Gobble, gobble: Gannett’s grand ambitions

By the editors of Media Life

This article is part of a Media Life series “Reinventing the American Newspaper.” Click here to read other stories in the series.

There was time real newspapermen made fun of Gannett. It was the plain vanilla newspaper chain and, ugh, creator of USA Today, a compendium of factoids and lighter-than-air features. It was everything newspapers should never become.

But that was a time back. Those real newspapermen are retired or dead. The internet came along. The newspaper industry crashed.

Gannett is bigger, stronger. And if it ever cared what those old newspapermen thought, you wouldn’t know it.

Gannett may not be the future of the American newspaper, but it’s certainly going to grab off a large chunk of that future. Or what’s left of it.

At a time when the newspaper industry is in panicked retreat, Gannett is cash-rich and on a buying streak.

Just the other day it bought The Bergen Record in northern New Jersey, expanding its foothold in the New York market. It also picked up ReachLocal, a digital media company.

And of course Gannett is most famously engaged in a takeover effort of Tribune, now calling itself tronc, parent of the Chicago Tribune and Los Angeles Times, among other holdings. Gannett has offered tronc a lush deal that the troubled publishing group will likely be forced to accept at some point.

This will add another dozen papers to the 100-plus Gannett already has and—most-importantly—give Gannett papers in top markets across the country, notably New York, Chicago and Los Angeles and a slew of smaller markets, such as Detroit, Phoenix, Louisville, Memphis and Des Moines.

Advertisers will be able to reach across the country with just one buy, giving Gannett a huge advantage over competitors.

Plus, Gannett reaps huge cost savings on newsprint, ink and all the other goods and services that go into newspaper publishing.

This buying binge might seem a risky strategy at a time when newspapers are suffering steep revenue declines, and there certainly is some risk.

But the fact is that much of the downside of newspaper publishing has already been factored in. Prices for newspapers these days are dirt-cheap compared to a few years ago, and revenues, while not what they used to be, are still strong for many publishers, particularly at smaller papers.

As analysts note, you can still make money publishing newspapers. The big hits were already taken by publishers who’ve been forced to sell their holdings for far less than their market value before the industry tanked.

The risks facing Gannett: Managing downsizing

The risk for Gannett is it will do too well what it is best known for, which is to cut and cut and cut. It is notorious for cutting staffs to the bone at its papers, particularly news staffs.

If, as analysts warn, its customers-readers and advertisers-come to feel they’re getting less than what they pay for, they will cease being customers.

And while no one knows the future of newspapers, everyone knows their past-and these past 10 years. Newspapers slashed and slashed and lost readers and advertisers as a result.

Here’s the challenge before Gannett:  Facing yet further slides in advertising, can the company manage the downsizing and cost-cutting in a way that doesn’t poke a hole in the balloon?

In a telling sign, when The Bergen Record held a meeting to announce the sale to Gannett, notably absent was longtime publisher Malcolm Borg, whose family had owned the paper for 86 years, reports the New York Post’s Keith Kelly.

The staff was worried about job cuts that might follow, undoubtedly an uncomfortable topic for Borg. As  a publisher of some years he already knew what was coming.

Tags: gannett, gannett buying, newspapers, reinventing the american newspaper, tribune, tronc