Gannett and GateHouse Media shareholders have both approved a deal to merge the two companies, with New Media, GateHouse’s owner, acquiring Gannett for $1.13 billion. The transaction will create the largest U.S. media company in terms of print circulation.
The new company, which will keep the Gannett name, will own more than 260 daily publications, as well as hundreds of weeklies. In addition to USA Today, the current Gannett brings such papers as the Arizona Republic, Detroit Free Press and Milwaukee Journal Sentinel to the deal, while New Media’s holdings include the Palm Beach Post, Columbus Dispatch and Austin American-Statesman.
The deal’s hefty price tag will necessitate equally hefty “synergies” (i.e. cost cuts). Management has promised to find $300 million in annual savings, allowing the company to pay off the $1.8 billion loan that New Media obtained from Apollo Global Management to help finance the deal. The loan carries an 11.5 percent interest rate.
“We have been working hard on integration planning,” said New Media CEO Mike Reed. Reed said he is confident that the company will realize the promised savings within 18 to 24 months. Gannett has already trimmed one-fifth of its workforce over the past two years.
Critics of the merger include the NewsGuild-CWA, which warns that it “will hurt the communities these media organizations serve.”
The nine-member board of the new company includes no current journalists.
Shares of New Media have slid 29 percent during the past week, hitting an all-time low of $6.68 at the close of the markets on Wednesday.