Digital First pursuing Gannett

[Twirling Time]

Digital First.

Genitals last.

 

[LanceyHoward]

Here's the Guild's response

NewsGuild statement on Digital First Media's proposal to purchase Gannett – The NewsGuild – CWA

DFM owns The News, having bought it for $25 million when Gannett bought the Free Press
Gannett pays the News salaries
News and Freep have their contracts up next month
This could be the time they finally shut The News down

Are the union contracts up in a month? I don't think the union contract is what keeps the JOA alive.

My understanding, based upon an article I read, is that when Gannett bought the Free Press, they signed a JOA with the Justice Department. That JOA basically said that as long DFI got 10% of the profits from the joiunt operation to run a second newspaper. There were provisions if the JOA has three consecutive years of losses it dissolves. It has reported that the JOA is still profitable.

IF DFI gets control of Gannett and the Free Press then we will see what the Justice Department says. It would obviously be cheaper to run one newsroom rather than two.
Fate of Detroit's newspaper partnership unclear

 

[LanceyHoward]

DFI has owned the Boulder Daily Camera since Scripps abandoned Denve/Boulderr. In 2011 DFI bought the Longmont Times-Call. Longmont is about 15 miles from Boulder. I know that the company continues to publish the papers separately. But how much of the editorial staff have been combined? How much unique editorial content is in each paper? I ask because if DFI acquires Gannett that is what we may see at a lot of papers.

 

[Jake from State Farm]

Are the union contracts up in a month? I don't think the union contract is what keeps the JOA alive.

My understanding, based upon an article I read, is that when Gannett bought the Free Press, they signed a JOA with the Justice Department. That JOA basically said that as long DFI got 10% of the profits from the joiunt operation to run a second newspaper. There were provisions if the JOA has three consecutive years of losses it dissolves. It has reported that the JOA is still profitable.

IF DFI gets control of Gannett and the Free Press then we will see what the Justice Department says. It would obviously be cheaper to run one newsroom rather than two.
Fate of Detroit's newspaper partnership unclear

Contract are up at the end of February but you're right, that isn't what keeps two papers alive
Simply, they make more $$$ with two papers than one
It would be convenient for DFM to fold one if this happens
I have heard they have been losing $$$ and I wouldn't be surprised if they hit the three-year mark but nobody really knows
Having lived through the strike, all I know is nobody knows what Gannett is doing, least of all Gannett

 

[MileHigh]

DFI has owned the Boulder Daily Camera since Scripps abandoned Denve/Boulderr. In 2011 DFI bought the Longmont Times-Call. Longmont is about 15 miles from Boulder. I know that the company continues to publish the papers separately. But how much of the editorial staff have been combined? How much unique editorial content is in each paper? I ask because if DFI acquires Gannett that is what we may see at a lot of papers.

Production for both papers is done in Boulder. Papers are printed in Denver. I don't see the physical papers very often so I don't know how much similar/different content there is.

 

[LanceyHoward]

Contract are up at the end of February but you're right, that isn't what keeps two papers alive
Simply, they make more $$$ with two papers than one
It would be convenient for DFM to fold one if this happens
I have heard they have been losing $$$ and I wouldn't be surprised if they hit the three-year mark but nobody really knows
Having lived through the strike, all I know is nobody knows what Gannett is doing, least of all Gannett

I read that if the papers turn a profit then the three year clock restarts. DFI profits by state were released for the fiscal year ending June 30, 2017 and showed the Michigan market turning a $7,000,000 profit. That number would include properties on Royal Oak and Pontiac but those papers would not have made seven mil. So, if those numbers re accurate, the three year clock only started June 30,2018 and probably not then. Michigan profit margins were 18% and Gannett revenues dropped about seven percent so there was a cushion there for fiscal year 2018. And I have never seen a denial from DFI of the 2017 financial results.

 

[Jake from State Farm]

I read that if the papers turn a profit then the three year clock restarts. DFI profits by state were released for the fiscal year ending June 30, 2017 and showed the Michigan market turning a $7,000,000 profit. That number would include properties on Royal Oak and Pontiac but those papers would not have made seven mil. So, if those numbers re accurate, the three year clock only started June 30,2018 and probably not then. Michigan profit margins were 18% and Gannett revenues dropped about seven percent so there was a cushion there for fiscal year 2018. And I have never seen a denial from DFI of the 2017 financial results.

Lansing, Battle Creek and Port Huron also are Michigan papers
They also have the market cornered on weeklies, notably the O&E chain
I suspect that's where Gannett makes $$$

 

[Jake from State Farm]

Digital First $1.4B Gannett value too low, cost-cutting hopes likely unrealistic: Analysts

 

[Fredrick]

Can somebody explain what is going to likely happen here?

 

[DanOregon]

 

[LanceyHoward]

Digital First $1.4B Gannett value too low, cost-cutting hopes likely unrealistic: Analysts

I think that there are cuts to be made at Gannett. I think you could shut down the USA Today print edition and save money.

And while Gannett has cut reporters they seem to still locally manage their papers. I don't think Gannett has moved to combined newsrooms like some other chains. I could see Gannett owns Memphis, Nashville, Knoxville and some other properties in Tennessee. I could see DFI doing something like having one sports editor for the state and beat reporter on the University of Memphis, the Tennesseans, the Predators and the Grizzilies and leaving maybe one preps guy at each paper.

And for all those who are going to respond that such a consolidation would be an operational disaster, lead to poorer quality papers and eventually fewer subscribers and revenues you are no doubt correct. But DFI does not care. They go for the short term cash influx.

 

[LanceyHoward]

Can somebody explain what is going to likely happen here?

There are two scenarios.

One is Gannett is sold to someone. That someone will want to cut expenses (firing a bunch of people) to pay back the debt they took on for the acquisition.

The second is Gannett stays independent and promises to take cost saving (firing a bunch of people) measures to attempt to bump up the stock price.

Dan Oregon is correct. Either way there will be pain.