Untitled Document
If everything goes as planned, Springfield’s
hometown daily newspaper will soon have a new owner. Fairport, N.Y.-based GateHouse Media Inc. last week
announced an agreement to buy the State
Journal-Register and six other dailies
and two weeklies in Illinois and Ohio for $380 million. The seller, Copley
Press, of La Jolla, Calif., put its Midwestern properties on the market
last year. Subject to approval by regulatory officials, which is expected,
the deal will be completed by the end of April. What happens then — whether there will be
changes in content or personnel — is unknown. GateHouse spokeswoman
Francie Nagy says the company isn’t “looking to comment on
anything right now,” and for the time being it’s business as
usual at the SJ-R and its sister, the Lincoln Courier, says publisher Sue Schmitt. “Where we stand is — we pretty much know
as much as you do right now,” Schmitt says. She adds that GateHouse representatives have yet to
travel to the capital city. Doing so, she says, would be premature. In recent years, newspaper companies have been
pounded by declining circulation, competition for ad dollars, and the
fluctuating cost of newsprint. Although some newspaper chains have crumbled
under the pressure, little-known GateHouse has quietly become one of the
nation’s largest newspaper companies, at least measured by the number
of titles it owns. Not counting the Copley papers, GateHouse has 74
dailies, 226 weeklies, and 113 shoppers (including the Springfield Shopper) in 18 states. GateHouse began business in 1997 as Liberty Group
Publishing, the company formed to acquire some of the U.S. newspaper
properties of Conrad Black’s Hollinger International Group. Current
chief executive officer Mike Reed later changed the company’s name
and moved the headquarters from Illinois to upstate New York in 2006. GateHouse’s business strategy of acquiring
newspapers in smaller communities and heavily emphasizing local coverage
seems to have been a winning plan for the company’s stockholders.
Despite a history of losses, the profit picture appears to be improving.
Operating losses in 2006, for example, were $14.9 million on revenues of
$314.9 million, compared with a loss of $30.7 million on revenues of $200.1
million in 2004. At the same time, as the company expands, it’s
piling on more and more debt — $690 million as of March 9, according
to its 2006 annual report, filed last week with the Securities and Exchange
Commission and available at www.sec.gov. The company, which paid $49.7
million in interest last year, warns in its filing that “our
indebtedness could adversely affect our financial health.”
GateHouse, which is controlled by private equity firm
Fortress Investment Group LLC, went public in October and trades under the
symbol GHS on the New York Stock Exchange. The Copley papers will present new challenges for
GateHouse. The SJ-R, with circulations of 61,330 on Sundays and 51,850 on weekdays,
will soon become one of the largest GateHouse newspapers — and the
first daily operating in a capital city. It’s unclear how
GateHouse’s “hyperlocal” editorial philosophy will jibe
with the SJ-R’s
statewide scope and national coverage, including on its editorial page. Typically a change in ownership of large newspapers
is followed by job cuts in the newsroom, but that may not be the case for
leaner, smaller dailies. Bob Neil, president of the Quincy, Mass., Newspaper
Guild, the union that represents workers at the Patriot Ledger, says that although
some staff changes were made when GateHouse bought that paper last summer,
the experience hasn’t been too bad — a few people’s
contracts were bought out, but the company found jobs elsewhere for others.
“We understand that they need to make
changes,” Neil says. “We know that things have to change, and
we’ve been working with them to protect our members and as many jobs
as we can.”
Staffers at the SJ-R aren’t wringing their hands yet, says Schmitt. “We’re not going to speculate on
what they’re going to have us do,” Schmitt says. “What
I’ve been discouraging people from doing is looking at what
they’ve done other places and extrapolating ‘This is what it is
going to mean here,’ because we’re a quite different newspaper
than they usually acquire.”
Whatever changes are in the offing at the SJ-R, readers won’t know
until later this spring, says Bob Sullinger, president of Great Plains
Group, a local advertising agency. “You don’t know until the new man takes
over,” says Sullinger, a former TV reporter, “but historically,
as with broadcast, when the new man comes in there’s a new way of doing
things.”
Contact R.L. Nave at rnave@illinoistimes.com
This article appears in Mar 15-21, 2007.
