Gannett, Gatehouse talking merger

A tax write off for capital losses?

 

Turns out it was just a misunderstanding and we got it sorted out, haha.

 

More furloughs for Q3, as expected. At least Mr. Bascobart got his.

 

Gannett revenues were down 10% for the first quarter of the calendar year that ended March 31 on a same store basis. Lee also reported a 10% drop on a same store basis. A week ago Lee told analysts that they expected revenues for the quarter ending in June to drop by 24.9%. Given that management made the announcement two weeks before the quarter ended that is pretty solid estimate. I think it is safge to say that Gannett took about the same hit which means their was revenues drop by a quarter billion dollars from last year in this quarter.

Gannett had EBITDA of 60 million dollars in the first quarter. They deferred about 45 million dollars of interest expense in the first quarter. So the company barely made enough money in the first quarter to pay interest on the loan and the bottom fell out of their business in the second quarter. The company must pay the back interest next month and start making regular payments.

Gannett has a bizarre management structure. An outfit called Fortress has a contract to provide the CEO and the CFO and Fortress gets about 20 million a year to provide their managerial assistance. If Gannett goes into Chapter 11 Fortress loses the contract. So Fortress has a strong economic incentive to avoid Chapter 11.

I leave you with this question. If Gannett employees were dying of starvation in the newsrooms do you think Fortress would increase wages to allow the employees to buy food or would they conserve cash to stay out of Chapter 11 and let the employees die so Fortress could keep getting the 20 million?

 

Editorial personnel are exempt from furloughs in Q3, I’ve heard.

 

just reporters and “visual journalists.” Editors and producers still subject to furlough.

 

looking forward to posing this exact question during Thursday's Ask Mike webinar, Lancey.

 

Anyone who doesn't think Fortress will get its millions one way or the other is naive. Body counts don't matter to vampires.

 

In terms of vendors and creditors, why would they deal with newspaper companies? They’re just going to get screwed over in the bankruptcy proceedings anyways.

 

Another, better question someone should ask.

If a property starts running negative cash flow during this period can the company afford to carry the property until this crisis is over? If not, how many properties are currently at risk of closing?

 

Did you get an answer?

 

So what is up with Gannett/Gatehouse? Are they in trouble or are they buying McClatcthy? What is going on with McClatchy and the hedge funds. All seems quiet.