It’ll Cost One Investment Firm Roughly $1.4 Billion To Own 1/6 Of US Newspapers
New Investment Media Group agreed to spend more than $1 billion Monday on a deal that would unite two of the largest newspaper chains in the country as the journalism industry struggles to survive.
The group acquired Gannett Co. for $1.38 billion, with the merged entity expected to own more than one-sixth of all daily newspapers, including USA Today, analyst Ken Doctor told reporters. The entity will have 263 daily media outlets across several dozen states.
The deal will allow the companies to deliver local journalism to communities and transition to a digital future, according to the companies involved. The companies told reporters that the merged entity will search for cost reductions “in a judicious manner,” Bloomberg reported. New Media’s merging could exacerbate a nearly decade long trend.
Readers are now moving online and getting their news from social media, hurting print ad sales. Facebook and other major social media platforms are meanwhile taking a massive bit out of online sales, hurting digital outlets in the process.
The number of newspaper newsroom employees dropped by 47% since 2008, according to Pew Research Center. Reporters who have been dismissed were highly paid but unproductive, New Media CEO Michael Reed said in a 2018 interview. The company is asking the remaining reporters to write more articles.
Digital outlets, meanwhile, are struggling to keep up in an environment where information is shared for free across a slew of platforms, according to Eric Schiffer, the CEO of Patriarch Equity, which focuses on pre-IPO startups in Silicon Valley.
“Facebook and some of the other big tech agitators have acted like rat poison for journalist jobs. When you can get your news for free from a platform, it decimates the firms that are putting out high quality reporting,” Schiffer told the Daily Caller News Foundation in January. This wave of layoffs could be the beginning of something big, he said.
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