Kirk Davis – Page 2 – Media Nation

GateHouse parent buys T&G — and its parent chain

A 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 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.

A rant for the ages against the corporate media

Following the most recent round of layoffs at GateHouse Media, one newly unemployed journalist decided he’d had enough. James Craven, who worked for GateHouse’s Norwich Bulletin in Connecticut, wrote a blog post headlined “Goodbye Norwich” in which he ripped into GateHouse management for deciding “to cannibalize the newspaper.”

You will not be surprised to learn that Craven’s post has been taken down. But thanks to the glories of Google’s cache feature, you can still read it here for what I’m sure will be a limited time. So click while it’s hot. (The Google cache version is now gone, but I’ve posted it as a PDF.)

Among other things, Craven writes that it’s his understanding the Bulletin is profitable, yet GateHouse laid off seven members of the newsroom staff. He continues:

[T]he most recently ordered layoffs will sap The Bulletin of nearly 20 percent of its newsroom staff. That will, of course, allow the president of Gatehouse Media to follow up on his $750,000 bonus to himself with an equally staggering and incongruous gratuity this year. Merry Christmas Mr. President.

Craven is referring to GateHouse chief executive Michael Reed, who did indeed receive a bonus of $750,000 last year. GateHouse president Kirk Davis got “only” $275,000. One other mistake: Craven prematurely offs Philip Meyer, who can now invoke Mark Twain.

Craven also writes:

The thing about reduced community coverage is that you do not notice it while it is happening. It is, if I may be so bold, like a cancer. It works below the surface, until one day when suddenly it becomes all too apparent. There will be referendums that may not be covered as fully. Some school functions — that first grade play that in the past featured your son or daughter — will be bypassed. On holidays, like Veterans Day, decisions will be made to forfeit coverage in some communities because there just is not an extra reporter.

According to Craven’s Twitter feed, he is “an award winning journalist but due to a corporate layoff is now job hunting.”

Craven has written a rant for the ages. And he raises an important point. We all know that the newspaper business (like most businesses) is struggling. What is less well-known is that many of these papers are making money, but are being ravaged by their corporate owners, which are staggering under the debt they took on to build their empires and whose executives remain addicted to paying themselves bonuses.

Craven comes across as a journalist who really cares, and I wish him well. I have no idea if he could make a go of it financially. But how great would it be if he started a Norwich community news site to compete with the Bulletin?

At GateHouse, as elsewhere, the rich get richer

Seems like it’s been ages since I last wrote about GateHouse Media, the financially challenged Fairport, N.Y.-based company that owns about 100 community newspapers in Eastern Massachusetts.

Things may be more quiet than they were a year ago, but rumblings of dissension persist. Several anonymous employees sent this along, detailing some mighty nice bonuses top GateHouse officials paid themselves to publish understaffed newspapers run by overworked, low-paid journalists.

Leading the parade is chief executive Michael Reed, who got $500,000. Taking the silver, with $250,000, was president and chief operating officer Kirk Davis, a top GateHouse official in Massachusetts before decamping for upstate New York last year.

It’s an old story. Ordinary people work hard for short money while the folks at the top reward themselves. Reed and Davis are managing a difficult situation, and it may well be that they deserve to be compensated handsomely just for keeping GateHouse alive. Then, too, their situation is hardly unique.

Just a few days ago we learned that Joseph Lodovic IV, president of Dean Singleton’s MediaNews chain, was receiving a $500,000 bonus for the bang-up job he did putting together a structured-bankruptcy plan. That may be the way of the world. But such tidbits can be pretty hard to swallow for those who actually cover late-night meetings and give up their weekends to photograph local events.

In other GateHouse news, here is a weird story involving a reporter for the company’s Dodge City Daily Globe, in Kansas, who was fired in the midst of a legal dispute over whether she should testify about her confidential source in a murder case.

I’m going to have to side with management on this one. The reason: Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press, tells the Topeka Capital-Journal that the reporter, Claire O’Brien, refused to show up in court to answer the subpoena she’d received.

“What she did was really stick a thumb in the judge’s eye today,” Dalglish is quoted as saying. “Even if you’re not going to answer questions, you still have to go to court.”

Media Nation Rule No. 57: If Lucy Dalglish doesn’t stand up for you on a freedom-of-the-press issue, then you’re wrong.

Tuesday evening update: Dalglish takes a rather different stance on the RCFP Web site, saying she finds O’Brien’s termination “unusual” and “quite disturbing.” An Associated Press account of what happened is worth reading, too.

The well-compensated Kirk Davis

Randy Turner looks at GateHouse Media’s latest filings with the Securities and Exchange Commission and discovers that Kirk Davis, the just-promoted president and chief operating officer, will be extremely well paid.

According to a Form 8-K filed with the SEC last week, Davis is now earning “a base salary of $461,260.80.” He’s eligible for performance bonuses as well, which sounds a little like a baseball team that signs a free agent for $12 million and then includes an incentive clause for making the All-Star team. Why? Shouldn’t the All-Star team be a given for that kind of money? [Note: I should make it clear that I don’t know what Davis was making as head of GateHouse Media New England. It’s possible that this isn’t actually a raise.]

Turner writes that Davis is making more than double what his predecessor earned as GateHouse’s number-two executive, although considerably less than what’s paid to GateHouse chief executive Mike Reed — $925,000 in 2007 and $6.4 million the year before.

Turner, a journalist-turned-schoolteacher, is witheringly sarcastic in observing that the financially ailing GateHouse is paying its top executives so well at a time when it has eliminated contributions to its employees’ 401(k) plans.

I think Davis is fundamentally a good guy, and that GateHouse can only benefit from having him run its day-to-day operations. But this is terrible symbolism.

Kirk Davis’ latest challenge

It looks like GateHouse Media has done something pretty smart: the community newspaper chain has named Kirk Davis (right) as its president and chief operating officer, the number-two position in the company. Davis, who currently runs GateHouse Media New England, will be replaced by his own number-two, Rick Daniels, a former top executive at the Boston Globe.

GateHouse owns some 400 newspapers nationwide, and more than 100 in Eastern Massachusetts. The company is currently involved in a nasty legal dispute with the New York Times Co. over GateHouse’s and the Globe’s competing online strategies.

I’ve interviewed Davis several times over the years, including, most recently, this past fall for a piece I wrote for CommonWealth Magazine. He is smart, passionate and an inveterate optimist.

I’m not sure anyone is up to the task of saving GateHouse — or, for that matter, the newspaper industry in general. But Davis is not someone I’d bet against. (Thanks to Walter Brooks of Cape Cod Today for blasting out the press release.)

Photo of Davis is from a video on the GateHouse New England Web site, which you can see here.