Just wow.
Here's the company announcement,
here's Ken Doctor's initial take at Nieman, and
here's his follow-up analysis, complete with the "maybe" becoming more serious now that Alden Global Capital, owner of Digital First Media, aka Dead Fucking Media, apparently missed over Gannett's earlier rebuff of its takeover attempt, is spitting in the soup by allegedly taking a 9.4 percent stake in the new merger.
In his initial piece, Ken notes the two companies had become more comfortable with one another, and in the follow-up, that some sort of merger kind of fit both. Fortress Capital, still the de facto owner of Craphouse, was seeing its investment strategy run out of steam. A big acquisition helped. Gannett, kind of puttering around even before Alden's attempted takeover, probably could use a gray, if not totally white knight, and one further down the digital "transformation" road than it.
Later on,
in talking to USA Today, Doctor says he thinks Alden might be looking at dumping its papers. Color me skeptical, with it's milking the Denver Post not for money for other papers, but for flailing and failing non-newspaper enterprises it owns. (Unless it thinks the last easy dollar has been milked out of that turnip.) Another angle, which I think more likely, is that Alden will do its best to cock-block this unless the combined company takes its papers off its hands.
And, where will they get that kind of money from, other than a potentially extortionate loan from Alden? So, Dead Fucking Media and Craphouse could have a dual between their hedge-fund owners, which would include Gannett being the piƱata in a three-way bashing.
Now, the fallout?
First, Ken notes, the merged company (assuming federal approval) has to raise money to pay off loans.
Some of that comes through making two HQs into one. Some comes through whacking middle managers, especially, it seems, at Gannett.
Update, Oct. 9: Doctor has details on the chainsaw side. Expect a 10 percent jobs cut; he notes 3K lost jobs would equal McClatchy's entire workforce.
Advertising, production, finance and circulation will take most of the cuts.
No surprise, in various ways.
- Advertising? I'd joked about CrapHouse having the idea of centralized programmatic ad sales. Might not be a joke now.
- Production? Most of Gannett's copy editors and graphic artists will be told to apply for jobs at CrapHouse design hubs.
- Finance? Centralized billing, which will surely get fucked up. CrapHouse may, at this size, make its collections all in-house. (And then peddle that as a service to other papers.)
- Circulation? Dunno how much actual savings is there, but stand by.
Back to the initial story.
And some will come from selling semi-orphan papers and concentrating on areas where one or both chains are already somewhat clustered.
Ken lists Florida, Wisconsin and Ohio. I see that.
But, why he missed Texas, I don't know.
Gannett already had a number of properties here after its Journal-Sentinel takeover.
Gatehouse, ditto, even before the Statesman buy in Austin. Combined, they'll own every 7-day west of I-35 except Plainview, Midland and Odessa. They'll have several five-day and six-days in North Central and West Central Texas.
Hearst owns Midland and Plainview. Dunno if it will sell or not. AIM Texas Media owns Odessa; all of its other papers are in the Valley. Would they swap Odessa, and maybe a little cash, for Alice? Would they sell out entirely, to the new chain owning Alice and Corpus now? Would Hearst swap Midland, or Midland and Plainview for Corpus, which would let it cluster more than now in Gulf Coast (plus San Antonio) Texas?
Finally, which of the two corporate cultures (assuming Alden remains spurned) wins out? Read Ken for that. But let me offer some thoughts, too.
First, the Gatehouse takeover of the Statesman was such a shocker because their MO had been community dailies and non-dailies before that. (IMO, this also shows that, for whatever reasons, Cox had become desperate to unload the Stateless.)
Gannett, on the other hand, is still a "big dailies" type of company. Those seven-day dailies in Texas? All but Austin are Gatehouse properties, though it does own a few five and six-day dailies of decent size (Sherman-Denison the biggest).
Those different focuses will be difficult to merge, themselves. And if Alden wedges its way in, more difficult yet.
As for the cost-cutting? It will be middle managers more than top brass, even with the two HQs merging. They'll get their own on golden parachutes. And, although things have changed somewhat
since 2007, big newspaper chains still get their own off the top.
As for whether this will "work"? From
Deano Singleton's stupidity on the "TV Model" to AP being run earlier this decade by a bunch of CEO failures
doing more stupidity, and the
AP further prostituting itself more recently, it's hard to say.
More thoughts of mine on pagination hubs
here.
For you the employee?
Given that Craphouse has had its design shop for years, and from what I know, it sucking about as bad as Granite Newspapers'
small one sucked (and yes, I believe it was done to spin off Gatehouse), if you're a graphic artist, you'll lose your job. You may be given "first-in-line" status to apply for the new (and lower paying) ones that Craphouse will create in Austin, but that's it.
Given that Craphouse was aggressive enough on expanding its pagination shop to take on the Snooze on contract even before buying the Stateless, the same's going to happen to you as a copy editor. On, and their layout is get-it-out-the-door crappy.
I assume Craphouse may create one or two other hubs in Ohio and Florida.
Oh, and insider pro tip? If you're a minority, and maybe also if you're a woman? At least as of a few years ago, you don't want to work for Craphouse's design hub.
==
Sept. 28:
The two companies say they have US regulatory approval; Craphouse adds that it's already been cutting jobs in anticipation.
