Dow Jones – Media Nation

The Globe’s Taunton printing plant will lay off about 30 employees, the BBJ reports

Presses at The Boston Globe’s Taunton printing plant. Photo (cc) 2018 by Dan Kennedy.

About 30 employees will be laid off at The Boston Globe’s printing plant in Taunton following news that the Globe has lost its contract to print the regional edition of The New York Times. The layoffs were reported early this morning by Don Seiffert of the Boston Business Journal.

The loss of the Times contract was revealed Saturday by Media Nation. But though I had heard there would be layoffs associated with the move, I was unable to pin down the exact number. Seiffert, citing a “source familiar with the ongoing negotiations over those layoffs,” reported there will be about 200 Globe employees left in Taunton.

The Times is now being printed by the Dow Jones plant in Chicopee; Dow Jones is the parent company of The Wall Street Journal.

Seiffert’s story also contains an interesting wrinkle that could, in theory, hasten the demise of the five-year-old, $72 million Taunton plant: a workforce of 200 is only a third of what the Globe promised when it obtained a tax break from that city in order to bring much-needed jobs into that area.

At one point the Taunton facility printed not just the Globe but also the Times, USA Today and the Boston Herald. Seiffert’s source told him that the printing plant has “‘totally abandoned any revenue streams related to other commercial print or direct-mail work’ and is now printing only the Boston Globe.”

The Globe’s paid digital circulation of about 230,000 now outpaces print by a considerable margin. According to the most recent figures from the Alliance for Audited Media, the Globe’s average weekday print circulation is now about 64,000, and about 112,000 on Sundays.

If Taunton is no longer getting any outside work, it raises the prospect that the Globe’s owners, John and Linda Henry, may close the plant at some point and job out the Globe’s print run — perhaps to a combination of Chicopee, CNHI’s Eagle-Tribune plant in North Andover (which has handled some of the Globe’s production work in the past) and/or Gannett’s Providence Journal.

Correction: An earlier version of this post said that The Eagle-Tribune had an arrangement to handle part of the Globe’s print run in the past. That was incorrect.

The Globe loses its contract to print The New York Times

Sign outside the Globe’s printing plant in Taunton. Photo (cc) 2018 by Dan Kennedy.

The Boston Globe has lost its contract to print the regional edition of The New York Times at its Taunton facility. The Times will instead now be printed at the Dow Jones plant in Chicopee. Dow Jones is the parent company of The Wall Street Journal.

When the Globe’s Taunton printing plant opened in 2017, the hope was that it could turn a profit for the paper by taking on outside clients. The facility got off to a rough start, though, with publisher-owner John Henry writing a front-page note to subscribers admitting that the presses “are operating too slowly and breaking too often.” He added: “We are embarrassed. We are sincerely sorry to all those affected.” In my 2018 book, “The Return of the Moguls,” I described the launch of the Taunton plant as a “disaster.”

At one point, the Globe printed the Times, the Boston Herald and USA Today. The Herald decamped for The Providence Journal some time ago. When I asked Globe spokeswoman Heidi Flood whether the Taunton facility currently has any outside work, she answered only that “we are always exploring ways to bring more work into the plant.” She did say that Taunton now handles the entire Globe print run. At one time the Globe was jobbing some of its run out to The Eagle-Tribune in North Andover; I’m not sure when that stopped.

I’ve heard that the Taunton plant has laid some employees off as well, but Flood did not address that when I asked her about it by email. The full text of her statement follows.

I can confirm that the Times decided not to renew their printing contract with the Globe. We worked very hard over many months to keep their business in a way that also worked for ours, but were not able to arrive at a financially sustainable agreement. While the pending NYT departure is disappointing, from a business perspective it’s the right decision and positions us more favorably for the future.

The Times’s decision to print elsewhere will not affect our Globe print operations. Taunton currently handles the entire Globe print run and we are always exploring ways to bring more work into the plant. First and foremost, the Globe remains committed to meeting the needs of our valuable print subscribers.

Sale of ProJo a lost opportunity for local ownership

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.

The reaper visits Cape Cod, New Bedford papers

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

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

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.