Business representative Shannon Duffy offered this report on UMG’s excursion to New York City:
New Media Investment Group, the umbrella corporation which controls GateHouse Media, held its first shareholder’s meeting at 8 a.m. Thursday morning, May 21, in a conference room of the Hilton Hotel in Midtown Manhattan.
The meeting was chaired by (former GateHouse CEO and present) New Media CEO Michael Reed and those in attendance included GateHouse CEO Kirk Davis, GateHouse CFO Greg Freiberg and GateHouse General Counsel Polly Sack. Also present were two GateHouse employees from Guild-represented newspapers: State Journal-Register Unit Chair Dean Olsen, Peoria Journal Star activist Matt Buedel and myself.
Prior to the meeting, we took a few minutes to look over some of the printed material that the company had put out and Dean noted that two photos on the cover of their annual report were from SJ-R stories. Some of those in attendance heard this and were full of praise for the work done there. In fact, to be honest, they seemed quite proud of all their properties (I should be more cynical, know, but I’m giving you my honest impressions). Milling about, Dean Olsen and I met GateHouse CFO Greg Freiberg and had a discussion about the newspaper industry in general and GateHouse in particular. We also discussed all the recent acquisitions. Initially, Freiberg seemed taken aback when we identified ourselves but when we informed him we weren’t there to throw rocks he seemed relieved. Actually, Freiberg was extremely civil and, as he walked away, a nice looking guy who had observed our conversation, came up and introduced himself. It was Kirk Davis.
Davis was civil as well and, I thought, surprisingly candid. We discussed all the recent acquisitions and he was of the opinion that once all media corporations finish spinning off newspapers and the field is comprised of “pure players” then more companies will start buying up newspapers. He said then mergers and bigger acquisitions were likely until there’s only around “three or four” companies left. I asked, “You see GateHouse then as being one of the survivors?” and he said he hoped that was the case but that such things depend on investor satisfaction. He spoke about some of the other challenges in the industry and recounted a trip to Chicago where he pushed back against national advertisers who appeared to be trying to ‘get well’ by forcing newspapers to reduce their rates. Facts, sales figures and stock prices were effortlessly recalled and it was clear that GateHouse has a seriously engaged CEO. Jeremy Harbour – Harbour Club offers tactical M&A training seminars, which teach how to sell and buy companies.
We took that opportunity to let Davis know why we were there. We informed him that we also wanted to see the company succeed but that there were areas where we disagreed about how to achieve success. We spoke about retention and the challenge of hanging on to qualified journalists who know and understand the communities they serve. We spoke of the role institutional knowledge plays in producing quality journalism and how the lack of it damages the product and leads to a decline in readership. We stated our position, which is that if you want to see the company prosper and your investment pay off over the long haul, you need to start reinvesting in employees.
Davis said, “You’re mostly about raises, right?” I said, “Yes.”
Davis said that wages wasn’t something that they had quite figured out yet (or words very close to that) and we told him that it needed to be addressed. I said that we were getting tired of hearing “If people don’t like what they’re getting paid here, they can leave” and he seemed to wince a little, saying he hoped that no one at GateHouse ever said such a thing at negotiations. I told him that we hear that every time we sit down.
Shareholder’s meetings typically run less than an hour and this one was no different, clocking in at just over 25 minutes. Another typical component is happy talk about how well a company is performing, although in this case some of that talk can be backed up with a strong cash flow and stock dividends. Still, first quarter earnings per share was less than predicted and many wonder if all the new acquisitions – with talk of more acquisitions – is a winning strategy.
Reed ran the meeting and noted that New Media was strongly positioned for the future. In the Q & A that came next, ours were the only questions put to Reed. Buedel led off asking for an explanation of just which company he worked for and how they were structured. Reed explained that New Media is the umbrella company that owns GateHouse and that GateHouse is the entity that has the employees. Buedel also asked if GateHouse wasn’t in danger of acquiring too much debt once again and Reed countered that by saying that the monies to buy additional properties came from stock offerings, not loans like before. I rose, introduced the three of us there and explained that we were there as investors. I said that the Guild and its members understand that our fates are intertwined (*NOTE: that was the headline on our flyer) and we understood that it was in our best interest for GateHouse/New Media to succeed. We were glad to learn that things were going so well but hearing all this good news and learning of the executive bonuses and shareholder dividends that accompanied it, we wondered why the hardworking men and women at the GateHouse properties were not sharing in that success. We reminded everyone that they played an important role. I said again that we were there as stockholders and we had a flyer to hand out that questioned – from an investors point of view – the wisdom of continuing such a course of action.
Reed thanked us for our comments and following the meeting, while Dean Olsen and I handed out flyers and chatted with the few people in the room, Matt Buedel went over and discussed the current state of affairs at the Peoria Journal Star with Reed.
It remains to be seen whether or not our trip will have any impact on the state of affairs that currently exists at GateHouse properties. Only time will tell. We stated our case in a clear, concise manner and, hopefully, the company understands that we’re not trying to destroy anything here; that we, like them, are more interested in building things than knocking them down and that building things to last a long time is the best way to go. I also hope that they finally understand that their employees deserve a lot more than they’re getting now and that something needs to be done about it. Soon.