NEW YORK -- In November, newspaper publisher GateHouse completed its acquisition of USA Today owner Gannett, creating the largest newspaper publisher in the U.S. Executives behind the merger, which was funded in part by a high-interest, $1.8 billion loan from a private equity firm, have pledged significant cost cuts, but say they are aiming to shield reporting jobs as much as possible.
The combined company, which will use the Gannett name, also has big aspirations for new digital ventures that it likens to a modern and reimagined form of classified advertising.
The Associated Press spoke recently with Gannett CEO Mike Reed and the head of its new operating unit, Paul Bascobert. The conversation has been edited for clarity and length.
Q: Tell us about new products you might launch.
Bascobert: If you go back to think about what a local newspaper was, even 20 years ago, you were provided with news and information. But you also had connections to the local community through classifieds, which connected you with local providers. You could find a dog or cat, personals, a car, etc. We think we can actually go back to that through better digital innovation.
Q: You have 140 million online visitors, but that digital business is small for each local paper.
Bascobert: We can use 140 million as a national advertising buy. What's more powerful is actually the market share within each of those little communities. The amount of digital activity on our platforms and the engagement, the frequency of people on our digital platforms is actually where the real opportunity is.
Q: How is the $300 million cost-cut estimate going to translate to job cuts?
Bascobert: There’s a lot of duplication of senior-level folks and duplication of management. There’s duplication of printing delivery. Not just people, but operating costs, systems costs, audit costs, things that we’re buying twice that we only need to buy once.
Q: What about the newsroom?
Bascobert: Formatting and layout, digital placements, digital research. There's lots of things that can be done in one place, which leaves us more resources to keep our frontline reporting intact. That's the thing that has given us the trust in the brand and these local markets that let us build the digital businesses on the back of it. It's the last place that we want to touch.
Q: Would you be able to hire reporters?
Bascobert: If that's what we determined to be the right answer, sure. But I don't necessarily think that the answer is adding more bodies. There's a lot more interesting innovation to be done through things like use of large datasets.
Q: GateHouse, and now Gannett, is managed by private equity firm Fortress through 2021. There’s a lot of wariness of media companies connected to investment companies. What’s your response?
Bascobert: To make the transformation that we need to make, we need to invest in new products, new technology, new approaches. Those investments come from shareholders who do demand the return. You know, for lack of investment from companies, from shareholders, the business doesn't change. It just continues to decline.
Reed: I’m a 31-year media guy who cares deeply about the future of journalism. This is not an investment where I'm at the table saying we've got to cut these journalists because we've got to pay fees to somebody else. That's never a discussion that would be had.