Barbarians at the Gate(House)
by Al Diamon
We’re coming for your newspapers: Unless you’re a news-business junkie, you’ve probably never heard of GateHouse Media Inc. But according to numerous sources in the New England newspaper industry, you’re about to hear a whole lot about the company. By the end of 2015, the chain based in the Rochester, N.Y., suburb of Perinton could be the largest media operation in Maine.
GateHouse is sort of the operational arm of a holding company called New Media Investment Group, based in New York City, which owns nearly 600 daily and weekly newspapers in about 30 states, from Maine to California, mostly in small- to medium-sized markets. Lately it’s been aggressively buying up properties in this region.
Last summer, New Media laid out $46 million to purchase the Providence Journal. In November, it gained control of virtually all the dailies in eastern Massachusetts, except the Boston Globe and Boston Herald, when it assumed ownership of the Worcester Telegram & Gazette andits parent company, Halifax Media.
Halifax owned about three dozen papers in six states, mostly in the southeast. That same month, New Media’s New Hampshire subsidiary, Seacoast Media Group, publisher of the Portsmouth Herald, took over the rival Foster’s Daily Democrat, in Dover. Seacoast already owned two Maine weeklies, the York County Coast Star and the York Weekly. The Foster’s acquisition gave it a third, the Sanford News. But the new owners’ interest in this state goes well beyond that.
When New Media bought Halifax, it also acquired that company’s not-so-secret plans to buy several Maine newspapers. Halifax had designs on the Bangor Daily News, the Forecaster weeklies (owned by the Lewiston Sun Journal), and even MaineToday Media’s Portland Press Herald and Maine Sunday Telegram. According to an informed source on the business side of the Massachusetts media, New Media/GateHouse intends to follow through with some of Halifax’s plans.
“They may have cooled a little on the Forecaster because those papers aren’t particularly profitable,” the source said. “But they still like the Bangor Daily and they’d love to grab the Press Herald if they could pry it away from [majority owner S. Donald] Sussman.”
Another media insider with business expertise said recent reports of drastic declines in the circulation of Maine papers make them likely targets for an acquisition-hungry outfit like GateHouse. “There will come a time very soon, if it hasn’t arrived already, when the printed newspaper can no longer claim to be a mass medium,” the expert said. “The key is household penetration. Once you are this far below 50 percent, you are a niche product and will no longer be able to charge mass-medium ad rates, and you will not be able to make up a lot of that loss from the low rates you get from digital ads.”
GateHouse responded to phone calls requesting comment by saying the company official authorized to answer questions was unavailable.
There’s little question GateHouse has the financial means to make deals happen. According to the Boston Business Journal, it has fully recovered from a 2013 Chapter 11 bankruptcy filing caused by debt accrued through overly aggressive expansion. The company’s restructuring was made easier by the fact that most of its overdue bills were owed to Fortress Investment Group, which was also its majority owner. Once the ledger books were rearranged, Fortress executives endorsed a plan calling for GateHouse to complete $1 billion in new acquisitions by the end of 2016.
A GateHouse stock offering this fall raised something north of $100 million. The company also arranged a $200 million loan, much of it specifically designated for buying up media properties. And although its parent company, New Media, is losing money ($4.7 million worth of red ink in the third quarter of this past year), its stock price jumped 11 percent and its revenues increased over last year’s figures — whether or not you count the cash generated by the new companies it’s purchased in the past 12 months. While its traditional print publications saw only modest growth (revenues climbed 1.8 percent), New Media’s 40-plus printing operations registered big gains and even its relatively new digital-marketing arm showed a sharp upward trajectory.
As a newspaper owner, GateHouse has much the same reputation as nearly every company brave (or foolhardy) enough to buy into that struggling industry. It isn’t shy about cutting costs by axing reporters and editors, and consolidating operations. Its editorial stances are blandly conventional, and while its news coverage has shown occasional flashes of initiative, it’s more often predictably mediocre.
If GateHouse follows through on its plan to buy up a sizable chunk of the Maine media, readers may not immediately notice much of a difference.
Paid coverage: The Dec. 7 Maine Sunday Telegram carried a story by staff writer Bob Keyes on Art Collector Maine, an online art dealer and operator of galleries in Portland and Kennebunk that chooses its artists based not on the quality of the work, but on the artist’s ability to pay a monthly fee.
ACM is primarily owned by the publishers of Maine Home + Design, Maine and Old Port, three glossy lifestyle magazines best known for puff pieces on their advertisers.So it’s no surprise Keyes reported that “many of the artists” represented by ACM “also end up in the magazines as subjects of profiles and feature stories.”
This amounts to attempting to con readers into buying something in which the magazines have an undisclosed financial interest. Which is ethical how?
Sun sets and Phoenix sues: The Portland Sun is no more. The five-year-old, twice-weekly free paper published its last issue on Dec. 23. Owner Mark Guerringue blamed the recession and competition from the Portland Press Herald for the failure. “Execution could have been better, without a doubt,” Guerringue wrote in an e-mail, “but we also couldn’t buy a break.” Both of the Sun’s full-time staffers, editor David Carkhuff and sales rep Joanne Alfiero, will move to the Portland Phoenix, which the Sun’s parent company purchased in November.
Meanwhile, the Phoenix is suing two executives of its new competitor, DigPortland. The Phoenix claims Dig co-publisher Marc Shepard, who was once general manager of the Phoenix, and Dig associate publisher John Marshall, who was GM of the Phoenix until mid-November, stole its format and client list, thereby violating non-compete agreements both signed while employed by the Phoenix’s previous owner. The Dig says that information was available to anyone who read the paper, and claims the non-competes are legally unenforceable.
(Disclosure: I’m a former columnist for the Phoenix and a current one for the Dig.)
Odds and sods: Who knew Maine is a hotbed of pre-apocalyptic preparation? No, not the right-wing kooks in bomb shelters full of canned goods, toilet paper and ammo. I mean those engaged in intellectual preparation for doomsday. “The Next Chapter,” a weekly show that shortwave station Radio Alexandria labels its “flagship program,” is written and produced by Roland Hunt, of Madison, a former executive producer for NPR. Hunt’s musings on how to cope with civilization’s impending collapse can also be heard on WBCQ in Monticello and WERU in Blue Hill.
The vacant Gannett House, near the Blaine House in Augusta, is one step closer to being converted into a museum celebrating the First Amendment. The Gannett family, heirs to what was once a media empire, were the sole bidders in early December to buy the historic state-owned property. If their offer is accepted, work on the museum could begin in 2015. (Oddly enough for a project devoted in part to a free press, neither the family nor the state would reveal how much the Gannetts are willing to pay for the building.)
On Nov. 19, the Bangor Daily News set an odd precedent for Maine newspapers by running an editorial calling for less openness in government. The paper urged the state to restrict sales of lists of registered voters and their voting history, or “to charge much more for this information.” Some political groups used these documents during the 2014 campaign to send letters to people threatening to expose their past failures to cast ballots if they didn’t hustle to the polls this past Election Day.
If the BDN believes such mildly annoying antics are sufficient cause to shut down public access to government information, will it also support a bill in the Legislature making transcripts and recordings of 911 emergency calls secret? Or will it just advocate making them more expensive?
In addition to serving as The Bollard’s media critic, Al Diamon writes a weekly political column that runs in DigPortland, the Daily Bulldog and the Current Publishing papers. He can be e-mailed at firstname.lastname@example.org.