Cox selling Palm Beach Post, Austin American-Statesman

And now, according to Ken Doctor, GateHouse is the leading contender for the Palm Beach Post (got to give credit to Lancey for his prediction that this scenario was very likely). And so it goes...

 

I think Gatehouse is the 21st century reincarnation of Dean Singleton. Say what you want about Singleton but it is a fact that he put every paper he ever owned into bankruptcy.

Gatehouse just released their 2017 results. Same store revenues were down 5.9%. This was because advertising went down 13.3% while circulation revenue only dropped by 0.6%. Now I am pretty sure that the actual number of subscribers went down by more than that, assuming standard mortality rates within the subscriber population. So Gatehouse is increasing the subscription prices to raise cash. But they still need to cut costs to stay afloat. Profits run about 30 million dollars a year while revenues are declining by about 60 millions a year in existing papers. So the quality of the product will continue to decline.

What of Gatehouse's digital strategy, you might ask?. Last year the company receive 10.7% of its revenue from digital. That noted high tech powerhouse, Lee, another chain with a lot smaller papers, made 18.7% of their revenue from digital. So it appears to me that Gatehouse really does not appear to have an effective digital strategy.

So how do the hedge fund guys who own Gatehouse prosper? Because the parent company, "New Media is externally managed and advised by an affiliate of Fortress Investment Group LLC, a global investment management firm." So the hedge fund is taking their cut off the top.

 

Which newspapers has Gatehouse liquidated? Honest question.

 

From a friend of a friend of a friend, etc. ...

Cox Enterprises CEO Alex Taylor held a company-wide video conference today to announce that Cox will give back the corporate tax cuts by awarding bonuses to all employees, with amounts increasing by seniority.

 

I should have said Gatehouse has the mindset of liquidators.

Why did I say that? How many papers has Gatehouse money in? I suspect the answer is none. How many have they slashed local reporting staff, centralized production and consolidated printing. Every single paper.

I believe the Gatehouse corporate strategy is to buy a paper and recover their investment as quickly as possible. At what point does a local paper lose its identity and become essentially a zoned edition of a regional or nationwide newspaper even if the masthead retains the same title? And if revenue continues to decline Gatehouse will go ahead and close the paper and move on. These hedge fund guys don't care if they invest in newspapers or cigarette manufacturers.

And I hasten to add this may be a very smart business strategy. But it seems to me to be effectively a slow liquidation.

 

I liked working in newspapers because it was valuable public service. The investment turks have all but ruined that.

 

Gatehouse took a paper (Norwich, Conn.) at which I spent 15 years and absolutely gutted it. I think we had about 12 news reporters and six sports writers (as well as two weeklies) as recently as 2010/11, and now it's three news reporters, two sports writers and no weeklies (not to mention no copy desk) and a 9:30 p.m. final deadline. So as far as I'm concerned, Gatehouse has done absolutely nothing to give the community anything of substance. This is strictly done to pad its coffers. I would imagine Norwich (a paper printed since 1791) and others will be doomed at some point.

 

A friend of mine who works for a Cox company (not a newspaper) told me the same thing.

 

I agree that all of that stuff has been done and it's not good. I agree that Gatehouse is trying to squeeze every last dime.
Which chain will be the first to shutter print operations at a major paper and go all-digital? I'm not talking about three days a week at New Orleans and Birmingham. Who's going to pull the trigger at a larger paper first? And is everyone just waiting for the first chain to jump before doing the same thing?

 

I think the first chain will be Newhouse given that they have already reduced publication to three times a week.

But given how well the New York Times is doing in digital I can see them starting to cut back on print in the next couple of years. NYT grossed 1.7 billion dollars last year. About one/third was from digital. Digital advertising was up nine percent and they added 157,000 digital subscribers. At what point do they cut ties to the print product, given the cost of distribution.

I believe the Washington Post still carries a lot of retail circulars that the Times never really had and would be slower to abandon print.

 

It's generous of Cox to pay those bonuses.

But if I'm an employee in Austin and (possibly) Palm Beach, I'd be hoping the bonus money is paid out before GateHouse takes over, because that's when generosity goes away.