Gatehouse offering buyouts

This must be kind of how the buggy whip industry went bye-bye in the 1900s. They all got bought out by GateWhip and had every red cent wrung from them until they went belly-up.

 

When did Gatehouse buy a proctology journal?

 

GateHouse doesn't own the Uranus Examiner. Actually that publication started because GateHouse shut down a paper nearby.
Controversy surrounds new Pulaski County newspaper's name

 

I just read the transcript of the third quarter earnings call.

Things I found of interest:

1. They only paid 12.5 million dollars for the Oklahoman.
2. They indicated they would be pursuing papers in larger markets such as Oklahoma City, Palm Beach and Austin rather than in smaller markets. They said that frequently there is not enough revenue left to amke a buy in a smaller market worthwhile.
3. They talked a lot about a business service division they are building up and expanding the events management division.

 

Wonder if that’s a signal they’ll start spinning off smaller papers that they own already.

 

Not sure I'd get your hopes up for that; they've cut most of the costs out of those operations already and they're reliable cash generators.

 

The Oklahoman sold for that little? That's depressing.

 

Gatehosue had been the most active buyer of smaller properties. The company said print advertising was down 14% and circulation down substantially.

I interpreted their comments and their diversification into new business lines as indicating they think the smaller papers as a lost cause. Gatehouse typically tried to pay no more than 4.5 EBITDA for properties. It sounds like they no longer believe that small papers will generate returns for a long enough period to make them worth buying.

 

If I worked there I would be really depressed. Warren Buffet is very smart. He also owns the Tulsa paper and prints the Oklahoman. You would think that the Oklahoman would be worth at least 12.5 million dollars to Buffett because of the printing contract, the opportunity to consolidate editorial functions and the fact that Oklahoma City is a good sized metro market. But he did not think it was. What does that say about the future?

In the conference call Gatehouse management said they project EBITA from the paper next year of five million dollars. They believe the Oklahoman is undersold from an advertising perspective. I think given that Gatehouse is losing advertising across the chain at 13-14% a year that any advertisers that the Oklahoman have lost are not coming back next year.

Gatehouse management also said that the paper was overstaffed. I know a bunch of staff cuts have recently been made but I think it is quite likely more folks are going to get fired. Gatehouse will want to make their number.

 

Jim Hightower’s latest column, “Free the Free Press from Wall Street Plunderers,” takes on the corporate bottom-feeders picking apart what’s left of America’s newspapers. He names names, singling out Digital First Media and GateHouse Media, which recently purchased the Austin American-Statesman, as the worst offenders — “hedge-fund scavengers” and “ruthless Wall Street profiteers out to grab big bucks fast” by gutting newsrooms. Tough stuff. And apparently too tough for Creators Syndicate, the distribution firm that has long placed Hightower’s column in various media outlets.

Last week, according to the Austin Chronicle, Creators informed Hightower that it would not be distributing his column out of fear of retribution from Digital First and Gatehouse. In an email to the Chronicle, Creators Managing Editor Simone Slykhous defended her decision, saying the company was only trying to protect Hightower. “We have more than 200 columnists and cartoonists, and our job is to make sure that our actions do not negatively impact them,” Slykhous said.

https://www.texasobserver.org/the-j...JVccGZdjHX7nRQebEPK1OnDhCbrLBgJvamPxu0Ha-V0H4

 

If you work for GateHouse, you should have a Plan B ready to go, and take the buyout when it is offered.
In the past year, they've closed more than 15 papers across the country and based on that earnings call, they intend to close many more in the coming year and beyond.
Obvious targets for closure:
1) Any paper that has reduced its frequency of publication
2) Any paper that doesn't own its real estate and works out of leased space
3) Any paper that doesn't house its own printing press
4) Any paper that was part of regional chain that wasn't the flagship property
5) Any paper that can't get the events management program rolling
If you work for GH, and any of the above applies to your shop, then it is on the chopping block for closure.
It is just that simple.

Obvious targets for layoffs/buyout:
1) Any paper that isn't unionized
2) Any paper in a metro market
3) Any paper in a medium-sized market
4) Any paper in a small market

That's to say all GH papers will have layoffs or buyouts in the coming year. GH has a formula for staffing based on revenue and when revenue declines, staffing numbers are adjusted to the new reality. Ad revenue is on the decline everywhere. Circulation revenue is on the decline everywhere. Some papers have adjusted by going big on events management and that has helped, but it won't be enough to save the current number of jobs.
For various tax reasons and a lack of effort on the corporate end, smaller papers won't be spun off to another ownership group/local ownership because they don't have any assets besides the nameplate and when GH closed papers earlier this year, they took a publicity hit in the journo world, but it didn't impact stock price.
Conversely, GH is still looking to acquire more papers, again for tax reasons, and, again, because it keeps the stock up as a sugar rush.

It is all a scam. The entire operation is designed to extract as much revenue as they can and move on.

 

The American Dream at work.