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What the Gannett-GateHouse merger means for Minnesota

Gannett Co. Inc. and GateHouse Media — two of the biggest newspaper chains in the U.S. — recently announced plans to merge.

Under the terms of the agreement, GateHouse owner New Media Investment Group plans to acquire Gannett, publisher of USA Today and several smaller papers across the country. The new company would retain the Gannett name.

Both Gannett and GateHouse have a presence in Minnesota, though GateHouse’s market share here is considerably larger. GateHouse publishes eight papers in the state, most of them weekly, while Gannett’s sole presence in Minnesota is the daily St. Cloud Times.

Still, Fargo-based Forum Communications Co. dwarfs both companies’ operations in Minnesota: Forum publishes around 20 newspapers in the state, according to its website. As a result, impacts of the GateHouse-Gannett merger may be limited in Minnesota.

Number of Minnesota papers
GateHouse 8
Gannett 1
Forum 20

“Compared to other parts of the country, GateHouse and Gannett don’t have a huge presence in Minnesota,” says Mark Neuzil, chair of the journalism program at the University of St. Thomas.

In a news release, GateHouse and Gannett say they’ll continue to “invest in newsrooms” even as they eye cost-cutting measures in the range of about $275 million to $300 million each year.

Neuzil says he’s not sure how the two will pull off those savings. And like many other industry observers, he’s concerned about the possibility of more newsroom cuts or slashes to newspaper frequency.

Gannett’s sole presence in Minnesota is the daily St. Cloud Times.
Gannett’s sole presence in Minnesota is the daily St. Cloud Times.
Today, GateHouse publishes just one daily paper in Minnesota: Minneapolis-based Finance & Commerce. (The Crookston Times, also published by GateHouse, switched from daily to twice weekly back in May.)

Neuzil says the companies’ daily papers in Minnesota will likely “feel the pinch” of the merger before the weeklies.

“My advice to them would be to not speed up the death spiral. Cost-cutting turns off readers and discourages advertisers,” Neuzil says.

It’s no secret that the newspaper business has been struggling over the last decade. According to the Poynter Institute, the number of newsroom employees dropped from 71,000 in 2008 to around 39,000 in 2017. The number of newspapers has been on the decline, too. Since 2004, it’s estimated that more than 2,000 newspapers have ceased production.

Minnesota papers haven’t been spared from the industry’s upheaval. A few months ago, for instance, the Warroad Pioneer published its last edition, attracting national media attention.

Meanwhile, the Star Tribune remains the dominant daily paper in the state. In 2016, the newspaper reported a total Sunday circulation of more than 581,000. The Strib also counts more than 1.2 million weekly readers in the Twin Cities metro area.

The Strib, which seems to have weathered the newspaper industry’s seismic changes better than many other publications, likely benefits from having Glen Taylor as its private owner, says Neuzil. Unlike papers owned by publicly traded companies, the Strib isn’t beholden to shareholders’ demands.

“It’s important to have local ownership, and that’s incredibly rare these days,” Neuzil says.

Gayle Golden, senior lecturer at the University of Minnesota’s Hubbard School of Journalism and Mass Communication, notes that private owners may be more willing to hold onto their newspapers “even if revenues dip.”

And, like The New York Times and The Washington Post, the Strib benefits from having a strong established brand.

“It’s able to leverage the brand successfully, not only by selling newspapers and attracting readers to its website, but by doing other ancillary things that take advantage of the brand,” Neuzil says, citing the paper’s sponsorship of local events as an example. “They’re diversifying without really saying they’re diversifying.”

But small papers likely don’t have the same brand recognition, which means they might not be able to attract national advertisers and subscribers.

Golden says she’s frank with students interested in pursuing journalism, though she won’t discourage anyone.

“I talk to them truthfully about the state of the industry,” she says. “Many of them find jobs, but then find it more challenging as they go forward to build their careers.”

She emphasizes that there are other avenues for journalism, too.

“There are many opportunities, and it doesn’t just take place on one platform,” Golden says. “Newspapers aren’t the only place where journalism occurs.”

The GateHouse-Gannett merger still needs to obtain federal approval. In a blog post, news industry analyst Ken Doctor says it’s unlikely the Department of Justice would halt the deal, valued at about $1.4 billion.

This article is reprinted in partnership with Twin Cities Business.

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Comments (1)

  1. Submitted by William Stahl on 08/15/2019 - 02:54 pm.

    The deal isn’t a done deal yet. Alden Capital, owners of the St Paul Pioneer Press and many other newspapers, purchased 9% of Gatehouse’s parent company and appears to be trying to scuttle the merger, according to Ken Doctor and probably replace it with a deal involving their properties. Alden was interested in Gannett earlier but did not get anywhere. Even more than Gannett and Gaterhouse, Alden seems to specialize in sucking as much money as possible out of local properties. So, not good news for the newspapers involved if Alden succeeds in butting into the Gatehouse-Gannett deal.

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