Jan 14, 2019

Digital First Media proposes buyout of local media company Gannett

Gannett headquarters in Tysons Corner, Va. Photo: Mark Wilson/Getty Images

A hedge fund-owned newspaper holding group is making a play to buy Gannett, one of the largest local news companies in America and home to titles like USA Today, The Arizona Republic and The Indianapolis Star.

Why it matters: Digital First Media doesn't have a stellar reputation for maintaining the cultures and values of struggling local news companies it buys up. Instead, it's known for cutting staff and outsourcing local news-gathering to digital operations in major cities.

Background: MNG Enterprises, known commonly as Digital First Media, is owned mostly by a New York-based hedge fund called Alden Global Capital, which often buys up distressed newspapers and restructures them to slash costs and drive profits.

  • It owns roughly 200 newspapers, including The Denver Post and The Boston Herald, and has come under fire for major layoffs at both papers, including what have been called "dehumanizing" cost-cutting strategies in Boston.

Details: The Board of Directors of Digital First Media sent a letter to Gannett’s Board of Directors Monday requesting that it take action to immediately evaluate its offer for the local newspaper company for $12.00 per share in cash, a 23% premium over Gannett's current trading price of $9.75.

  • The letter asks Gannett's board to hire an investment bank to "conduct a review of strategic alternatives," including a potential sale, stop making digital acquisitions, and commit to a "feasible, strategic and financial path forward" before hiring a new CEO. (Gannett CEO Robert Dickey is slated to retire this spring.)

Between the lines: Gannett's stock has struggled since the company spun off its local broadcasting arm (TEGNA) in 2015, although it's experienced gains over the past few months, presumably amid buyout anticipation.

  • The company has tried to make a play for acquiring more newspapers over the past few years, including at one point an attempt to buy Chicago Tribune publisher Tribune Publishing, formerly called Tronc, while simultaneously engaging in some small cost-cutting efforts, including layoffs.
  • But the newspaper business continues to be stressful for stakeholders, as fewer consumers indicate a willingness to pay for print, which impacts both subscription and print advertising revenues.

The big picture: A study released in October by the University of North Carolina’s School of Media and Journalism shows a stark decline of newspapers in rural areas. And while digital websites are trying to fill the gap, they often don't have the same journalism resources as the former newspaper.

  • Another study from Duke University’s DeWitt Wallace Center for Media & Democracy last year found that only 17% of news stories in a community are actually local, meaning they're actually about or having taken place within a municipality. 

The bottom line: Experts fear that these types of major acquisitions this could take a big toll on the quality of local news in the U.S.

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 1,014,673 — Total deaths: 52,973 — Total recoveries: 210,335Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 244,678 — Total deaths: 5,911 — Total recoveries: 9,058Map.
  3. 2020 updates: The Democratic National Committee said its July convention will be postponed until August because of the coronavirus. A federal judge declined to delay Wisconsin's April 7 primary election.
  4. Jobs latest: Coronavirus unemployment numbers are like a natural disaster hitting every state.
  5. Public health latest: Anthony Fauci called for a nationwide stay-at-home order. FDA allows blood donations from gay men after 3-month waiting period, citing "urgent need."
  6. Business latest: Treasury Secretary Steven Mnuchin said oil companies are eligible for aid from new lending programs the Federal Reserve is setting up, but not direct loans from his department.
  7. U.S.S. Theodore Roosevelt: Navy removes captain of aircraft carrier who sounded alarm about coronavirus.
  8. 1 future thing: In developing countries, consequences of COVID-19 could be deeper and far more difficult to recover from.
  9. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

CNN: Fauci says U.S. should issue nationwide stay-at-home order

Dr. Anthony Fauci listens to President Trump speak during a briefing on April 1. Photo: Win McNamee/Getty Images

The Trump administration should implement a stay-at-home order for the country, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said at a CNN town hall on Thursday.

Why it matters: The recommendation stands in contrast to President Trump's calls for "flexibility." Nearly 4o states have issued stay-at-home orders to promote social distancing as a way to combat the novel coronavirus — but the orders vary in strictness and duration.

Go deeperArrow14 mins ago - Health

World coronavirus updates: Confirmed cases top 1 million

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

Novel coronavirus infections have surpassed the 1 million mark after "near exponential growth" that's reached "almost every country," World Health Organization Director-General Tedros Adhanom Ghebreyesus said Thursday.

The big picture: Policy responses to the global coronavirus crisis have been every-country-for-itself and — in the case of the U.S. and China — tinged with geopolitics. But, the scientific work underway to understand the virus and develop a vaccine has been globalized on an unprecedented scale.

Go deeperArrowUpdated 41 mins ago - Health