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.

Advertisements

GateHouse Media to install a media gatehouse

Earlier today Media Nation obtained a copy of a message from Sean Burke, president and group publisher of GateHouse Media New England, announcing that GateHouse will experiment with metered paywalls at three of its daily papers — The MetroWest Daily News of Framingham, The Enterprise of Brockton and The Milford Daily News. At a fourth daily, The Herald News of Fall River, the company will try a premium/freemium model.

GateHouse Media, based in suburban Rochester, N.Y., owns more than 100 papers in Eastern Massachusetts, most of them weeklies. The full text of Burke’s message follows.

Gatehouse Mass. dailies going to “metered model”:

To: All GateHouse Media New England Employees
From: Sean Burke
Date: 3/4/2014
Re: The Meters Are Here!

Team,

Today we are pleased to announce that we are under taking a very important and strategic step in the  future of our business by introducing tactics to eliminate unlimited free access to our content.

Sean Burke (via LinkedIn)
Sean Burke (via LinkedIn)

For years now, it’s bothered me that we essentially undervalue the efforts of our hardworking journalists by giving away their content free on our websites. Plus, we do everything we can to drive people to our free content, through social media, promotions and more. On the circulation side the cannibalization of our own best efforts is clear to see: We ask people to pay for our print publications, while increasingly pointing them toward digital, where they can consume most if not all of the print content free.

We have been providing this value to readers and visitors for years, free of charge, and at the detriment of our core business, our paid print publications. As increasing numbers of readers choose digital options to satisfy their news and information needs, the circulation of our newspapers continues to trend downward.

No more. Today begins a paid content strategy on three of our daily newspaper sites:

MetroWestDailyNews.com, MilfordDailyNews.com and Enterprisenews.com. These sites will test what is called a “metered model.” Users will have access to 15 free articles each month. After reaching the limit, they will trigger a prompt that will give them a variety of payment options to allow them to continue to access content. We’re starting the meter high – allowing a higher level of free content – then we will begin to lower it, testing along the way, to find the optimum level. As always, readers can view an unlimited number of exclusive breaking news stories and community features on the home page, as well as enjoying full access to obituaries, section fronts and video.

In Fall River, at The Herald News, we’ll be testing a different model, which we refer to as “freemium/premium.” This model capitalizes upon the differing levels of consumption and engagement by our readers through versioning. We’ll continue to offer plenty of content to our more casual readers, but it will be just the basics of stories. We’ll ask readers who want a richer, more in-depth, interactive, multi-layered, and multimedia experience to join our brands as paid “members.”

In conjunction with this model we will launch a consumer loyalty and membership program, Herald News Perks, which gives “members” access to exclusive deals, contests and events beyond content.

We plan to learn a great deal from our initial venture into paid online content with these models, striving to emerge with refined approaches for what resonates in our many individual markets. Along the way, I invite your feedback on what you think works, what doesn’t and ideas for how we might continue to demonstrate the value of all of our products across all platforms.

Best,
Sean

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.

GateHouse papers ban anonymous comments

Anonymous commenter reacts to new GateHouse policy
Anonymous commenter reacts to new GateHouse policy

Friday update: MetroWest Daily News columnist Julia Spitz offers her take.

Yet another major news organization is fighting back against the scourge of anonymous, hateful comments. GateHouse Media, a national chain that owns about 100 newspapers in Eastern Massachusetts, is now requiring readers to use their real names and log in via Facebook or LinkedIn. The new rules kick in today.

Here’s how the reason for the new policy was explained in the GateHouse-owned Patriot Ledger of Quincy earlier this week:

For some time, we’ve received complaints that the anonymous commenting system we’ve hosted on our online stories does little to enhance the conversation within our community. The criticism has been that some of the comments are hateful and sometimes, downright objectionable. We heard you and we agree.

Most of GateHouse’s Massachusetts papers are community weeklies, but there are also a few medium-size dailies — most prominently The Patriot Ledger, The Enterprise of Brockton, The MetroWest Daily News of Framingham and The Milford Daily News.

The new policy pertains to all of GateHouse’s properties, which include more than 300 daily and weekly papers, according to a tweet from Nicole Simmons, regional digital editor for GateHouse Media New England.

In discussing the new policy on Facebook this week, I’ve seen praise for the decision to banish anonymity and criticism for relying on third-party services such as Facebook and LinkedIn. My sense is that the new policy is a step in the right direction, and how well it works will depend on the willingness of local editors to engage with their audience.

In other words: better some places than others.

Moment of truth draws closer for debt-riddled GateHouse

Since coming together in the middle of the last decade, GateHouse Media has been struggling with $1.2 billion in debt that it took on to assemble a chain of more than 300 community newspapers.

In 2008, I wrote in CommonWealth Magazine that company officials claimed they had no problems making debt payments — yet they were in the midst of dramatically downsizing their operations, including at about 100 newspapers in Massachusetts.

A year ago, Jack Sullivan, also in CommonWealth, found GateHouse was warning shareholders that bankruptcy was an option, even as the company was paying out $1.4 million in bonuses to top executives.

Now, it seems, the moment of truth is at hand. According to Emily Glazer and Mark Spector of the Wall Street Journal, GateHouse appears likely to undergo a “prepackaged bankruptcy” with the cooperation of its creditors in the hopes of emerging from the proceedings debt-free. (Non-subscribers may read the Journal story by searching for it on Google News. Don’t worry: Rupert already knows, and he says it’s OK.)

If GateHouse could put itself on sounder financial footing, that would certainly be good news for employees and readers of papers such as the Patriot Ledger of Quincy, the Enterprise of Brockton, the MetroWest Daily News and the myriad weekly papers the company continues to operate.

A despicable way to handle closings and layoffs

In case you missed it, you have got to take a look at how a shrinking chain of hyperlocal websites handled closings and layoffs earlier this week. As reported by Gawker’s Camille Dodero, Daily Voice chairman Carll Tucker sent out a company-wide email last Friday promising some pretty exciting news:

Monday morning we will share with you the news about where we’re going and how we’re going to get there. The news is good — but you’ll need to sit tight while we finalize our plans. Check your email about our company-wide phone conference early Monday morning.

I am pumped about the prospect of working with you to build a great company.

Monday comes around, and the Daily Voice announced it would shut down all 11 of its sites in Central Massachusetts. Widespread layoffs were reported at the company’s sites in New York and Connecticut as well. Despicable — not the downsizing, which may have been necessary, but the deceit.

“They bought us a year and a half ago and made a lot of stupid decisions,” Jennifer Lord Paluzzi, the laid-off managing editor of the Grafton Daily Voice, told Walter Bird Jr. of Worcester Magazine. “They would offer to put us up in hotels. All this stuff that had nothing to do with community news.”

It’s a shame, because the Central Massachusetts story was an inspiring one. Paluzzi, laid off by the MetroWest Daily News, started the Greater Grafton Blog. She later teamed up with a businessman named Jack Schofield, and together they built a network of hyperlocal sites in and around Grafton, selling out to the company that became the Daily Voice in 2011. I brought Paluzzi in to speak with my students a few years ago, and every so often I’d get a message from her telling me she was hiring.

Paluzzi has revived her blog, but it’s not clear what will come next. “We’ll get reacquainted after I take a bit of a rest,” she wrote on Monday. “I think I’ve earned it.”