News. Two of the largest newspaper companies in the US are reportedly set to combine.
Gannett, owner of USA Today and 109 other newspapers, and GateHouse Media, owner of 156 dailies including the Austin American-Statesman, and Palm Beach Post, are apparently close to concluding a deal to create the country’s largest (by far) newspaper publisher. The combined company would publish 265 dailies with a total circulation of 8.7m – more than a sixth of all US dailies. The second largest company would be McClatchy with a total circulation of 1.7m.
GateHouse Media is ultimately owned by SoftBank, of Japan. Gannett is a listed company with a market capitalisation of some $900m. Earlier this year, Gannett fought off a hostile takeover from regional publisher First Digital Media (MNG Enterprises).
More than 1,800 US newspapers have closed during the last 15 years.
In the UK, insiders are asking what will happen to Gannett’s highly-regarded and soundly profitable UK subsidiary, Newsquest Media. The £197m-revenue/ £35m EBITDA company was formed 23 years ago as a KKR-backed management buy-out from Reed Elsevier. It publishes some 200 newspapers including the Glasgow Herald and the UK’s oldest paper, the Berrow’s Journal, and also specialist consumer and B2B magazines. It is the country’s second largest regional publisher after Reach Plc , the former Trinity Mirror. Newsquest claims 30m online users and 6m print readers, and employs 2,400 people.
It is thought likely that any decision by Gannett-GateHouse to sell-off Newsquest would trigger the next wave of consolidation among UK newspapers. A merger with JPI Media (the former Johnston Press), whose long-suffering shareholders were wiped out recently by a debt-for-equity rescue, could be on the cards. Indeed this prospect might even forestall early-stage negotiations by Reach to acquire some of JPI business which were confirmed this week.
JPI has now said it is formally up for sale with all options being considered including the sale of individual assets or of the whole company. Reach may be most interested in acquiring some major JPI dailies including The Scotsman, Yorkshire Post and the i national tabloid. The possibility of acquiring both JPI and Newsquest might, however, just whet the appetite of private equity firms which have so far stayed away from UK newspaper investments.