Rick Daniels will step down as president of GateHouse Media New England at the end of the year. GateHouse publishes about 100 community newspapers in Eastern Massachusetts — mostly weeklies, but also a few medium-size dailies, including the MetroWest Daily News of Framingham, the Patriot Ledger of Quincy and the Enterprise of Brockton. The company also runs about 150 Wicked Local websites.
In my rather minimal dealings with him, Daniels, a former Boston Globe executive, struck me as amiable and wanting to do right by local journalism. The same is true of Kirk Davis, president and CEO COO of all GateHouse properties, who will take over Daniels’ responsibilities on an interim basis.
But for years now, GateHouse — which runs more than 400 publications and websites from its national headquarters in suburban Rochester, N.Y. — has been staggering under the burden of $1.2 billion in debt. In August 2011, the Rochester Business Journal reported that GateHouse was “the most highly leveraged of any publicly traded newspaper company,” with debt nearly 14 times cash flow.
And just a few months ago, Jack Sullivan of CommonWealth Magazine wrote that GateHouse itself had raised the possibility of bankruptcy in its annual report.
Thus in recent years we’ve seen a number of high-profile executives lopped off the payroll, including digital-publishing chief Howard Owens, now the publisher and editor of The Batavian, a widely admired local news site that he actually started for GateHouse, and Greg Reibman, former publisher of GateHouse’s Greater Boston papers, now president of the Newton Needham Chamber of Commerce. Also leaving was Kat Powers, managing editor of GateHouse Media New England, now director of communications for the American Red Cross of Eastern Massachusetts.*
Daniels is supposedly leaving GateHouse to pursue unspecified “investment and advisory roles for media companies.” At least no one is claiming that he wants to spend more time with his family.
“There’s a lot of pretty interesting deals that are out there and I’ve been approached by some folks who would like to do some of those deals,” Daniels told the Patriot Ledger. “They seem to have some interest in having operators with some experience.”
My guess is that if Daniels is quickly replaced, then his leave-taking was voluntary. And if Davis is still interim president six months from now, then Daniels’ departure should be seen as a cost-cutting move.
Five years ago I wrote about GateHouse’s debt woes for CommonWealth and talked pretty extensively with Davis. It’s been a long time, but the issues haven’t changed all that much.
Here is Davis’ email to the troops, a copy of which was forwarded to Media Nation by a trusted source earlier this afternoon:
I’m writing to explain some important news that is “public” today.
Rick Daniels, who has presided over our Massachusetts operations for the past 5 1/2 years, will be leaving his post at the end of the year. Rick plans to pursue investment and advisory roles to a variety of media companies.
I’ve had the pleasure of working with Rick throughout his career at GateHouse Media. He’s proven himself to be a very capable and accomplished executive, one who has led an accelerated transformation of our newspapers and web sites through very difficult economic times. Rick departs with our deepest gratitude and admiration and has graciously agreed to continue to provide any assistance I may need in order to ensure a seamless transition.
I will assume responsibility for our Massachusetts group on an interim basis. I’ve been affiliated with our operations in Massachusetts for many years and have always appreciated the support I’ve received from employees. I’ll enjoy reconnecting with staff.
In light of Rick’s departure, I will appoint a few key executives to assist me and our strong management team in Massachusetts through this transitional period. Look for that announcement before January 1.
Again, it has been a pleasure working with Rick. We are extremely grateful for his leadership the past 5 1/2 years and wish him much continued success.
Thanks,
Kirk
*Correction: Kat Powers did not lose her job at GateHouse, as I originally wrote. Rather, she left the company to take a position with the Red Cross.
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Dan, It seems difficult to imagine some of these local communities without their local TABs or Tribunes etc. Couldn’t they go through bankruptcy, reorganize and reemerge to serve their local towns and cities?
@Margie: I’d like to see the dead hand of GateHouse removed from these papers, many of which are fundamentally healthy and could thrive on their own or in small groups. Corporate chain journalism doesn’t work. What value do the executives at GateHouse headquarters in upstate New York add to the Newton Tab?
Not sure they could survive. Some of them put out a weekly with two or two and a half reporters, and can’t cover all the things that local papers used to cover. They survive, I think, because they get articles distributed through the corporate ownership to complement what they generate on their own. I think they do an amazing job with what they have.
@Margie: So you distribute stories around a small group of a dozen or so papers, as Bill Wasserman did with North Shore Weeklies and Russel Pergament did with the Tab papers. Don’t underestimate the effect of revenues being shipped out of the local area to service GateHouse’s debt. Granted, if you were starting from scratch you wouldn’t do it on paper. But the Greater Boston suburbs are ripe for projects like The Batavian and Baristanet.
Mitt Romney’s not doing anything…maybe he could fix it.
Do local readers really care about the articles that are provided by corporate though? I think their ability to survive in spite of corporate interference is what’s amazing.
I worked with Rick for about five years. He’s a solid newspaper man (and in my book that’s a very high compliment) who (although he toiled on the business side) Rick consistently stood up for editorial integrity and independence; even in those instances when it was going to make one of our advertising managers, shall we say, sad.
Rick was also a pioneer in the transition to the online world when he was at the Globe and helped launch Boston.com and then helped fight our content battle against his former employer. I learned a lot from him, including one of life’s hard lessons about job security.
I’m glad I had an opportunity to work and learn from him.
My first full-time job after Northeastern was in GateHouse NE’s Plymouth office. Seven weeklies, highlighted by the Old Colony Memorial. From my perspective, the only problem those papers had was GateHouse.
How does a Plymouth weekly benefit from having it’s advertising revenues used to pay debt on the loan that it’s owners took to buy it?
Dan, one of my biggest curiosities about GateHouse is when it is broken up, how will the papers be sold? As a group? As CNC? Is there any chance weeklies will be sold out individually? And, finally, how much exactly does a weekly cost?
@Adam: No idea what the cost would be, but my suspicion is the weeklies would perform best under local ownership in groups of about a dozen. That way you can have local *and* regional content and advertising — very similar to what Bill Wasserman did with North Shore Weeklies, now part of GateHouse.
Adam: A Plymouth weekly doesn’t benefit from having local advertising revenues used to pay debt on the loan. But it can benefit from the synergies of things like owning your own printing press, negotiating good prices on paper, rent, utilities, delivery guys,an h.r. system, group insurance, and, as the saying goes, buying ink by the barrel. Those types of expenses will be a challenge for a smaller group of titles.
That said, there’s no doubt that the debt — along with owning a lot of weak performing papers — zaps all the resources away from good performers. GateHouse has (or at least had, I haven’t seen the numbers in more than a year) some really strong performers that probably could thrive if liberated from the need to subsidize debt and too many sub par products and unsavable dailies.
Among the papers I worked with directly, the Newton TAB, Brookline TAB and Needham Times were always top performers. What did they have in common besides desirable demographics? They were free. They had great penetration. Advertisers loved them and (unlike onlne ads) they were willing to pay a lot to be in there because they delivered results.
I wouldn’t buy or start a newspaper now. But if I did, I’d want it to be free….and that expensive.