Mike Reed Sets Goals for New Gannett

First of all, it's not a matter of what I agree with. I wasn't giving an opinion. Everything about the way they are ripping the company apart is the way it looks. It's unseemly, but it's reality. I was stating what happened.

Second of all, Leon Cooperman is such an odd appeal to authority. He can be as big a sleaze as anyone -- even if his act is the frugal guy who drives an old Toyota Camry thing and he would only cash a check for a dollar if he had earned $2. Look, Leon Cooperman made a bad investment, and he got out-manuveured for once in his life. He ended up taking a loss on what is a relatively small investment for him, because he ran into a shark bigger than he is. It shows that he's human -- when he's not trading on inside information.

Third, the fact that the deal got done with borrowed money (which they borrowed at loan shark rates -- including it mostly refinancing a pile of Gannett debt that was aleady there) doesn't change the fact that Softbank bought the company. Gannett was worth what it was worth and whatever Softbank had on the line (which would have been the value of the New Media stock it put up, and the portion of distressed-entity interest rate and principle that New Media ended up on the hook for by attaching itself to Gannett), their risk was: exactly half the value (or whatever their exact stake was) of what Gannett had sunk to. It's not nothing, the way you characterize it. FWIW, Apollo got seats on the board and has been on board with everything that they have been doing. Everyone is in this to try to pull money off the ship before it sinks.

Fourth, there is no way to know -- at least as far as I know -- how Digital First would have financed an acquisition. Their offer was rejected before we got that far. What I can say with reasonable certainty -- and this is not a stretch given what Digital First does -- the path that Gannett took wouldn't have been substantially different had they been the buyer. Maybe the specifics about how they gutted the company to extract a return would have differed, but it would still have been a case of exactly what I said: Gannett was a distressed company, with more debt than it was ever going to be able to pay back from operations, and the only buyers left interested in that kind of company are vulture investors. ...IF they see an opportunity to make the parts worth more to them than the whole. If you want to call that immoral, or pretend that there was a savable company there if those immoral people hadn't gotten their hooks into the gem, so be it.

 

Day traders? What am I not understanding?

 

You are are making this distinction that has absolutely no practical difference and you are ignoring all context by either not knowing where New Media came from or just ignoring the history of Fortress.

Softbank / Fortress / New Media are the same thing for all intents and purposes. New Media was formed out of the ashes of the Gatehouse bankruptcy, which all hinged on Fortress. ... it had to agree to restructure a boatload of secured debt. They agreed, with their reward (if you can call it that) being the founding of New Media (which took over after the bankruptcy) in return for Fortress collecting fees in exchange for managing New Media. Then, Softbank subsequently bought Fortress.

When New Media took a majority stake in Gannett, Gannett got Fortress too, which is attached at the hip to New Media as a result of Gatehouse. It's not as if Gannett didn't get anything. New Media gave Gannett shareholders cash and stock in New Media (which already had hundreds of small dailies and weeklies that are the legacy of Gatehouse) as part of a merger that put all of those publications under the Gannett name.

If I am understanding your posts, you seem to think that someone waltzed in and somehow wrote themselves a management contract for millions of dollars in an immoral (and what sounds incomprehensible to me) way. Immoral is subjective, I guess, but Fortress (and subsequently Softbank, which purchased Fortress) didn't pop up out of nowhere. It was Fortress that purchased Liberty Group years ago, renamed it Gatehouse, expanded trying to be newspaper moguls .. and watched their investment fall apart, for which Fortress has had to have lost a lot of its original investment and ultimately had to take a haircut on a lot of debt it had taken on. Fortress has been there all along.

It's impossible to consider the relationship between Fortress and New Media without that context. The only thing Fortress may have taken out of the Gatehouse bankruptcy were the fees it gets from New Media, with New Media remaining an affiliate of Fortress (and therefore Softbank).

As for the ownership? OK, it's New Media, not Fortress (or Softbank), although I honestly don't see the difference. Softbank comes with New Media. It's not like this was / is / should have been a surprise to anyone. But to put it technically, New Media paid Gannett shareholders more than $12 per Gannett share for the stake (in cash and stock in New Media), or about an 18 percent premium to where Gannett was trading at the time. That is not nothing. It made New Media, the owner, and Fortress / Softabank a beneficiary because New Media is just an affiliate of Fortress and Softbank (it was set up for that purpose).