By Dan Kennedy • The press, politics, technology, culture and other passions

Wolves at the GateHouse

I read a GateHouse paper. You probably do, too. Maybe even two: the chain owns good-size dailies such as The Patriot Ledger (Quincy), The Enterprise (Brockton), The Daily News Tribune (Waltham) and The MetroWest Daily News (Framingham), in addition to 100 or so weeklies in Eastern Massachusetts.

Anyway, sorry to bury the lede. GateHouse Media may be in deep trouble. According to the blog 247WallSt.com, the chain — based in suburban Rochester, N.Y. — is doing so badly that you might be able to get some furniture and computers cheap in a few months. After turning itself into a publicly traded company several years ago, the stock price has tanked, falling 80 percent over the past year.

247’s Douglas McIntyre writes: “Watch for GHS to be broken up before the end of the year or to enter Chapter 11.” (GHS is GateHouse’s symbol on the New York Stock Exchange.) Wow.

What’s more, the Motley Fool recently listed GateHouse as one of “5 Deathbed Stocks.”

GateHouse does some interesting things, but it has clearly been hampered by a lack of resources. Its Wicked Local sites were supposed to be a model of hyperlocal and citizen journalism, but they have yet to achieve critical mass. The company also pushes its reporters to shoot and edit low-end video, which is pretty smart. Earlier this year I wrote a post on Cathryn O’Hare, editor of the Danvers Herald, after I followed her through the process.

Mostly, though, the GateHouse papers in Massachusetts are good, solid community papers that have suffered under revolving-door ownership for many years.

During the 1980s, they were owned by a half-dozen or so regional groups, some based in Massachusetts, some out of state. Then, in the 1990s, most of them were combined by Fidelity into a chain that was dubbed Community Newspaper Co. Fidelity sold CNC to Boston Herald publisher Pat Purcell for a reported $150 million in 2001.

Purcell did one thing wrong and one thing right. On the one hand, he took the Herald downscale, which made his purported flagship a weird fit with the affluent, well-educated readership he had just acquired.

On the other hand, Purcell unloaded CNC for $225 million just five years later, making him one of the few people to turn a profit on a newspaper deal in the 21st century. The money, many insiders believe, has allowed him to keep the Herald afloat. The CNC deal was part of a larger, $400 million purchase by Liberty Group Publishing, which renamed itself GateHouse, moved to New York State and went public.

GateHouse may or may not survive, but its papers should probably be all right in the long run. Community newspapers are in a better market position than major metros these days. Providers of quality local news don’t face a lot of competition either from other papers or, with a few exceptions, from the Internet.

The problem is that chains amass huge amounts of debt when they buy papers ($1.2 billion at GateHouse, according to McIntyre), and need to turn an unrealistically high profit in order to pay down that debt and satisfy their investors.

If the economy were rocking along, maybe GateHouse could pull out of this. But it’s not. Unfortunately, McIntyre’s post is an indication that things are going to get worse both for those of us who read GateHouse papers and the people who work for them.


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23 Comments

  1. Aaron Read

    Wow! I didn’t know they were out here. I drive right past that office building every day. If I spot any deals on furniture and computers, I’ll let y’all know. :-/

  2. Anonymous

    Dan, speaking of racking up debt when acquiring other papers, I can say that Eagle-Tribune Publishing Co. was never the same after scooping up the three ECN papers in 2002. An extremely profitable, family-owned company found itself in over its heels, the Rogers family had to sell to the CNHI group, and the rest is disastrous history.

  3. Dan Kennedy

    Anon 1:57: You are correct. The Eagle-Tribune papers are like GateHouse on a smaller scale.

  4. Anonymous

    “Mostly, though, the GateHouse papers in Massachusetts are good, solid community papers that have suffered under revolving-door ownership for many years”I see a verb tense problem here. They WERE decent papers until snapped up by the bean counters at Fidelity, then CNC. The revolving door from there is less relevant to their present pitiful journalism than what the corporate cutters did to them before the door really got spinning.

  5. Dan Kennedy

    Anon 2:39: It depends on the paper. Our paper, the Danvers Herald, has pretty much the same staffing level it’s always had — two full-timers (and they’re experienced!) and a few stringers. Not bad at all. I just hope that doesn’t change in the months ahead.

  6. Larz

    Besides the large debt, another problem for the Gatehouse conglomeration is the Chinese water-clock design of the group. If you’re trying to be “wicked local,” it makes little sense to have one chain trying to cover so many distant, disparate communities. Weeklies have a tough time attracting advertisers that can benefit from the large geographical spread that the company has.— Larz

  7. mike_b1

    Microsoft’s CEO thinks print media will barely outlive Ted Kennedy.http://www.techcrunch.com/2008/06/06/ballmer-tells-the-washington-post-that-print-is-toast/

  8. DanversGuy

    Actually, Dan, if I’m not mistaken the Danvers Herald had three full-time staffers until fairly recently. And that was when the staff didn’t also have to put out a website.

  9. Anonymous

    Thank God those of us in the Seacoast region of NH have the locally-owned and operated daily and weeklies run by the Foster family!

  10. Dan Kennedy

    DanversGuy: The way they deploy stringers and part-timers, it’s hard to tell. I will tell you that it was not unusual for some of the North Shore weeklies to operate with just a full-time editor and stringers even 15 and 20 years ago. Perhaps not the Herald, which serves a larger town.

  11. Rick in Duxbury

    Dan,I moved from the North Shore 20+ years ago and was immediately struck by the quality of the Patriot Ledger. (After The Item, I realize that is damning with faint praise.) Is the Ledger what it was? Probably not, but it is the only way we have to get information in my area. Their people do a great job at nuts & bolts fundamentals. The Globe regionals are jokes. Plymouth County is actually growing (in MA!), so someone will figure out a way to make it work. All those dollars won’t be left unaddressed.

  12. Anonymous

    Their operating procedures just make no sense. Some of the dailies have overlapping coverage areas. The weeklies are Cliff’s Notes of the past week’s daily editions.It’s time to streamline.

  13. Rick in Duxbury

    12:28,I take your point but not everyone leaving for work at 5:00-6:00 AM gets to read the paper every day.(Common on the South Shore). Weekend is needed so info isn’t missed. Also, because of the linear markets along Routes 24 and 3, people in between, (e.g. Randolph, Stoughton, Easton),could fall into either one. People could live off Route 3, commute to one town over and be in a different market off 24, covered by the Enterprise. (I have no connection the the Ledger, I just find them less patronizing than the Globe. Opinions are left to the Ledger editorial page, as they should be.)

  14. MeTheSheeple

    Is the Tribune next? note reference to cash flow for debt service …

  15. Anonymous

    It’s great to want to be hyper-local. But you can’t be hyper-local and then cut your reporting staff so that there’s one reporter covering two communities. And the publishers just don’t get this. “Writing shorter and tighter” is not a replacement for additional bodies covering more topics. Readers and publishers also need to realize that many of tehse weekly reporters are making less than a Harvard janitor. Its hard to attract and keep talent on $30k a year.

  16. Anonymous

    Dan … I agree, these are good solid local newspapers, at least in editorial if not financial matters. I can read and eitoial about Obama in any paper, but the Ledger and others tell me what’s going on in my back yard. And the Ledger deserves great kudos for having a brilliant LOCAL editorial cartoonist. (No, I’m not his mother.) The NYT isn’t going to give me local satire.

  17. Anonymous

    The only way a lot of newspaper can survive is if they are/go private — the herald being a case in point. It doesn’t answer to anyone but the owner, and he can decide whether breaking even year to year is acceptable to him and his familly. Gatehouse will never satisfy Wall Street, and save for a few solid efforts here and there they will not be able to satisfy readers. It’s a mess. But the lesson is: Wicked Local should mean “wicked local ownership.”

  18. Anonymous

    On weekly reporters making $30K: More like $23 to $25K. And I know that one of the best editors for Gatehouse who is considered an asset in the town he covers by the townies themselves, takes home $35K after six years on the job. Is it any wonder that most reporters work second jobs? I met one who was waitressing in a restaurant. It’s that bad.

  19. Anonymous

    gatehouse papers in mass had layoffs last month, left dozens of positions unfilled and cut the hours of part-timers

  20. Anonymous

    When the Emptyprise/Enterprise goes under I’ll be a happy camper…

  21. Meghann

    It’s not just the reporters getting screwed… There are drivers out there that have been working for 30 years that are making crap for salaries. These companies(Gatehouse and The Enterprise) ended up screwing themselves and their employese. Anonymous – Yeah, I’m glad you’ll be happy when the Enterprise is done – my family won’t.

  22. Anonymous

    Still posting & reading? The paper I’m at is GateHouse and the changes are tremendous. Updates to our building, new software, best Macs we’ve ever worked on, better press and our articles are getting on other news sites in states on each side of the country. I hope they do better…Michele PageThe Daily World, Helena Arkansas…www.helena-arkansas.com

  23. Anonymous

    I know from experience at the GateHouse owned Patriot Ledger, that ownership of the paper has changed at least four times in the last ten years. Every owner who has come in has cut jobs and along the way the quality of the paper has gotten worse. The Ledger has always been poorly managed, now that too is even worse. I hope both the Ledger and Enterprise survive, as well as all newspapers, but I feel ownership of the newspapers is now run more profit orientated than ever, thus driving a “dying business” into the ground even quicker. It is a sad state of affairs where even papers that are making a solid profit, now tell their employees that pay raises are doubtful in the following years.

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