Gannett, New Media Shareholders Approve Merger

After the merger, Gannett will be the largest newspaper publisher in the United States.
Lauren MuskettNovember 14, 2019
Gannett, New Media Shareholders Approve Merger

Shareholders of New Media Investment Group, the parent of GateHouse Media, and Gannett voted to approve their proposed merger, the companies said after special shareholder meetings on Thursday. The combination of GateHouse Media and Gannett will create the largest media company in the United States by print circulation, with more than 260 daily publications and hundreds of weekly papers.

New Media is financing the $1.13 billion acquisition with a $1.8 billion loan from Apollo Global Management at an 11.5% interest rate, which will, reportedly, require $275 million to $300 million in cost cuts per year within 18 to 24 months.

“I think $300 million is a low number” for the cost cuts, Ken Doctorj, media analyst at Newsonomics said. “The number is going to be higher.”

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Apollo can appoint two observers, and as many as two voting directors, to the new company board, if its debt level surpasses a certain threshold.

“If it turns out that the management team doesn’t hit their plans, they’ll be more assertive as time goes on,” said Tim Hynes, head of North American research at Debtwire. “The whole goal is to get rid of that,” Hynes said, of the Apollo debt.

The deal is also built around increased online revenue from a “digital transformation.” Gannett said its digital subscriptions rose 27% in the third quarter. New Media said its digital subscriptions rose 65% in the third quarter.

The chief executive officer of New Media, Mike Reed, told investors last month the company felt “great” about the synergies from the merger. “We have been working hard on integration planning, and we are now even more confident in our ability to realize the high end of the range in savings and within the 18- to 24-month period we previously stated,” he said.

The companies said they expect the deal to be complete on November 19. Reed will be CEO of the new company.

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