Major battles loom for GateHouse journalists

Oct 2, 2013 by

Journalists from all the GateHouse/New Media properties need to come together to fight for their craft, their institutions and their communities.

GateHouse managers are painting a pretty picture of life after bankruptcy. The existing properties will merge with the old Dow Jones chain into a new operation called New Media.

Not only will GateHouse’s $1.2 billion debt disappear, the new company would have up to $1 billion to spend on new properties. That sounds great.

But New Media is promising investors the same intense cost controls that GateHouse used to gut its newsrooms and diminish its quality of journalism.

Recently the Boston Business Journal assessed some potential pitfalls facing New Media, as Fortress Investment Group outlined as part of its disclosure or risks to investors,

Here is an excerpt of its report:

There’s also no guarantee that GateHouse’s strategy of merging operations among its papers, in part through its so-called “clustering strategy,” will set it on a profitable path. New Media’s cost control efforts, GateHouse concedes, might not lead to the hoped-for savings, or they could hurt New Media’s ability to recruit and hold on to valuable employees.

GateHouse’s revenue projections, without the former Dow Jones/Ottaway papers, show compensation expenses declining only modestly in 2014 and 2015, to $195 million and $192 million respectively, from $200 million today. Once the former Ottaway papers are added to the mix, the projections call for $257 million in compensation expenses next year and $252 million in 2015, down from $264 million for the combined GateHouse/Ottaway workforce expenses this year.

GateHouse’s projections also rely on its relatively new Propel digital marketing venture taking off: Venture revenue, projected at $9.4 million this year, would grow to $31 million next year and $56 million in 2015. That extra income likely would be necessary to help offset a 3-percent annual projected decline in ad sales. (It’s worth noting that the projected decline might be overly optimistic, given the broader industry trends.)

The New Media group, GateHouse says, could also have a hard time finding acquisitions it can afford. GateHouse also warned of the potential for labor union complications, if negotiations end up adversely affecting the company’s ability to make its operations more efficient. Unions represent about 15 percent of GateHouse’s 4,565 employees (split among Massachusetts, Illinois and Ohio papers). About half of the union contracts expire next year.

The fight for a good first contract is underway at our new Rockford and Springfield units. Soon the battle will start at another UMG unit, the Pekin Daily Times. We are hoping to gain a contract extension in Peoria, but the nothing has been finalized with that unit.

Journalists from all the GateHouse/New Media properties need to come together to fight for their craft, their institutions and their communities.

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