By Dan Kennedy • The press, politics, technology, culture and other passions

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In a separate lawsuit, Gannett joins antitrust effort aimed at Google (and Facebook)

Photo (cc) 2010 by John Marino

Since early 2021, Google has faced legal challenges over its control of digital advertising. Essentially, the tech giant stands accused of violating antitrust law by controlling all aspects of the ad market. As Paul Farrell, the lawyer for a group of seven newspapers in West Virginia, told Gretchen A. Peck of the trade publication Editor & Publisher:

They [Google] have completely monetized and commercialized their search engine, and what they’ve also done is create an advertising marketplace in which they represent and profit from the buyers and the sellers, while also owning the exchange. Google is the broker for the buyer and gets a commission. Google is the broker for the seller and gets a commission. Google owns, operates and sets the rules for the ad exchange. And they are also in the market themselves.

The suit filed by Farrell on behalf of the West Virginia papers was later joined by about 200 papers and included Facebook, which was accused of colluding with Google in order to receive preferential treatment. Attorneys general in Texas and several other states filed a separate suit, with BuzzFeed News reporting that the CEOs of Google and Facebook “personally signed off on a secret advertising deal.” The Justice Department got involved, and the European Union is suing Google on similar grounds.

On Tuesday, Google’s legal woes grew that much more complicated as Gannett, the country’s largest newspaper chain, filed its own lawsuit against Google in federal district court. Writing in USA Today, Gannett’s flagship publication, chair and CEO Mike Reed accused Google of “monopolization of advertising technology markets and deceptive commercial practices.” He added:

The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions. Further, Google’s exchange rigs its own auctions so Google’s advertisers can buy ad space at bargain prices. That means less investment in online content and fewer ad slots for publishers to sell and advertisers to buy. Google always wins because it takes a growing share of that shrinking pie.

In addition to USA Today, Gannett owns about 200 daily papers and other publications across the country, including local papers such as the Telegram & Gazette of Worcester, The Patriot Ledger of Quincy, the MetroWest Daily News of Framingham and The Providence Journal.

So why did Reed decide to file his own lawsuit rather than joining antitrust efforts that are already under way? It’s a good question, and it’s one that Editor & Publisher’s Mike and Robin Blinder asked him about in their vodcast, “E&P Reports.” Reed’s answer: “You know, as far as us going by ourselves, we just felt like we had the right size, we had the right legal counsel, and we felt like we didn’t want to wait.”

Jeff Jarvis, a well-known digital media observer and director of the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York Graduate School of Journalism, was critical of the Gannett suit, telling E&P:

It is tragic that once-great Gannett is resorting to protectionism and retribution against its competitors rather than have a strategy for innovation and growth in a changed marketplace. There are legitimate questions to be addressed regarding Google’s power in both sides of the advertising market and authorities in both Europe and the U.S. are investigating them. But for Gannett to blame Google’s alleged monopoly for its present troubles is just sad.

But you can disparage Gannett for decimating its newspapers while still supporting legal efforts to hold Google to account. Few media observers have been more critical of Gannett than my What Works partner Ellen Clegg and I. Greed and crushing debt have led the chain to cut its journalistic capacity far more deeply than would have otherwise been necessary. Yet it’s simply a fact that very little digital advertising money has flowed to the news business, and that lack of innovation on the part of the news business is only partly to blame. If news publishers and government investigators are able to show that situation is either partly or wholly the result of illegal practices on the part of Google (and Facebook), then there’s no reason why Gannett shouldn’t be one of the beneficiaries, regardless of the company’s otherwise loathsome behavior.

Moreover, the antitrust route strikes me as far more promising than congressional efforts to force Google and Facebook to pay for the news they repurpose. Last week, the Senate Judiciary Committee passed the Journalism Competition and Preservation Act on a bipartisan 14-7 vote, according to Ted Johnson of Deadline. The JCPA would allow the news business to bargain collectively with Google and Facebook for a share of their revenues. Even if the JCPA passes the full Senate, though, it seems unlikely to prevail in the Republican-controlled House. A similar law in Australia has served mainly to enrich press baron Rupert Murdoch, and there’s no guarantee that the JCPA would bolster journalism at the local level.

Regulating a monopoly often leads to unintended negative consequences. Breaking one up, as Gannett and its numerous co-plaintiffs would like to do, can spark innovation. Local news today is getting by through a combination of paywalls, low-value programmatic ads and — in the nonprofit sector — foundation grants, membership fees and events. Nothing would be more welcome than to see that bolstered by a reinvigorated ad market.

At Gannett, those better days that are just around the corner never seem to arrive

Photo (cc) 2010 by Shashi Bellamkonda

Boston Globe columnist Brian McGrory wrote Wednesday that he’d heard from Gannett chair and chief executive Mike Reed after his recent piece detailing the devastating cuts that the country’s largest newspaper chain had endured. Reed told McGrory that the worst was over and that happy days were almost here again. McGrory wrote:

“My full intention is to do more journalism, not less,” Reed said. “We’re so close to that inflection point that the major cuts are behind us.” Moments later, for emphasis: “The cuts are behind us.”

Is that a commitment, Mike?

He hesitated. I swear I could hear the loud warning beeps from a truck backing up. “What I’m saying is we’re near the end of the process on the reduction side,” he replied. Then this: “I wouldn’t say that I don’t know there’ll be one more cut.” And finally: “We’re in the ninth inning of the game.”

It sounded so familiar. I’ve written about Gannett and its predecessor company, GateHouse Media, many, many times over the years. For instance, after I wrote for GBH News in June 2019 that GateHouse seemed to be imploding, Reed contacted me to push back. He wouldn’t put any of our phone conversation on the record, but he didn’t need to. Because it’s been the same old song for a very long time.

How long? Let’s go back to August 2008, when GateHouse’s stock price was taking such a pounding that it could not longer be traded on the floor of the New York Stock Exchange. In a conference call with investors, according to the Rochester Business Journal, Reed was full of assurances that the worst was over. “Our results, while below our estimates, are holding up quite well, and our capital assets put us in a position of strength going forward,” he said. And: “We believe our assets will continue to produce strong cash flows and when the economic cycle improves we are positioned in our small markets to grow.”

If that’s not enough déjà vu for you, consider that, around the same time, the website 24/7 Wall St. named Reed “The Most Overpaid CEO Of The Day,” noting that he was being paid a salary of $500,000 to preside over a company whose stock price was down 90%. As readers of Media Nation know, Reed was just getting started. He received $7.7 million in total compensation in 2021, and was rewarded with another $3.4 million in 2022. Meanwhile, Gannett newspapers are being shut down and journalists laid off by the score.

In October 2008, I wrote a piece for CommonWealth magazine about GateHouse’s operations in Eastern Massachusetts — around 100 community newspapers, mostly weeklies, that it had acquired from Boston Herald owner Pat Purcell, who had in turn purchased them from Fidelity Capital a few years earlier. The theme of the day, inevitably, was newsroom cuts. But Kirk Davis, then the president and publisher of GateHouse Media New England, was, to invoke an old cliché, cautiously optimistic:

“We feel that community newspapers have a very viable future and, juxtaposed against the trend overall, are performing very well,” says Davis, arguing that small, community newspapers have a competitive advantage over major metros because their locally focused content is not available elsewhere. “I believe in it, and I believe it’s going to stay strong.”

Five years later, the company sought Chapter 11 bankruptcy protection so that it could restructure $1.2 billion of the debt it had taken on in assembling its newspaper chain.

The cutting continued after GateHouse emerged from bankruptcy, sometimes slowly, sometimes quickly, but always with the same downward momentum. In late 2019, GateHouse merged with Gannett, a longtime publisher that was also notorious for running its papers on the cheap. The new Gannett was saddled with $1.1 billion in debt, and a lot of that has been financed by cutting the workforce in half, as Axios reported recently. Davis left shortly after the merger, but Reed continues to decimate newsrooms, just as he continues to insist that better days are just around the corner, as he told the trade publication Editor & Publisher last November.

The problem with Gannett, as always, is that better days for Reed never translate to better days for his newspapers, his journalists or the communities they serve. McGrory’s skepticism is warranted.

Shed a tear for Gannett’s Reed, whose compensation has been cut to just $3.4 million

I guess we’ll have to start referring to Mike Reed as Gannett’s $3.4 million man.

According to Gannett’s just-released proxy statement for 2022, Reed, the newspaper chain’s chair and CEO, received nearly $3.4 million in total compensation last year, down from $7.7 million the year before. That’s a decline of 56%, but it’s still a healthy pay package for someone who has wreaked so much destruction on the local news business. It’s also 66 times more than the median salary ($51,035) earned by Gannett employees in 2022, as Don Seiffert observes at the Boston Business Journal. Seiffert broke the news about Gannett’s latest numbers on Friday afternoon.

The main difference in Reed’s compensation package is that he received just $2 million in stock awards in 2022, down from about $6 million in 2021. His base salary was cut slightly as well, from $900,000 to $859,615, but he also received a bonus of $513,652 in 2022, which he did not get in 2021. Finally, he got a 401(k) match of $6,184 in 2022, something he didn’t get in 2021. I guess we can refer to that last as rubbing-it-in money, since Gannett suspended 401(k) matches for its employees last October. If they were restored later on, I haven’t heard about it.

Gannett’s chief financial officer and chief accounting officer, Douglas Horne, received nearly $2.2 million in 2022, up from about $1.75 million the year before. And all but one of Gannett’s nine non-executive board members continued to receive in excess of $200,000 for their part-time work — which, as I reported last August, was at least generous, and perhaps excessive, when compared to other publicly traded companies. You’d think that would especially be the case for Gannett, whose stock price opened 2022 at $5.54 a share and closed the year at $2.03. (It’s now down to $1.87.)

Gannett is our largest newspaper chain, but it’s hard to say exactly how large. At one time it published more than 200 dailies and a slew of weeklies, but it’s been closing weeklies in droves over the past few years. Just last week, Sara Fischer of Axios reported that Reed was predicting the closure of more papers moving forward. Just recently a knowledgeable industry observer told me that they wouldn’t be surprised if Gannett got down to about 30 dailies, including its flagship, USA Today, and zero weeklies in the not-too-distant future.

Gannett’s annual meeting is scheduled for June 3. If the past is any indication, though, the only complaint will be that Reed hasn’t cut enough.

From a hiring freeze to unpaid furlough, Gannett’s Mike Reed is slashing once again

Mike Reed, Gannett’s $7.7 million man, announced another round of truly astonishing cuts earlier today in an all-hands memo shortly after holding a brief town hall meeting. His memo was provided to me by two trusted sources.

There’s a lot of head-shaking material in here, but perhaps the most clueless line is this, in explaining the company’s decision to suspend company matches for 401(k) accounts: “This decision does not impact employee contributions, just the Company match.” What generosity!

The rest of it is the usual sort of thing — five days of unpaid furlough, a hiring freeze, voluntary severance, voluntary shorter work weeks and, for those who can afford such a thing, unpaid sabbaticals. “Our company is resilient, our people are the best in the industry and my confidence in what we can accomplish as Team Gannett has not wavered,” Reed writes in conclusion.

Gannett is our largest newspaper company, with more than 200 dailies. Despite — or, more likely, because of — round after round of cuts, the debt-addled company’s stock price has slid from a high of $5.99 back in February to $1.40 as I’m posting this. Here is the full text of Reed’s message (note: links are internal and won’t work if you click on them):

Team –

These are truly challenging times. The company continues to face headwinds and uncertainty from the deteriorating macroeconomic environment which has led the executive team to take further immediate action.

Before I share the specifics, I want to thank you all for your hard work and commitment. Whether you’re part of the Digital Marketing Solutions team, Gannett Media or USA TODAY Network Ventures, we will navigate this unpredictable climate by working together.

We pledged transparency – and while these actions are tough, I want to be explicit about what we’re doing and why. In order to sustain the mission of our company to empower communities to thrive, sustain local journalism and support small businesses with digital solutions, we need to ensure our balance sheet remains strong.

These are not decisions we made lightly, but they are critical for our long-term success. Here’s what you can expect:

    • 401(k) Match Suspension
      Gannett will temporarily suspend the 401(k) match for contributions made on or after October 24, 2022. This decision does not impact employee contributions, just the Company match. Employees may continue their contributions on a pre-tax basis, which reduces taxable income or on an after-tax basis to a Roth 401(k).
    • December Mandatory Leave
      Employees must take 5 days of unpaid leave during the month of December. The mandatory leave will occur over a two-week period from December 19-30 (the holiday observance of Christmas will be paid). Teams will work with their managers to determine scheduling to ensure staffing and coverage as appropriate. HR will provide specific guidance to ensure FLSA compliance.  
    • Voluntary Severance Offer (VSO)*
      We are offering to pay severance to an employee in exchange for their voluntary resignation and execution of a separation and release agreement. This program provides flexibility for those who may wish to transition. Employees interested in the VSO must express interest by October 18 and work through November 4, 2022. *In accordance with Gannett’s 2022 severance program.
    • Hiring Pause   
      Gannett will cease overall hiring with the exception of key revenue and operating roles as well as positions deemed critical.
    • Voluntary Options 
      The following options are also available to employees who wish to reduce their work hours or take an extended break to meet their personal needs.

      • Adjusted Work Week
        Employees may request an adjusted work schedule with fewer hours, commensurate with a 20% reduction in compensation, and maintain full-time employment status. Please note this is not a compressed work week where employees work their normal schedulein fewer days.
      • Unpaid Sabbatical
        Employees may request an unpaid sabbatical from 1 month to 6 months in duration. As an approved personal leave, employees may continue health benefits coverage by paying their portion of premiums directly to Fidelity.

This is a lot to process. This mix of temporary and permanent actions allows us the near-term flexibility we need to drive improvement while preserving our ability to quickly pivot as we see the economy and areas of our business progress.

I recognize that these decisions take a financial and emotional toll but mitigating these economic pressures now will benefit Gannett’s future. The days and weeks ahead will require close partnership with managers and our human resources team to support you as we implement these measures.

Our company is resilient, our people are the best in the industry and my confidence in what we can accomplish as Team Gannett has not wavered. If you missed the Town Hall where I address these actions, you can watch the replay [at internal link]. You may find additional information at [internal link].

My sincere gratitude for all you do,
Mike

Please note that this information may or may not apply to you if you are covered by a collective bargaining agreement, represented by a union or work for an entity that is part of a Joint Operating Agreement.

Digital circulation is growing, but it needs to be more and faster

Photo (cc) 2005 by rnv123

Will digital subscriptions save the newspaper business? They had better. With advertising in a death spiral, publishers have to hope that readers will pick up the slack. Progress has been slow, but it may finally be picking up.

Marc Tracy reports in The New York Times that several newspaper chains, including Lee Enterprises and Gannett, have experienced significant increases in paid digital circulation. The problem is that these increases are spread over many papers, and the situation at any one of them remains dicey.

For instance, Gannett is up 46% over the past year, to 1.5 million paid digital subscriptions — yet it owns about 250 daily papers, including USA Today. Those numbers need to be exponentially greater if Gannett is going to re-establish itself as a lucrative business and actually start adding rather than cutting journalistic resources.

“There’s a big misperception out there that there’s a big hole in local journalism, and I think that narrative’s been created by people who aren’t sitting in local markets,” Gannett chief executive Mike Reed told Tracy. As a longtime reader of Gannett’s (previously GateHouse Media’s) community weeklies, all I’ve got to say is: You’ve got to be kidding.

In order for paid digital to work, you also have to charge enough. To go back to USA Today, I see that the cost is $9.99 a month after the first-year discount expires. That’s not bad, but it’s well behind The Boston Globe’s $30 a month. And the Globe has managed to sell a reported 235,000 digital subscriptions. Of course, the Globe, like most newspapers, offers a huge discount to new subscribers, which means it then has to figure out a way to keep them.

In order to succeed with digital subscriptions, you need good content and good technology. Many of the papers now trying to succeed in the digital space have been cut substantially. And too many newspaper websites are still clunky mish-mashes with pop-ups, pop-unders and other annoyances.

It’s better to grow than to shrink, so in that sense I guess Tracy’s story is good news. But there’s still a long way to go.

Gannett needs to invest if it wants to meet its digital subscription goal

The Gannett newspaper chain, like nearly all publishers, is staking its future on reader revenue. Which raises a question: What is the company prepared to do to make that happen?

In its most recent quarterly report, the country’s largest newspaper chain said that its total number of digital subscribers is now 1.2 million — an increase of 37% over the previous year, but not especially impressive for a company that owns about 250 daily papers, including USA Today, and hundreds more weeklies. Gannett CEO Mike Reed said he’s aiming for 10 million in five years.

At least the subscription total is heading in the right direction. Overall, the company lost $142 million, largely due to pandemic-related declines in print and digital advertising.

The focus on digital subscriptions isn’t smart so much as it is the only option available. Newspaper advertising has been tanking for years as ad spending has moved to Craigslist, Google and Facebook. National papers and a few big regionals, including The Boston Globe, have succeeded in making the shift to reader revenue. But if Gannett wants to emulate them, it’s going to have to overcome its reluctance to invest in journalism and technology.

For years, Gannett and the chain that essentially took it over, GateHouse Media, have been decimating their newsrooms in order to squeeze out enough revenues to keep their creditors at bay. (Reed claims a recently completed loan restructuring should help.) As I’ve written before, our local Gannett weekly, serving a city of nearly 60,000 people, hasn’t had a full-time staff reporter since the pre-pandemic days of late 2019. Yet it is also the only print paper I subscribe to because reading it online is such a dismal experience.

Lately I’ve noticed an increase in stories from something called “the USA Today Network,” which is to say they’re not local. Some are from one or two towns over. Some are from afar. They are nothing but space-fillers.

Gannett announced several other moves as well, including a paywall for USA Today, sports betting and even an attempt to sell non-fungible tokens (NFTs). I’ve been trying to grasp exactly what that last means, but I’m still confused even after reading this New York Times story.

Gannett owns nearly all of the community papers in Eastern Massachusetts and environs, and in very few cases are they meeting the information needs of their communities. If the company is determined to offer a better product, with more local coverage and a better user experience, then it will deserve to sell more digital subscriptions.

But I can’t imagine that the chain will be able to build its digital subscriber base significantly with what it’s offering now.

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The start of a trend? Gannett sells Nantucket paper to local owners

Nantucket. Photo (cc) 2013 by Si B.

I don’t suppose this is the beginning of a trend, but it’s great news nevertheless: The Inquirer and Mirror of Nantucket has been sold to local owners.

According to an announcement on the weekly paper’s website, Gannett (the part that’s formerly GateHouse Media) has agreed to sell the paper to a group put together by editor and publisher Marianne Stanton and a local businessman named David Worth.

I think it’s pretty cool that two Nantucketers, both descendants of the early settlers, could work together to pull this off,” said Stanton. I think it’s pretty cool, too.

No sooner did I tweet about this than I learned that Gannett had also sold The Pine Bluff Commercial to the Arkansas Democrat-Gazette, which is itself independently owned. So maybe it is a trend. Or a mini-trend.

Meanwhile, the perpetually downsizing Gannett continues to struggle. Chief executive Mike Reed announced last week that the chain would embark on another round of voluntary buyouts.

So if you’d like to acquire the Gannett paper in your community, it sounds like it might be a good time to make an offer.

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As Gannett seeks to hire journalists, Alden continues to ‘strangle’ them

Photo via the U.S. National Archives and Records Administration.

Previously published at WGBHNews.org.

Among those of us who follow the business of local news, there is a tendency to lump the two most notorious corporate chain owners together. Gannett Co. and Alden Globe Capital, after all, are both notorious for slashing their newsrooms to the bone. Their newspapers and websites in too many instances fail to meet the information needs of the communities they purportedly serve.

Yet there is a difference. And I was reminded of that difference recently by Rick Edmonds, who analyzes the media business for the Poynter Institute.

After a decade’s worth of cuts, Gannett is planning to bolster its reporting corps in the near future, Gannett chief executive Mike Reed told Edmonds — although he didn’t provide any numbers. Currently, Gannett employs about 5,000 journalists at its properties, which include USA Today, about 260 regional dailies and many other weekly papers and websites, including dozens in Greater Boston.

“We need to get even better,” Reed was quoted as saying. Well, OK. I would replace “even” with “a lot.” Still, such talk would be unimaginable at Alden Global Capital, whose MediaNews Group chain of about 200 papers has sparked newsroom revolts as well as demands from 21 U.S. senators that the company stop its “reckless acquisition and destruction of newspapers,” according to a recent story by Sarah Ellison in The Washington Post.

The difference between how Gannett and MediaNews are perceived may have something to do with their ownership structures.

The current Gannett is the result of a merger late last year between Gannett and GateHouse Media. Despite keeping the Gannett name, it was clearly GateHouse that got the better of the deal: Reed was the chief executive at GateHouse before assuming the same position at Gannett. The new Gannett immediately embarked on an estimated $400 million in cuts in order to pay down the debt it had taken on in financing the merger, according to the media-business analyst (and newly minted entrepreneur) Ken Doctor at Nieman Lab.

Gannett is a publicly traded corporation, which means that Reed’s ultimate goal is long-term growth and sustainability — albeit with as little journalism as the company can get away with. Reed hopes to do that by leveraging Gannett’s media holdings with digital marketing subsidiaries the company owns as well as an events business, which is obviously on hold during the COVID pandemic.

If everything works out over time, it is possible to imagine Gannett’s local news outlets staffing up and providing better, more comprehensive coverage than they have in recent years. As good as what would be offered by independent newspapers and websites? Almost certainly not. But any improvements would be welcome.

Alden Global Capital, on the other hand, is a hedge fund. And as best as anyone can tell, the company has no strategy for MediaNews Group beyond extracting as much money as it can for as long as it can. Its Massachusetts papers, the Boston Herald, The Sun of Lowell and the Enterprise & Sentinel of Fitchburg, operate on a shoestring. The Fitchburg office was closed several years ago. The Herald’s office in Braintree was recently shut down as well, although it’s unclear whether that was a temporary, COVID-related move or something permanent.

In Ellison’s Washington Post article, Alden managing director Heath Freeman tried to portray himself as a savior of journalism. “I would love our team to be remembered as the team that saved the newspaper business,” he was quoted as saying. Ellison, though, ran through a list of MediaNews papers across the country that have been so gutted that they have virtually no one to cover the news.

“Don’t buy the idea that Alden is trying to save newspapers. I don’t think any idiot would buy that,” said Dean Singleton, the owner of an earlier iteration of MediaNews Group whose own reputation as a cost-cutter looks benign by today’s standards. Freeman’s retort: “We’ve saved the very newspapers that Dean Singleton ran into bankruptcy, so take his recriminations with a grain of salt.”

Stop me if you’ve heard me say this before, but quality local news can be a key to reviving civic engagement, which in turn could help us overcome the hyperpolarization that defines our culture nationally. According to a recent survey by Gallup and the Knight Foundation, 70% of Americans believe the news media play a “critical” (30%) or “very important” (42%) role “in making residents feel connected to their local community.”

Moreover, Andrea Wenzel of Temple University, in her new book “Community-Centered Journalism: Engaging People, Exploring Solutions, and Building Trust,” found that people trust local news outlets more than they do national media.

“While national press was perceived by residents of all political backgrounds as distant, privileged, and dismissive of local culture,” she wrote, “it was not uncommon for residents to have first- or secondhand interactions with local reporters. So while participants could identify shortcomings, there was a base-level familiarity and trust.”

Those interactions are important — but they are becoming increasingly rare at the local news organizations being run by Gannett and MediaNews Group. At least there’s some reason to hope that the situation might improve at Gannett. As for MediaNews, a former reporter for the chain, Julie Reynolds, put it this way in The Nation several years ago: “Don’t just blame the Internet for journalism’s decline. Old-fashioned capitalist greed also strangles newspapers.”

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Kirk Davis leaving GateHouse Media just ahead of the merger with Gannett

Kirk Davis (via LinkedIn)

I posted this on Twitter and Facebook on Thursday, but it seems significant enough that I ought to share it here as well. Kirk Davis, chief executive officer at GateHouse Media and number two to Mike Reed in the GateHouse-New Media combo, is leaving just as the company is merging with Gannett.

I’ve known Davis for a very long time, having interviewed him for The Boston Phoenix in the 1990s when he and Mary Jo Meisner were running Community Newspaper Co. for Fidelity. CNC, which comprised more than 100 newspapers in Eastern Massachusetts, was later sold to then-Boston Herald publisher Pat Purcell, who in turn sold out to GateHouse.

In 2008, I interviewed Davis — then the head of GateHouse Media New England — for CommonWealth Magazine.

Earlier this week, Chris Faraone wrote for Boston magazine about a familiar subject: the brutal cuts in news coverage and staff at GateHouse papers in Greater Boston. It’s not going to get any better now that the company has merged with Gannett.

Although Davis’ departure is being portrayed as his decision, it’s worth noting that Don Seiffert wrote in the Boston Business Journal back in August that Davis “may not have a role at the new, combined company.” Still, it wouldn’t surprise me if Davis decided he’d had enough.

On Thursday a source sent me a memo that Reed sent to GateHouse staff members announcing Davis’ departure. I present it here in full:

TO: GateHouse Media employees
FROM: Mike Reed
RE: Kirk Davis
Date: October 31, 2019

I am writing to inform you that Kirk has shared with me that he intends to leave New Media upon the close of the Gannett acquisition. I know this decision did not come easily for him; his commitment to our company and each of you is unmatched. I have worked very closely with Kirk for the past 13 years and not only have we become great business partners, but also great friends.

I want to personally offer my deepest appreciation and respect for Kirk’s work and leadership over the years. From our roots as a small collection of local newspapers, we’ve become one of the largest publishers of locally-based media in the United States. We are nationally recognized for our growth in digital marketing services and local and national events and most importantly, celebrated for our multi-platform, local journalism. Kirk’s leadership, building and guiding a high performing organization, has led to our opportunity with Gannett. I know without doubt that Kirk will be incredibly successful in his next endeavor and we wish him all the best in that effort. I know Kirk will want to share some thoughts with you before he departs. And, we will provide channels for staff to acknowledge and commemorate Kirk’s service to GateHouse.

Please join me in thanking Kirk for his many contributions to us and our company and wishing him all the best on his next adventure.

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GateHouse Media brass touts Gannett deal in confidential message to employees

Al Neuharth in 1999. Photo (cc) by John Mathew Smith and 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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