GateHouse Media brass touts Gannett deal in confidential message to employees

Al Neuharth in 1999. Photo (cc) by John Mathew Smith and http://www.celebrity-photos.com.

Following the completion of a long-anticipated deal to merge GateHouse Media with Gannett, GateHouse’s top two executives, Mike Reed and Kirk Davis, sent a confidential message to the troops, a copy of which was forwarded to me by a trusted source.

GateHouse and Gannett are the two largest newspaper publishers in the United States. By coming together, they have created a media colossus, albeit one whose decline continues apace. Reed and Davis’ message says in part:

We are incredibly proud of this team’s commitment to high-quality journalism and community leadership; this mission will remain at our core. The Gannett acquisition positions us as the leader in community journalism in the United States. In addition, we believe that together, we are well-positioned to address the profound changes our industry has faced in media consumption habits and advertising spend.

As you can see for yourself, the memo is mainly corporate boilerplate (and I don’t just mean the literal boilerplate on the second and third pages). For me, the main takeaway is that they say nice things about Gannett’s flagship, USA Today, which suggests that GateHouse — clearly the lead player despite being smaller than Gannett — isn’t going to mess around with Al Neuharth’s baby, at least not right away.

By the way, you’ll see a reference in the memo to BridgeTower Media, a name I was not familiar with. It turns out that’s the name for a GateHouse division that publishes B2B titles such as Massachusetts Lawyers Weekly.

The newspaper analyst Ken Doctor broke the news of the impending merger over the weekend. Keep an eye on the debt the combined company is taking on. Doctor estimates that it could be as high as $2 billion, which would seem to suggest further cuts ahead regardless of what kinds of cost efficiencies GateHouse-Gannett is able to achieve. As I wrote for WGBHNews.org two months ago, when it first became clear that the two companies would merge:

When a chain takes on debt to keep buying more properties and extracts revenues from its individual papers in order to satisfy shareholders, there is simply less money available for journalism than there would be with independent ownership.

I don’t think this was necessarily a terrible day for local journalism. MNG Enterprises, the hedge fund-owned chain formerly known as Digital First, was kept at bay, and that’s not nothing. But neither was it a good day. Committed local ownership is the key, and this merger moves us that much farther away from it.

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Future shock for GateHouse as it lays off journalists and merges its smaller papers

Previously published at WGBHNews.org.

In his book “The Inevitable,” the technology journalist Kevin Kelly writes, “The future happens very slowly and then all at once.” That seems like as good a description as any of what’s going on at GateHouse Media, the nationwide chain that owns more than 100 newspapers in Greater Boston. After years of gradual contraction, the company is suddenly laying off journalists by the dozens and merging its smaller weeklies. In fact, you might say the future has arrived as quickly as one, two, three:

1. On May 23, word began to trickle out that massive layoffs were taking place at GateHouse papers around the country. A crowdsourced spreadsheet showed that two local dailies, The Providence Journal and Worcester’s Telegram & Gazette, were especially hard hit, losing about six journalists each (the Worcester numbers include Worcester Magazine, another GateHouse title). All told, the newspaper analyst Ken Doctor wrote for Nieman Lab, it looked like about 200 people would lose their jobs, offset slightly by the addition of 30 investigative and regional positions.

2. On May 30, The Wall Street Journal reported that the giant Gannett chain, best known for publishing USA Today, had held merger talks with GateHouse after earlier fending off a hostile acquisition attempt by MNG Enterprises, the hedge fund-owned group formerly known as Digital First Media. As I wrote earlier this year, Gannett is a slightly better steward of local journalism than MNG, although it has decimated properties such as Vermont’s Burlington Free Press.

3. The next day, on May 31, I obtained a confidential memo from GateHouse New England executives informing the troops that 50 of the company’s Greater Boston weeklies would be merged into 18. Although the memo said there would be no reduction in coverage, venerable titles such as the Danvers Herald and the Ipswich Chronicle will pass into history.

In many ways it felt like the end game was at hand, even if no one knows quite what that will look like. Kirk Davis, chief executive officer of GateHouse and chief operating officer of its parent company, New Media Investment Group, expressed optimism when I contacted him, though he noted the seriousness of the situation.

“We remain positive about the future for local media but certainly acknowledge that the business model for community news is under pressure,” he said by email.

The turmoil has reached the upper echelons of GateHouse and New Media. The Boston Business Journal’s Don Seiffert reported two weeks ago that New Media’s shareholders recently rejected a compensation plan that had paid Davis $1.7 million in 2018. Share prices are down, and New Media chairman Wesley Edens has been replaced by Mike Reed, the company’s chief executive.

If the future is murky, the history is clear enough. I’ve been following the devolution of local newspapers into chain ownership for more than 25 years. I also worked briefly in 1990 for North Shore Weeklies, one of GateHouse’s predecessor regional chains. It’s a story of combining more and more newspapers in a desperate attempt to achieve economies of scale sufficient to offset the overall decline of the newspaper business. It hasn’t worked, and there is little evidence that it ever will. But it has not been for lack of trying.

Our tale begins in the 1960s, when enterprising newspaper publishers built about a half-dozen regional chains in Greater Boston. Starting in the late 1980s and early ’90s, Fidelity Capital, an arm of the investment giant, assembled many of these groups into what became Community Newspaper Co. Among the executives who passed through CNC was a young Kirk Davis, who did a stint as president and publisher.

In 2001, Fidelity cashed in by selling CNC for an estimated $150 million to Pat Purcell, then the owner and publisher of the Boston Herald. Purcell, perpetually challenged financially, turned around five years later and sold CNC to the company that would become GateHouse for a reported $225 million. At the same time GateHouse bought The Patriot Ledger of Quincy, The Enterprise of Brockton, and their associated weeklies for another $165 million. Davis had been running those papers, so the acquisition brought him back into the fold.

In 2008 I wrote about GateHouse for CommonWealth Magazine. By then Davis was president and publisher of the New England division. The company was laying off journalists, continuing a trend begun under Fidelity and Purcell. But Davis, ever upbeat, hoped GateHouse could get ahead of the curve.

“We feel that community newspapers have a very viable future and, juxtaposed against the trend overall, are performing very well,” Davis told me at that time. “I believe in it, and I believe it’s going to stay strong.”

Five years later, GateHouse went into bankruptcy, only to emerge within a few months. Since that time the company has continued to build its empire while shrinking its reporting corps.

Like many observers, I’ve been harshly critical of GateHouse’s cost-cutting measures, which in many cases have left its newspapers without the resources to meet the information needs of their communities. Newspapers in general are an endangered species. But when a chain takes on debt to keep buying more properties and extracts revenues from its individual papers in order to satisfy shareholders, there is simply less money available for journalism than there would be with independent ownership.

At the same time, it’s important to acknowledge that there is a difference between GateHouse and, perhaps, Gannett — both of which seem to be intent on developing a long-term survival strategy — and MNG, which by all appearances is squeezing the last few drops of revenue out of its papers before walking away. (In Massachusetts, MNG, which is owned by the hedge fund Alden Global Capital, controls the Boston Herald, The Sun of Lowell, and the Sentinel & Enterprise of Fitchburg.)

“GateHouse does try — unlike Alden, for instance — to make small investments in some sort of a future,” Ken Doctor wrote recently. “Its digital marketing and events business investments are examples.”

In our recent email exchange, Davis emphasized steps that GateHouse has taken to move toward sustainability, including the outsourcing of design functions to a facility in Austin, “constant engagement and surveys,” newsletters, audio, digital storytelling, data-based investigative reporting, and more.

“In New England,” he said, “we’ve recently added a regional engagement editor and regional newsletter editor. We’re also recruiting a New England investigations editor with a high focus on data.”

Davis also touted the adoption of the Accelerator Team Model, which, in essence, involves trying to do a better job of defining audiences as well as the priorities, teams, and plans needed to serve those audiences.

I asked Davis about GateHouse’s decision to cut The Providence Journal’s newsroom just as The Boston Globe was gearing up with a new Rhode Island initiative. His answer: “While we regret any involuntary staff reductions, the layoffs last month had a small impact on local reporting. My personal view on competitive threats is this: the more any local media can invest in covering our country’s local towns the better, whether we are there or not…. We’ll compete with and celebrate expansive efforts in local news.”

I also asked where he imagines GateHouse will be five years from now. Davis: “My belief is that our industry will be digitally proficient in all aspects of serving our communities. Certainly there will be fewer ‘print-based’ publications. Much is written about the likelihood or necessity of consolidation in our industry. We are one of the larger groups and hopefully our scale and investments can prove beneficial to our industry. Bigger isn’t better though, better is better. That’s where we need to focus — always.”

My own view is that independent, grassroots news organizations are going to show the way. It won’t be easy, and some will fail. But in New England, nonprofits such as the New Haven Independent and VT Digger as well as locally owned for-profit newspapers such as the Berkshire Eagle and the Portland Press Herald are simply doing a better job of covering their communities than GateHouse, Gannett, or MNG.

Nevertheless, it looks like GateHouse or a permutation of it will be with us for some time to come. Given the importance of local journalism to democracy, we can only hope that Davis, Reed, and company figure out a way to stop the endless bleeding and start growing again.

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Another round of devastating cuts at GateHouse’s community newspapers

Another day, another round of devastating cuts at GateHouse Media, the national chain that owns more than 100 newspapers in the Greater Boston area. Don Seiffert of the Boston Business Journal is keeping track, and so far he’s counted “at least six journalists at the Providence Journal, another six at the Worcester Telegram & Gazette, and several more at the New Bedford Standard-Times and the Herald News in Fall River.” Yesterday afternoon brought this instant classic from Worcester Magazine’s Bill Shaner:

According to Seiffert, stockholders on Thursday rejected a proposed $1.7 million compensation package for GateHouse CEO Kirk Davis. The chain is losing money despite cutting its community newspapers ruthlessly, which suggests that there’s going to be more bad news to come.

Benjamin Goggin, writing at Business Insider, noted that this week’s layoffs follow at least 60 earlier this year. Although it’s not clear how many people have lost their jobs nationally in the latest round, Newspaper Guild official Andrew Pantazi tweeted this morning that he’s compiling a spreadsheet and has counted about 80 so far.

Goggin also talked with Michael Reed, CEO of New Investment Media Group, GateHouse’s parent company, who denied rumors that the cuts could reach 200 — and dismissed this week’s downsizing as no big deal. Goggin wrote:

When Business Insider talked to Mike Reed, CEO of GateHouse’s parent company New Media Investment Group, he downplayed the cuts, calling them “immaterial,” without providing a specific number of cuts but denying the 200 number, calling it “a lie.”

“We have 11,000 employees, a lot to me is 2,000,” he said.

Later, though, Reed semi-confirmed the 200 figure with Poynter’s Rick Edmonds, although he said most of them would remain employed and “are moving from non-reporting to reporting jobs.” So let’s just say the head count is unclear.

Goggin also reported that New Media announced Thursday it will continue its $100 million stock-buyback program for another year. Isn’t that special?

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GateHouse to partner with Google News on digital subscriptions

GateHouse Media will partner with Google News on a digital-subscriptions project, according to this internal email from GateHouse chief executive Kirk Davis, forwarded to me by a trusted source just a few minutes ago. The news follows Tuesday’s announcement that Google News will partner with the McClatchy chain.

The GateHouse experiment will take place at The Columbus Dispatch, followed by “a broad roll-out of our Digital Subscription Lab learnings across the GateHouse network.” GateHouse, as you know, owns more than 100 newspapers in Greater Boston and beyond, including the Providence Journal and the Telegram & Gazette of Worcester.

Certainly I would rather that Google put its efforts (and its money) into helping independent local news projects. But Google wants content, and the corporate chains are in the best position to give them that. Davis’ full email follows.

To: All GateHouse Media employees
From: Kirk Davis, CEO, GateHouse Media
Re: Google News Initiative Digital Subscriptions Lab
Date: March 27, 2019

Developing a sustainable digital subscription model to showcase the amazing work being done by our journalists across the United States is essential to preserving the vitality and viability of our local journalism. Which is why I’m thrilled to announce that GateHouse has been selected, as one of eight publishers, to participate in the Digital Subscriptions Lab, a partnership between the Google News Initiative, the Local Media Association and FTI Consulting.

This intensive six-month program will address every step of the digital subscription process from discovery to conversion to retention. Participants will receive dedicated 1:1 support from each of the three partners, as they leverage their respective capabilities in research, product, technology and analytics. Several in-person meetings over the course of the program will enable participating publishers to share strategies, insights and best practices.

We have selected The Columbus Dispatch to be the focus for our engagement; with 13,000 digital subs, The Dispatch is among our largest, paid digital subscription products. We anticipate a broad roll-out of our Digital Subscription Lab learnings across the GateHouse network. Our participation in this elite program is exciting; it reflects our very strong commitment to the future of community journalism!

Kirk

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GateHouse loses its top content and development veep

David Arkin, a top official with GateHouse Media, is leaving the company for a position in Texas. The following is a memo to employees from GateHouse chief executive Kirk Davis.

Dear Colleagues,

It is with very mixed feelings that I write to tell you that David Arkin, our Senior Vice President for Content and Product Development will be leaving GateHouse to become Chief Content Officer for Community Impact, a group of 21 award winning, hyper-local newspapers serving communities in the Austin, Dallas-Fort Worth and Houston markets. The free newspapers have a total circulation of 1.6 million.

I have worked with David for nearly 10 years and watched him develop from a lot of raw talent, to a truly great leader of our news and digital operations. I’m sad to lose that. However, for David, this new role means getting back into community journalism and a lot less travel (and more time with his family, including his three young children). I know he’s excited about that and I’m excited for him.

David has accomplished an enormous amount over the last several years. He launched our Center for News & Design in May of 2014 which today provides editing and design services for 220 GateHouse newspapers and is also home to More Content Now, our niche content business, and Community Content, which processes briefs and events for our papers. Reflecting the quality of its work, the Center has recently begun to take on significant commercial clients.

David used our centralized content services platform to develop innovative programs focused on quality journalism. For example, Pinnacle, our national enterprise reporting mentorship program, continues to produce great work like the recent piece examining the impact of substitute teachers in America.

Finally, David has led the transition of our newsroom culture from print to digital to mobile first. He initiated large-scale programs like reporter-produced video, social media engagement and digital journalism training, and focused our newsrooms on new, organizational structures and the use of digital analytics. And, most recently,

David led the development of the new, Garcia-designed responsive sites that we are currently rolling out.

David has accomplished all this with the support of a terrific team, including Tom Clifford, recently hired as VP of the Center for News and Design. We are confident that this team will continue to do a great job supporting our GateHouse operations. We will begin the process of identifying David’s replacement immediately.

In our discussions about what was a difficult decision, David shared how proud he is of his team and the digital transformation work happening across GateHouse newsrooms today. David also spoke to how much he values the relationships he has developed over the past decade with hundreds of GateHouse journalists.

David’s last day will be July 7th. Please join me in wishing David all the best!

Kirk

GateHouse officials: Quincy bid was not a conflict of interest

Two of GateHouse Media’s top executives have sent a memo to the company’s publishers and editors—marked “CONFIDENTIAL”—arguing that a bid to provide services to the city of Quincy through its Propel Marketing subsidiary would not have represented a conflict of interest for GateHouse’s Quincy-based daily newspaper, the Patriot Ledger. I obtained a copy of the memo last night.

“There was never a plan to ask the newsroom for favorable coverage, reflecting a clear separation of church and state,” says the memo from GateHouse CEO Kirk Davis and senior vice president David Arkin. “Just as a politician can buy an ad and have no expectation for favorable coverage, Propel sells marketing services with absolutely no expectation for involvement by our newsrooms.”

The memo follows a report from Jack Sullivan of CommonWealth Magazine that the city rejected the bid in part because Mayor Thomas Koch “was concerned about ethical conflicts if the owner of the city’s major newspaper went to work promoting the image of the municipality.” The GateHouse bid proposal cited the company’s “expertise” at “delivering measurable results for our partners in traditional media, digital media, and digital services as well as having considerable content generation serving The City of Quincy tourism, news, and business.” (Note: I’m quoted in Sullivan’s article.)

If Davis and Arkin are sincere, then they should make sure bid language such as that used in the Quincy bid proposal is not repeated. It would also help if the Patriot Ledger would follow up on its earlier story about the bid by noting that it has since been rejected.

The full text of Davis and Arkin’s memo follows:

DATE: 04/15/16

FROM: Kirk Davis, CEO of GateHouse and David Arkin, Senior Vice President of Content & Product Development

TO: Publishers and Editors

RE: Propel Marketing Campaign

Coming off the heels of this week’s Editors Conference and the release of our News Transparency guidelines, we wanted to be very clear about an issue in New England this week. The city of Quincy, MA, issued a request for proposal to market the redevelopment of the Quincy Center, a retail area. The RFP specified three primary services in its scope:

  1. Amplify Quincy’s story: Develop and implement a marketing campaign that projects Quincy’s image in print, broadcast, digital and social media
  2. Cultivate Positive Media: Leverage and develop relationships that result in positive media about Quincy development opportunities and current hospitality opportunities
  3. Hospitality Business Development: Cultivate chefs and restauranteurs to locate and invest in Quincy’s downtown.

Propel Marketing (owned by GateHouse Media) and the GateHouse Media New England group responded to only the first of the three services in the RFP scope, amplifying Quincy’s story with a marketing campaign. Propel had no intent of cultivating positive media, nor did they intend to cultivate chefs and restauranteurs, as the former is inappropriate and the latter not their expertise.

Propel Marketing created and submitted a proposal for an advertising and marketing campaign. The proposal included digital marketing services, print ads in local GateHouse newspapers and online display ads on WickedLocal.com.  The proposal did not include any form of native advertising, sponsored content or branded content.  Nor did it include any mention of blogs, blog posts or articles.

The proposal was submitted from GateHouse Media, rather than from Propel Marketing, because it included both Propel services and GateHouse newspaper ads, in print and online.

Neither the Propel sales rep, nor the GateHouse sales rep, had conversations with editorial staff about Quincy Center coverage. There was never a plan to ask the newsroom for favorable coverage, reflecting a clear separation of church and state. Just as a politician can buy an ad and have no expectation for favorable coverage, Propel sells marketing services with absolutely no expectation for involvement by our newsrooms.

We take the independence of our news coverage incredibly seriously and are committed to ensuring that our standards are upheld in every area of our business.

The Worcester Sun charts a path from digital to paid print

Worcester Sun co-founders Fred Hurlbrink Jr., left, and Mark Henderson.
Worcester Sun co-founders Fred Hurlbrink Jr., left, and Mark Henderson.

Previously published at the Nieman Journalism Lab.

Mark Henderson is certainly not the first person to launch a hyperlocal website in the shadow of the daily newspaper that used to employ him. Nevertheless, his ideas about how to build the site into a sustainable business are unorthodox enough to merit attention.

Henderson, a former executive with the 150-year-old Telegram & Gazette of Worcester, Mass., unveiled the Worcester Sun in August. From the start, the Sun’s content has been protected behind a hard paywall of $2 a week. There are no discounts; if you want to subscribe for a year, it will cost you $104.

Once the Sun has attracted a critical mass of paid digital subscribers (Henderson won’t reveal the magic number except to say that it’s well short of 1,000), he’ll add a Sunday paper for $1 a week, perhaps as soon as next spring. Print matters, Henderson says, because that’s still where most of the advertising is.

“If you’re going to start something new, monetizing digital is tough,” says Henderson. “And you can’t look at print as a medium without understanding that there is a ton of money still to be made there. Especially in Sunday print. We could use Sunday print to boost us into the stratosphere, to get us into a stable orbit where we can launch other things.”

Bootstrapping paid digital to break into paid print? Matt DeRienzo, interim executive director of Local Independent Online News (LION) Publishers, says he’s skeptical but intrigued. “Sunday print is going against the grain. There’s a lot of reasons the cards are stacked against them,” says DeRienzo, the former editor of Digital First Media’s Connecticut publications, which include the New Haven Register. But he adds: “The best ideas are going to come from people who live in and care about their community and who are closest to the problem. Who’s to say it’s not going to work?”

With a population of 183,000 — the second-largest city in New England after Boston — and a median household income of about $46,000, more than $20,000 below the state average, Worcester is a city facing economic challenges. It’s precisely the sort of community that could benefit most from independent media projects such as the Sun, says Catherine Tumber, a scholar with the Dukakis Center for Urban and Regional Policy at Northeastern University.

“No one else is coming to their rescue,” says Tumber, the author of the 2011 book “Small, Gritty and Green: The Promise of America’s Smaller Industrial Cities in a Low-Carbon World.” “They have to rely on their own resources and civic ecosystems in order to reconstruct their cities and maintain quality of life there.”

Last week, I met Henderson and his business partner (and cousin) Fred Hurlbrink Jr. in a brightly lit coworking space on the first floor of the Innovation Center of Worcester — formerly the Franklin Street headquarters of the Telegram & Gazette, the daily newspaper where Henderson worked for nearly 25 years. Across the street is City Hall and the Worcester Common. On the other side of the common looms the mid-sized tower that is the current home of the T&G.

Henderson, 49, rose from the paper’s sports department to deputy managing editor for technology and, starting in 2009, online director. He left on June 2, 2014, the day that John Henry, who had purchased The Boston Globe and the T&G from the New York Times Company, sold the T&G to Halifax Media Group of Daytona Beach, Florida, after previously saying he intended to sell to a local group. Halifax cut about 20 journalistsfrom the full-time newsroom staff of about 80. Further cuts came a few months later when Halifax turned around and sold the paper to New Media Investment Group, an affiliate of GateHouse Media, based in the suburbs of Rochester, New York.

Hurlbrink, 38, had two stints with GateHouse — first as a copy editor at The MetroWest Daily News of Framingham and later at the Design House, run out of the Framingham plant, which handled design and some copyediting tasks for multiple GateHouse papers. In August 2014, GateHouse announced that the operation would be closed and moved to Austin, Texas.

Even with a shrunken Telegram & Gazette, Henderson and Hurlbrink find themselves in the midst of a highly competitive media environment. In addition to the T&G, Worcester is covered by MassLive.com, part of Advance Digital; GoLocalWorcester, which has sister sites in Providence, Rhode Island, and Portland, Oregon; and Worcester Magazine, whose parent company, Holden Landmark Corporation, is controlled by GateHouse Media chief executive Kirk Davis but is not part of GateHouse.

In the face of such competition, Henderson and Hurlbrink say their plan is to steer clear of breaking news and offer depth and analysis instead. “We’re never going to cover breaking news,” Henderson says. “Will we cover the opiate epidemic rather than three people who OD’d in the last 24 hours? Yeah, we’ll take a look at that. But we’ll devote the resources to do it and give people an insight that they didn’t have before.”

The Sun’s content so far reflects that philosophy, starting with the August 9 debut, which featured an essay on the city’s bygone newspaper scene by Worcester native Charles P. Pierce, the high-profile journalist and author who these days spends most of his time blogging about politics for Esquire. The Sun has also published stories on the privacy concerns posed by surveillance cameras, the city’s sagging downtown business district, and a mother’s quest to find the educational resources she needs to help her daughter with ADHD. The site also offers such quotidian fare as profiles of local businesses, editorials and, yes, obituaries.

“I think there’s a niche,” says Timothy McGourthy, executive director of the Worcester Regional Research Bureau. “I think it provides kind of a thoughtful human-interest approach to Worcester. It’s a generally positive approach to the city. I think the challenge is going to be getting the word out in the marketplace.”

The Sun’s paywall — as well as that of the T&G — is based on technology provided by Clickshare, whose website touts the software as a “flexible system” that allows for different types of paid access, billing and payment processing, and various options for e-commerce. Bill Densmore, who founded Clickshare in the mid-1990s, believes that print and digital serve two different types of audiences — and that Henderson and Hurlbrink are smart to try to serve both.

“A lean-back experience once a week makes a lot of sense to me,” says Densmore, a research fellow at the Reynolds Journalism Institute. “It’s an experiment, really, and an important one, both for the existing industry and for people starting on the digital side and wondering where that leads. I think the marriage of print and digital makes a lot of sense, particularly if you’re not trying to put out a daily paper, which increasingly seems anachronistic to me and to people in the digital world.”

Starting and maintaining a community news site is a hard way to make a living, but the allure is undeniable. LION counts about 130 member sites, and of course there many more that are not LION members. New ones pop up regularly. Just this week, The Boston Globe reported on a project called The Spark, cofounded by a former photographer for the GateHouse-owned Enterprise of Brockton.

It’s the same allure that has kept Henderson and Hurlbrink going despite setbacks — including a $150,000 Kickstarter campaign that fell well short of the mark. So far, they say, they’ve invested $200,000 in money and time. Soon they hope to unveil the first in a line of ebooks. And they’ve got plans to launch online verticals in areas such as education and local sports. “I think there are places we can go where we can be effective,” says Hurlbrink.

If all goes according to plan, they foresee a staff of 20 full- and part-time journalists. The key, adds Henderson, is to fill a niche — and not worry about what the competition is doing.

“We’ve never said we’re here to take the T&G out,” says Henderson. “Other people have. We don’t agree with that. Our stated goal is to serve our audience, the city of Worcester, the best we can. And if we have an opportunity to grow our audience, all the better.”

GateHouse parent buys T&G — and its parent chain

Screen Shot 2014-11-20 at 5.26.17 PMA huge newspaper deal was announced late this afternoon. The parent company of GateHouse Media of Fairport, New York, which has been on the march since emerging from bankruptcy last year, is buying out Halifax Media Media Group of Daytona Beach, Florida. Locally, the acquisition greatly expands GateHouse’s footprint in the central part of the state: earlier this year Boston Globe owner John Henry sold the Telegram & Gazette of Worcester to Halifax.

Jim Romenesko has the memo from GateHouse chief executive Kirk Davis.

GateHouse now owns almost every significant newspaper property in Eastern Massachusetts (and beyond) other than the Globe and the Boston Herald. The Digital First papers, which include the Lowell Sun and the Fitchburg Enterprise & Sentinel, are for sale. Will GateHouse scoop them up? What about the CNHI papers, which include The Eagle-Tribune of North Andover and three other dailies in that region? How long can they hold out?

Even before its latest acquisition spree, GateHouse owned about 100 papers in Eastern Massachusetts — mostly weeklies, but also mid-size dailies such as the MetroWest Daily News of Framingham, The Enterprise of Brockton and The Patriot Ledger of Quincy. In the past year GateHouse has added the Cape Cod Times, The Standard-Times of New Bedford, The Providence Journal and — in a little-noticed move just last week — Foster’s Daily Democrat of Dover, New Hampshire, a small but legendary community daily.

GateHouse has a well-earned reputation for cutting staff and compensation, although that hardly makes it unique. The larger story is that its executives clearly believe it can be the last local-newspaper chain standing by centralizing every part of its operations that aren’t strictly tied to local news.

A considerable amount of copy editing is being moved to a facility in Austin, Texas. The ProJo has a nice new press, and no doubt it will soon be printing as many GateHouse papers as it can accommodate — possibly cutting into the Globe’s printing business. GateHouse also owns what Davis calls a “digital services agency” called Propel Marketing.

At a time when few business executives want to mess with the newspaper business, GateHouse has gone all in. How it will end is anyone’s guess. But GateHouse has been down this road before, and it ended in bankruptcy. If Kirk Davis and company have a better idea this time, we should soon find out.

More: “Copy editing” at daily newspapers traditionally refers to editing stories for grammar and style, writing headlines and laying out pages. I am told that the Austin facility’s mission is limited to page design, though some copy editors at the ProJo are losing their jobs.

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.

Rick Daniels to step down as head of GateHouse Media NE

Rick Daniels
Rick Daniels

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.