Tysons-based Gannett Co. may be acquired by rival

A prospective merger between two media rivals — Tysons-based Gannett Co. Inc. and GateHouse Media LLC — would likely create the largest newspaper group in the United States by titles owned and circulation. Terms of the proposed deal have not been disclosed.

The Wall Street Journal reported Thursday that GateHouse is in talks to acquire Gannett via a cash-and-stock deal. The combined papers own 265 U.S. daily newspapers with a combined circulation of 8.7 million.

There appear to be few obstacles to the proposed merger, which would combine to own one-sixth of all newspapers in the United States, writes Ken Doctor, president of San Francisco-based Newsonomics. “The next largest circulation is McClatchy, well behind at 1.7 million.”

Each owns Virginia-based newspapers. Gannett owns Tysons-based USA Today as well as The News Leader in Staunton, while GateHouse’s sizeable portfolio includes Richmond-based Virginia Lawyers Weekly and The Progress-Index of Petersburg.

GateHouse Media operates in 615 markets across 39 states, according to its website. A 2017 report noted that Gannett owned 20 of the 100 top newspapers by circulation at that time.

Financial figures for GateHouse Media’s parent company, New Media Investment Group, speak to the challenging market for newspapers and the potential advantages of a merger. New Media Investment reported $387.6 million in revenue for the first quarter of 2019, and a net income loss of $9.3 million. Gannett, meanwhile, reported $664.4 million in revenue for the same quarter and a net loss of $11.9 million.

Bob Kelley, associate professor of management and entrepreneurship at Virginia Commonwealth University’s School of Business, points to the shared benefits of the merger. “You try to acquire new capabilities that you don’t have. You’re trying to innovate without innovating within,” he says. “It just gives you better bargaining power.”

Bill Oglesby, an associate professor at VCU’s Richard C. Robertson School of Media and Culture, says the merger of the two companies makes sound business sense because of the economies of scale. Yet, it signals a reduction of media jobs ahead. “The bottom line is there [will be] fewer jobs and less competition,” he says.

The speculative deal, as posited by Rick Edmonds of the Poynter Institute, could mean a narrowing of local news reporting and smaller media operations. “I am not betting … on the resurrection of true local reports [in] the 250-plus daily markets the merged company would control,” Edmonds writes.