How GateHouse Loots its Papers

Aren't most of these purchases just LBOs with an assumption of debt and an IOU based on future earnings? (Usually paid to some company that will front the cash)

 

Gatehouse had revenue of 1.342 billion and reported a loss in FY 2017. Fortress, which has the management contract, took out over 10 million in base compensation and a performance bonus of another 10 million or so. Much of the cash is going to them.

 

Gatehouse has owned Canton for a while. Last year Gatehouse bought Wooster. How much of the Wooster staff is still there?

I suspect Gatehouse is going to combine Akron and Canton in a similar fashion.

 

Many years ago when I was in an MBA program we learned about a corporate milking strategy. This was developed by some consulting firm (BCG, I think). The idea was that you identified a dying business and pulled as much cash as possible out. While no one at Gatehouse has said that about newspapers I think that is the view of Fortress. The reason I think that is I don't see Gatehouse trying to develop a web strategy.

 

Railroads, exactly. Hedge fund Mantle Ridge owns CSX, and that continues to be an unmitigated disaster for its employees and customers.

 

Good commentary. The agent for all that railroad chicanery was E. Hunter Harrison, who led Illinois Central, CN and CP before being installed by Mantle Ridge at CSX. Despite having advanced COPD that soon required a portable oxygen tank, the Mantle-controlled board approved his hire and compensation north of $300 million. He quickly implemented his Precision Scheduled Railroading operating plan that had been successful at the previous linear railroads. CSX is more of a spaghetti bowl, but that didn't stop him from slashing thousands of jobs (with an announced 3,000 more jobs to go in the next two years), running fewer but much longer trains, planning to sell off up to 40% of the system, and pissing off just about all of CSX's customers to the point where the Surface Transportation Board called CSX on the carpet to explain itself.

Harrison died a few months ago after less than a year on the job, but his legacy with shareholders lives on: The other Class 1 railroads are similarly reducing overhead and abusing customers to the point where the STB has demanded service reports from all of their CEOs.

 

Shifting gears a bit, is anyone familiar with how GateHouse has gone about managing the larger papers it's purchased in recent years, such as the Columbus Dispatch? I'm interested to find out if the same scorched-earth policy to staffing that has been implemented at smaller papers also applies to larger metros, beyond laying off the copy desks and moving the work to the Austin hub.

The most recent purchases of the Austin American-Statesman and Palm Beach Post involve newspapers that, while not what they used to be, have managed to maintain some semblance of quality. I also have a few friends at both papers and would like to see them hang on as long as possible.

 

Must be nice living. Pocket all the revenues and write off the losses.

I’m on the wrong side of the glass door.

 

A lot of good people lost their jobs is right. They have slashed budgets to a bare minimum and substituted wire copy for local coverage.

As a result, the quality of their newspapers has declined dramatically.

 

Sad twist of fate: CSX used to own the Florida Times-Union before selling it to Morris.