GateHouse Media, the company that owns the Akron Beacon Journal and nine other Ohio newspapers, on Monday announced its long-planned acquisition of Gannett, creating the nation’s largest newspaper chain.
Pittsford, New York-based GateHouse, the operating subsidiary of New Media Investment Group, will combine with McLean, Virginia-based Gannett, the larger of the two companies, in a cash-and-stock deal worth about $1.38 billion and financed in part with new private-equity debt.
The combined company will be based at Gannett’s headquarters west of Washington, D.C., and will be called Gannett. New Media Investment Group CEO Michael Reed will remain CEO, and Paul Bascobert was appointed CEO of Gannett and a member of the Gannett board.
The companies estimated they can save $275 million to $300 million in annual costs within 24 months. New Media shareholders will own 50.5% of the combined company, while Gannett shareholders will own 49.5%.
“We believe this transaction will create value for our shareholders, greater opportunities for our employees, and a stronger future for journalism,” Reed said in a written statement.
Together, the two companies would operate more than 260 daily news operations — far more than any other U.S. news publisher — and serve potentially the largest online audience of any American news provider.
GateHouse acquired the Beacon Journal/Ohio.com in May 2018 from Black Press Ltd. in a $16 million deal.
Other GateHouse-owned papers in Ohio are The Alliance Review, The Ashland Times-Gazette, The Columbus Dispatch, The Daily Jeffersonian in Cambridge, The Repository in Canton, The Record-Courier in Kent, The Independent in Massillon, The Times-Reporter in New Philadelphia and The Daily Record in Wooster.
Other GateHouse newspapers include the Austin American-Statesman, Palm Beach Post, Sarasota Herald-Tribune and Providence Journal, while Gannett’s flagship properties include USA Today, Arizona Republic, Cincinnati Enquirer, Louisville Courier-Journal, Milwaukee Journal Sentinel, Nashville Tennessean and Detroit Free Press.
The combined company will double its reach in Ohio, adding Gannett-owned papers including The Enquirer and these central Ohio papers: The Telegraph-Forum in Bucyrus, The Chillicothe Gazette, The Coshocton Tribune, The News-Messenger in Fremont, The Lancaster Eagle-Gazette, The Mansfield News Journal, The Marion Star, The Advocate in Newark, The News Herald in Port Clinton, and The Times Recorder in Zanesville.
GateHouse on Monday also reported second quarter earnings.
The company had net income of $2.8 million, or 5 cents per share, on revenue of $404.4 million for the quarter ending June 30. That compares to net income of $11.7 million, or 20 cents per share, on revenue of $388.8 million for the second quarter a year ago. The company had adjusted net income of $47.5 million.
Results were in line with the company’s expectations, Gatehouse CEO Michael Reed said in a news release.
“Our growth businesses continue to perform well,” Reed said. “Circulation revenue trends were in line with the first quarter and we continue to see strength in our strategy to grow subscribers, with digital subscriptions of 195,000, up 54.6% [compared to the] prior year.”
Revenue at properties owned at least a year were down 6.9 percent. Traditional print advertising declined 15.3 percent from a year ago. Circulation revenue also fell.
Revenue at GateHouse Live, which organizes and does live events, was up 82.9% from a year ago, Reed said.
Digital revenue totaled $51.2 million, up 12.2% from a year ago. UpCurve, which provides small business services, had revenue of $27.3 million, up 13.7% from the second quarter a year ago.
Also Monday, Gannett reported net income of $27.7 million, or 23 cents per share, on revenue of $660.3 million for its second quarter ending June 30.
That compares to net income of $16.3 million, or 14 cents per share, on revenue of $730.8 million for the second quarter a year ago.
Gannett said it delivered results in line with its expectations, including hitting a milestone of getting 50% of its advertising and marketing services revenue from digital sources.