GateHouse Media Merges With Gannett To Become Biggest Newspaper Company
The two of the largest American newspaper company will form the biggest newspaper entity in the deal worth $1.40 Billion. GateHouse Media-owned by New Media Investment Group will acquire Gannett in a cash and stock transaction.
Under the roof of Gatehouse, there are 400 local newspaper with a total of 4.29 Million in circulation while USA Today which is owned by Gannett has 4.32 Million newspapers in circulation. It has 215 Titles according to the study by a university.
According to the press release, Gannett will own 50.5% and New Media will own 49.5% stakes in the newly formed company. The merger of the two company will look after the challenges to rise against the digital publication from Apple Inc and Facebook Inc.
Michael Reed, chief executive of Pittsford, N.Y.-based New Media Investment Group will serve as a CEO of the entity while Gannett will retain President Paul Bascobert as its new president and CEO. In the new sign deal, the company expects to cut upmost $275 Million in expenses.
In the call with analysts, Mr. Reed said that 25% of the company’s revenue will be generated from its digital model publication. While the experts are concerned that the new merger will lead to potential layoffs. “You’re meshing two managements with different approaches and layering in a new outside chief executive,” said Mr. Arthur, an analyst at Huber Research Partners.
Apollo Global Management LLC is helping companies by providing a loan of $1.79 Billion with an annual interest of 11.5%. Going forward to the earnings, Gannett Inc. income surged 64% to $26.7 Million which was due to the boost in its $32.8 Million property sales. However, New Media profit fell by 76% to $2.8 million from $11.7 million a year earlier.
Mr. Micheal said that the company is “honored to become a part of Gannett’s storied history,” explained that the merger will help “expand our comprehensive, hyperlocal coverage for consumers, deepen our product offering for local businesses, and accelerate our shift from print-centric to dynamic multimedia operations.”