Hedge-Fund-Backed Media Group Prepares Bid for Gannett

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Hedge-Fund-Backed Media Group Prepares Bid for Gannett

Hedge-Fund-Backed Media Group Prepares Bid for Gannett

A hedge-fund-backed media team identified for purchasing up suffering native papers and chopping prices is making plans to make an be offering for USA Today writer

Gannett
Co.


GCI zero.52%

, in step with other folks accustomed to the topic.

MNG Enterprises Inc., probably the most biggest newspaper chains within the nation, has quietly constructed a 7.five% place in Gannett’s inventory and plans to publicly urge the McLean, Va., writer to position itself up for sale, the folk mentioned.

MNG, higher referred to as Digital First Media, may also be offering to shop for Gannett for $12 a proportion, they mentioned, which might constitute a 23% top class over Friday’s ultimate worth of $nine.75. The stocks, which fell steeply remaining yr, were emerging in recent times.

Closely held Digital First is understood for its contentious historical past with the newspaper partly on account of its penchant for slashing prices. It has over the last few years made more than one approaches to Gannett a couple of deal however has been rebuffed, the folk mentioned. At least one method was once made prior to now month or so. It isn’t transparent whether or not Gannett will probably be receptive now.

In addition to publishing USA Today, probably the most top-selling papers within the nation, Gannett owns and operates dozens of different publications such because the Arizona Republic, the Record in North Jersey and the Naples Daily News in Florida. Its stocks have tumbled in recent times and dropped kind of 15% prior to now 12 months, leaving the corporate with a marketplace price of about $1.1 billion.

The print media has suffered sharp earnings declines as virtual promoting gross sales fail to stay alongside of drops in print promoting. This in flip has induced a wave of consolidation amongst publishers taking a look to get pleasure from economies of scale and minimize prices, continuously via layoffs. Both Gannett and Digital First Media were lively acquirers.

Digital First Media owns about 200 newspapers and publications together with the Denver Post and the Orange County Register. Last yr it beat out different bidders to shop for the Boston Herald after the tabloid had filed for chapter.

This wouldn’t be the primary time Digital First Media has confronted a combat. Since it purchased the Denver Post, the paper’s workforce has reduced in size, prompting outrage from news-industry unions however serving to make Digital First some of the successful newspaper operators.

The dispute is without doubt one of the maximum high-profile in a sequence of new battles between a newsroom and its possession. But USA Today, some of the known papers within the nation, will be the best-known goal it has set its points of interest on but.

Digital First Media’s biggest shareholder is Alden Global Capital LLC, a New York hedge fund that makes a speciality of making an investment in distressed corporations. It was an investor within the debt of an MNG entity in 2010 after that corporate’s personal chapter and was the most important shareholder a number of years in the past.

Alden, based through Randall Smith and Heath Freeman, has greater than $1 billion beneath control. The sometimes-activist investor is understood for slashing prices at its media investments via layoffs and the usage of zero-based budgeting, an method that calls for operators to justify their bills each and every yr.

Digital First was once shaped in 2013 as the results of the merger of Media News Group and the Journal Register Co. It briefly moved to sell off a lot of its actual property holdings and printing operations and made steep staffing cuts throughout its titles, consolidating substantial sides of its operations in centralized hubs.

In past due 2014, Digital First explored promoting all its newspapers to

Apollo Global Management

LLC, however known as off talks the next yr after the 2 aspects couldn’t agree to a cost.

In early 2016, Digital First bought the Orange County Register and different Southern California newspapers out of the chapter of Freedom Communications after the Justice Department blocked the successful bid through Tribune Publishing.

Gannett has been looking for to remake itself. In 2016 it purchased Journal Media Group Inc., proprietor of the Milwaukee Journal Sentinel, and made bids for the writer of the Chicago Tribune, Tribune Publishing Co. It in the end subsidized off amid resistance from Tribune Publishing, which till October was once referred to as Tronc.

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Since Digital First Media purchased the Denver Post, the paper’s workforce has reduced in size, prompting outrage from news-industry unions.


Photo:

David Zalubowski/Associated Press

While Gannett’s stocks had been down 41% throughout the finish of remaining yr since its 2015 derivative from what is referred to now as

Tegna
Inc.,

each Gannett’s inventory and that of Tribune Publishing have rebounded for the reason that starting of the yr, in all probability indicating buyers’ anticipation of consolidation.

Digital First Media’s bid comes as Gannett faces voids in its peak ranks. The corporate mentioned remaining month that Chief Executive Robert Dickey plans to departin May, or previous if a alternative is located quicker, and the executive of its online-marketing trade, ReachLocal Inc., additionally plans to leave.

Digital First Media desires Gannett to rent bankers to imagine a sale, input into talks with Digital First a couple of deal, evaluate its technique ahead of hiring a brand new CEO and halt acquisitions of virtual belongings, the folk mentioned.

Denver-based Digital First Media believes it is going to be onerous for Gannett to show round its operations whilst it’s publicly traded, creating a sale the most suitable option, the folk mentioned. It hasn’t dominated out pushing for adjustments to Gannett’s board of administrators if the corporate isn’t responsive, they mentioned.

Gannett is scheduled to record its fourth-quarter effects Feb. 18. During the primary 9 months of 2018, earnings from its promoting trade fell 7% from the prior yr to $1.23 billion. Overall, gross sales had been down 6% to $2.17 billion.

Write to Cara Lombardo at [email protected]

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