10 part-time employees have been cut at the Cape Cod Media Group, which comprises the Times and several affiliated publications. Twelve newsroom jobs were eliminated, with 10 people being laid off.

Similarly, four full-timers and four part-timers were let go at the SouthCoast Media Group, which is dominated by The Standard-Times. The story does not say how many of those employees were on the news side.

Peter Meyer, the publisher of both papers, was quoted in The Standard-Times as saying:

It is important to know that new ownership is not at fault for today’s actions. Any buyer would have taken similar measures based on financial realities. This was a painful but necessary step to position the SouthCoast Media Group for future success.

Essentially the same statement ran in the Cape Cod paper. Yet Meyer also says the papers in both groups remain profitable, though not as profitable as they were in 2009. Which means that the new owners could have invested in growth — admittedly, a dicey proposition — rather than bet on continued shrinkage.

I could not find any announcement for the Portsmouth (N.H.) Herald, the third major local daily that Dow Jones sold in September. But Jim Romenesko reports that the Times Herald-Record of Middletown, N.Y., got rid of all four of its staff photographers and will now rely on freelancers — reminiscent of the move made by the Chicago Sun-Times earlier this year. Three newsroom managers were let go as well.

“I’m getting reports today of ‘bloodbaths’ at some of the former Dow Jones papers,” Romenesko wrote on Friday.

GateHouse, currently going through a structured bankruptcy, owns about 100 community newspapers in Massachusetts, most of them weeklies.

BBJ scores big on two local media stories

By Dan Kennedy

On September 5, 2013

In Media

The Boston Business Journal has come up aces during the past week with two meaty stories on local media news.

• A shaky future at the Globe. The first, published last Friday, found that confidential financial documents put together by the New York Times Co. suggest The Boston Globe was in slightly worse shape than outside observers might have imagined when the paper and several affiliated properties were sold to Red Sox principal owner John Henry for $70 million in early August. The BBJ’s Craig Douglas writes (sub. req.):

In essence, Henry is buying into a borderline breakeven enterprise already teed up for $35 million in cost cuts over a two-year period before he even walks through the door.

How bad is it? According to the documents cited by Douglas, advertising revenue at the New England Media Group (NEMG) — mainly the Globe, the Telegram & Gazette of Worcester and Boston.com — is expected to be 31 percent below the 2009 level next year. And paid print circulation revenue continues to slip despite price increases at the Globe and the T&G.

You may have heard people say at the time of the sale that Boston.com was worth more than the Globe itself. Well, I don’t think you’ve heard me say it. Print advertising remains far more valuable than online, and that holds true at NEMG as well. Douglas writes:

The Globe is by far the biggest revenue generator of the group, accounting for 69 percent, or about $255 million, of its forecasted revenue this year. The Telegram & Gazette in Worcester is next in line at $42.5 million in forecasted revenue this year, while Boston.com is on track to book about $40 million.

Print products account for about 88 percent of NEMG’s total annual revenue. That heavy reliance on print-related advertising and circulation revenue has proven particularly problematic of late, as both categories have lost ground since 2009 and are forecasted to see continued deterioration for the foreseeable future.

Douglas’ story is protected behind a paywall, but if you can find a print edition, you should. Suffice it to say that John Henry has his work cut out for him. The picture Douglas paints is not catastrophic. But it does show that the Globe is not quite as far along the road toward figuring out the digital future as some of us might have hoped.

• Tough times ahead for local papers. The other big media splash, which I linked to last night, is Jon Chesto’s analysis of the sale of Rupert Murdoch’s Dow Jones Local Newspaper Group (formerly Ottaway Newspapers) to an investment firm affiliated with GateHouse Media. The papers sold include three prominent Greater Boston dailies: The Standard-Times of New Bedford, the Cape Cod Times and the Portsmouth Herald, on the New Hampshire seacoast.

Chesto’s article is part of the BBJ’s free offerings, so by all means read the whole thing. It’s a real eye-opener, as he explains as best anyone can at this early stage what the sale and simultaneous bankruptcy of GateHouse will mean for local papers and the communities they serve. Unfortunately, indications are the news will be very bad indeed.

Fairport, N.Y.-based GateHouse, which publishes about 100 local papers in Eastern Massachusetts (including The Patriot Ledger of Quincy, The Enterprise of Brockton and The MetroWest Daily News of Framingham), will somehow be combined with the entity that holds the former Ottaway papers into a new company with the uninspired name of New Media (that may change). (Update: Chesto is a former business editor of The Patriot Ledger, which no doubt helped him write his piece with a real air of authority. And thanks to Roy Harris for reminding me of that.)

The deal with Murdoch — at $82 million, quite a bit more than I had anticipated — was done through Newcastle Investment Corp., a real estate investment trust that is part of Fortress Investment Group, which in turn is GateHouse’s principal backer.

The powers-that-be are already talking about slashing the Ottaway papers, which are among the best local dailies in the region. Chesto writes:

The papers are described as “under-managed by News Corp.” with “expense reductions of only 6% since 2010.” Translation: We can take more out of the expenses than News Corp. did. GateHouse has been an aggressive cost cutter in recent years, most notably with efforts to consolidate most of its page design and layout functions. That work was centralized in two locations, including an office in Framingham. But it will soon be downsized further, into one location in Austin, Texas.

Yes, Murdoch, the “genocidal tyrant,” is likely to prove a better steward of local journalism than the people he’s selling to.

Post-bankruptcy, with $1.2 billion in debt off their backs, the executives now running GateHouse are going to be empowered. According to a presentation put together for investors, Chesto writes, New Media may spend $1 billion to buy up local media companies over the next three years.

Chesto doesn’t say so, but if I were working for the Eagle-Tribune papers north of Boston (The Eagle-Tribune of North Andover, The Daily News of Newburyport, The Salem News and the Gloucester Daily Times), I’d be polishing that résumé right now. On the other hand, those papers have already been cut so much under the Alabama-based CNHI chain that it’s not like a new owner could do a whole lot worse.

At a time when there are reasons to be hopeful about the newspaper business thanks to the interest of people like John Henry, Jeff Bezos and Warren Buffett, the GateHouse deal shows that there are still plenty of reasons to be worried about the future.

Murdoch sells local papers to GateHouse investor

By Dan Kennedy

On September 3, 2013

In Media

Rupert Murdoch is selling The Middleboro Gazette, the weekly that covers the Southeastern Massachusetts town where I grew up. I’m not sure Murdoch ever knew he owned it in the first place. It’s just something that was thrown in when his News Corporation bought The Wall Street Journal and Dow Jones in 2007.

Earlier today, Dow Jones’ chain of local newspapers — formerly the Ottaway group — was acquired by an affiliate of Fortress Investments, the majority owner of GateHouse Media, which will manage the papers. I’m not sure why GateHouse itself isn’t buying the papers, but perhaps we’ll learn more in the days ahead. Jim Romenesko has more.

Dow Jones’ regional properties include some high-quality, well-known dailies such as The Standard-Times of New Bedford, the Cape Cod Times and the Portsmouth Herald of New Hampshire.

Two questions spring to mind:

In general, the Ottaway papers have been spared some of the cuts that the financially struggling GateHouse chain has implemented. Will downsizing now commence? Or will the Ottaway papers’ odd status as non-GateHouse papers spare them?
What happens to Boston Herald owner Pat Purcell, who’s been running the Ottaway papers for Murdoch since 2008? Will he content himself with running the Herald? Or will Murdoch come up with a new assignment for him?

The deal includes 33 publications, eight of them daily papers. Romenesko reports that financial terms were not disclosed. But given that The Boston Globe recently went for $70 million — not much more than the value of its land — I can’t imagine that a significant amount of money is changing hands.

Update: From Wednesday’s New York Times:

The details of the transaction were not released, but the money involved was evidently relatively small, because if it had been bigger (or, in financial terms, material to the company) News Corporation would have had to disclose more financial information.

Ouch.

Update II: Shows you what I know. Fortress paid $87 million for the Dow Jones papers, which may be a fraction of what they were worth a few years ago, but is more than I had imagined.

According to Tiffany Kary of Bloomberg BusinessWeek, an enormously complicated reorganization is now under way. The long-in-the-making bankruptcy of GateHouse Media is now a reality, and the company will be absorbed into a new company to be created by Fortress called New Media.

Update III: Jon Chesto of the Boston Business Journal has posted a must-read analysis of what’s going on. Talk about failing up. GateHouse is going bankrupt and will become part of something bigger. And it looks like GateHouse chief executive Mike Reed isn’t going anywhere.