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$1.4 billion Gannett-GateHouse merger to reshape Florida's newspaper ecosystem

Although GateHouse Media is the buyer, Gannett will keep its name in a $1.4 billion merger between the nation’s two largest newspaper chains. In Florida, the combined company will own 20 daily newspapers. (Associated Press photo)
Published Aug. 9

GateHouse Media's $1.4 billion purchase of Gannett stands to put 20 daily newspapers in Florida under a single owner, further transforming the state's journalistic ecosystem in an age of disruption and challenge.

But don't count on change for the better, say scholars who follow the industry, reporters at GateHouse papers and readers who already have seen the results of large-chain ownership.

"I think it's going to have devastating effects," says Jennifer Proffitt, a professor and the director of the School of Communication at Florida State University. "You just have to look at what has happened at the Lakeland Ledger to see how GateHouse runs its company."

When you do, she and others say, you see a newspaper where aggressive corporate cost-cutting has undermined the ability of reporters on the ground to report on the public's business and to hold those in power to account.

At its peak in 1999, the Ledger's newsroom had 99 journalists. Staff cutbacks began under a previous owner, the New York Times Regional Media Group. They continued under the Halifax Media Group and then under GateHouse Media, which bought the paper in 2015. The most recent round of layoffs was in late May.

Today, a news staff of 15 covers a county almost the size of Delaware.

"At this point, it's a challenge for us to try to cover the basic news of the day, and it's just not a luxury we have to devote days at a time into digging into complicated stories," says Gary White, a Ledger general assignment reporter and one of two News Guild union stewards at the paper.

"Just really, really skimpy in its coverage," says Bob Doyel, a retired circuit court judge in Winter Haven, about 15 miles east of Lakeland. Doyel has known many Ledger reporters, respects them and counts some as friends, but he says Polk's smaller towns no longer get the attention they should.

The paper does not have a reporter covering health care, says former Ledger managing editor for digital Barry Friedman, whose job was eliminated after 32 years in 2014 and who now runs an independent local news web site. A sister GateHouse paper, the Winter Haven News Chief, is virtually identical in its content except for its name plate. A three-person investigative team is gone.

But not all of the Ledger's watchdog journalism was done by the investigative team. Ledger reporter Clifford Parody once heard a radio report about untested rape kits while he was driving back to Polk County from out of state. Pulling over in Georgia, he sent a public records request from the side of the road to Polk authorities to find out about kits they had kept in storage. He went on to report in 2016 that the Winter Haven Police Department made an arrest in a 2009 sexual assault case after getting fresh DNA evidence.

A few months later, Parody was laid off. He now teaches creative writing to high school students. Doyel says he knows victims whose kits have not been tested and has tried for a year or more but can't get the paper to report on whether other Polk agencies are taking new looks at dormant cases.

"What have they done with those cases?" Doyel says. "That's something the Ledger should have been covering, and it is a public safety issue. If there are rapists out there that are not being prosecuted, then somebody ought to shed light on that."

•••

GateHouse Media and Gannett already were two of the biggest chains in the country before the merger. By the end of the year, if the deal passes a federal anti-trust review, the new company will control 263 daily media organizations across 47 states and Guam, plus Gannett's USA Today, reaching more than 145 million online readers a month.

In Florida, the new company, which will go under the better-known Gannett name, will own newspapers in Tallahassee, Jacksonville, St. Augustine, Palm Beach, Sarasota, Naples, Fort Myers, Ocala and Gainesville. It will have a near-lock on markets north of Orlando, along the Atlantic coast from Palm Beach north and on the gulf coast from Sarasota south. It also will own eight weekly newspapers in the Panhandle, a ninth weekly near Jacksonville and the Palm Beach Daily News, a society-focused newspaper published daily from October to May.

No other publisher will own more than two major dailies in Florida.

"It's hard to see an upside, and I really tried," says Wayne Garcia, a University of South Florida senior instructor in journalism who previously reported for the St. Petersburg Times (now the Tampa Bay Times), Tampa Tribune and Gainesville Sun. He gives GateHouse credit for working to create innovative audio products.

The company also announced in June that it was building a national investigative and data-driven reporting team of more 30 reporters and editors from its newsrooms, including Sarasota-based regional investigations editor Michael Braga, who won the 2016 Pulitzer Prize for investigative reporting with two Times reporters for stories on escalating violence and neglect in state-funded mental hospitals.

That said, the merged company projects it will cut $275 million to $300 million a year out of its combined operations, with more than $115 million in annual savings coming from newspaper operations. The rest is expected to be a mix of corporate cutbacks, renegotiated contracts with vendors, consolidation of systems and operational efficiencies. In all, the combined companies are looking to cut about 7½ percent of their current annual expenses.

Garcia and others say the newspaper savings could come from more layoffs and closing some printing presses, which would mean earlier deadlines and less late-developing news. They could further consolidate copy-editing and page design, something GateHouse already does on a large scale in Austin, Texas. They also could consolidate newsrooms. Earlier this year, GateHouse combined 50 weekly newspapers that it owned in Massachusetts into 18.

"Florida more than any other state stands to lose a lot when you have a merger of this size," says Andrew Pantazi, an enterprise reporter and president and co-chairman of the News Guild unit at the GateHouse-owned Florida Times-Union. There, the news staff has dropped from about 100 when he joined the paper seven years ago to about 30 today.

Driving these changes, of course, are the steady, year-by-year reductions in both newspaper readership and advertising revenue. In Florida, the number of daily newspapers has dropped from 43 in 2004 to 36 this year, with statewide circulation falling from 2.9 million to 1.5 million, according to "The Expanding News Desert," a long-range research project at the University of North Carolina's Center for Innovation and Sustainability in Local Media.

Not coincidentally, Google and Facebook vacuum up more and more advertising dollars. This year, digital ad spending is expected to account for roughly half the global ad market for the first time, and Google and Facebook are expected to sell more than 51 percent of those ads, according to the research firm eMarketer. That dominance has sucked revenue out of traditional news companies like a bilge pump.

While newspaper companies have seen growth in online advertising, the gains have not come close to replacing revenues lost from print ads, leading to round after round of cutbacks in personnel and the amount of newsprint used.

The Times, owned by the nonprofit Poynter Institute for Media Studies in St. Petersburg, has not been immune to these pressures and has itself cut positions, sold assets, borrowed money and consolidated local news sections. In 2016, it bought and closed the Tampa Tribune as a daily newspaper, saying it was seeking to create a financially secure, locally owned paper in a market where continued competition between two newspapers was threatening them both. With more than 150 journalists, the Times is the largest newsroom in the state.

TIMES EXECUTIVE EDITOR MARK KATCHES COLUMN: Gannett and GateHouse merger changes the media landscape in Florida

About a quarter of newspapers with an average Sunday circulation of 50,000 or more laid off staff in 2018, and a third did so in 2017, the nonpartisan Pew Research Center said this month.

For the first five months of this year, media companies have cut 3,600 jobs, according to a survey from the consulting firm Challenger, Gray & Christmas, which provides services to businesses that are reducing staffs. Those are the worst job losses since 2009, during the Great Recession, Bloomberg reported last month.

Meanwhile, ad revenues are dropping at GateHouse and Gannett just like at other journalism companies. For Gannett's most recent quarter, publishing revenues were off 9.9 percent compared to the same three months as last year, and print advertising was down 18.5 percent. At GateHouse, total revenues were down 6.9 percent for the quarter once money from new acquisitions was factored out, and down 15.3 percent in print advertising.

•••

GateHouse and Gannett executives say their merger is a way to create a company big enough to persevere while they figure out a way to unlock digital revenues.

"A digital transformation is critical to reverse the revenue declines we've seen in the past," Mike Reed, who will become chief executive officer and chairman of the combined company, told analysts on a conference call the day the deal was announced. "We think this transaction puts both companies in a position to get there faster, and a side benefit, which is really great, is we have a lot more cash to deploy to invest in opportunities."

But not all new revenues will go toward growing operations, nor are they likely to go there first. GateHouse is borrowing nearly $1.8 billion at 11½ percent interest to finance the purchase of Gannett and pay off existing debt at both companies. When Reed talked about ways to spend new cash, he listed, in this order, paying down debt, paying dividends to shareholders and investing in growth.

"Eleven and a half percent is very high," says Penny Muse Abernathy, a former executive at the Wall Street Journal and the New York Times who is now the Knight Chair in Journalism and Digital Media Economics at the University of North Carolina.

For 10 years Abernathy's work has focused on developing sustainable business models for local news outlets. Seeing Gannett and GateHouse put publishers in place for multiple newspapers has not been encouraging, she says.

"You need to have an owner who has the flexibility to develop a newspaper around the needs and the expectations of both the residents in the community and the businesses," she says. "One of the things that concerns me about chains that are very, very large is that they tend to manage properties in the same way. That reduces the flexibility of someone on the ground to respond to a unique need or unique expectations of the audience and the businesses in that town. You can do it, but you need to have a really loud voice."

Pantazi says he's seen internal memos about GateHouse projects to track newsroom productivity metrics at other papers. Trouble is, he says, Times-Union sports writers get many clicks when the Jacksonville Jaguars win, fewer when they lose. Same with political reporters during election years.

"They're going to have to come up with standardized ways to do journalism," he says. But "the needs in the Treasure Coast are going to be different than the needs in the Panhandle (and) are going to be different than the needs in Jacksonville. All of us have unique communities, and we ought to have local journalists leading these newsrooms and driving the decisions around what gets covered and how it gets covered."

At FSU, professor Proffitt says the risk extends beyond the newsrooms themselves.

"When there's one person trying to cover city and county politics," she says, "the question becomes, what happens when the watchdogs can't watch anymore and can't hold those politicians and others who make decisions that affect us every day accountable?"

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Contact Richard Danielson at rdanielson@tampabay.com or (813) 226-3403. Follow @Danielson_Times

Who's left

The newly merged Gannett-GateHouse group will own 20 daily newspapers in Florida. Another half-dozen major dailies have other owners.

• The Miami Herald and Bradenton Herald, which are owned by publicly traded McClatchy, based in Sacramento, Calif.

• The Orlando Sentinel and South Florida Sun-Sentinel, owned by Chicago-based and publicly traded Tribune Publishing.

• The Tampa Bay Times, owned by the nonprofit Poynter Institute for Media Studies in St. Petersburg.

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