Hedge fund backed Digital First Media, which owns more than 200 newspapers and is known for its draconian cost cutting and job slashing, submitted a bid to buy Gannett for $1.3 billion on Monday.
“Critics have described Alden as a “destroyer of newspapers” that is prone to “savage” layoffs and as “one of the most ruthless of the corporate strip-miners seemingly intent on destroying local journalism,” the New York Times reported after news of the bid broke.
Gannett, a publicly traded company, owns USA Today and 100 other newspapers, including The Tennessean in Nashville, the Commercial Appeal in Memphis, and the Knoxville News Sentinel.
In its bid, Digital First Media delivered a withering assessment of the competence of Gannett’s current management team in this letter accompanying the bid:
Gannett has lost 41% of its value since its debut as a public company two and a half years ago, significantly underperforming its peer group and indices. During this period, Gannett suffered from a series of value-destroying decisions made by an unfocused leadership team – overpaying for a string of non-core aspirational digital deals and pursuing an ill-fated hostile for Tribune Publishing, all while Gannett’s core revenue, EBITDA, margins and Free Cash Flow continue to decline. With Gannett’s CEO departing by May and its key digital executive leaving later this month, there’s now an even greater leadership void. Frankly, the team leading Gannett has not demonstrated that it’s capable of effectively running this enterprise as a public company. Gannett shareholders cannot sit by and watch further value erode while the Board casts about for a strategy and a leader, especially when there is an opportunity to maximize value right now. We believe Gannett shareholders deserve better.
As The Associated Press reported:
The publisher of USA Today has received a $1.36 billion buyout bid from a media group with a history of taking over struggling newspapers and slashing jobs.
MNG Enterprises, better known as Digital First Media, said in a letter to Gannett Co. Monday that its leadership team has failed to show that it can run the company effectively.
The newspaper industry has shrunk and consolidated as readers ditch print papers and go online. Estimated U.S. daily newspaper circulation, print and digital combined, fell 11 percent to 31 million in 2017, according to the Pew Research Center. As recently as 2000, weekday subscriptions totaled 55.8 million.
The Tennessee Star contacted Michael Anastasi, Executive Vice President for News, USA Today-Tennessee, for comment, but did not receive a response prior to the publication of this article.
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Photo “Gannett Building” by Shashi Bellamkonda.