It could be a sign that consolidation likely will accelerate this year as newspaper publishers seek greater scale to compete for digital ad dollars.
Tribune Publishing CEO Justin Dearborn stepped down on Thursday and will be succeeded by company president Timothy P. Knight. Board member David Dreier, a former U.S. congressman from California, will become chairman.
Tribune executives had approached Gannett several times late last year, The Wall Street Journal reported this week. Dearborn discussed a potential deal with Gannett Chairman John Jeffry Louis, unnamed sources told the newspaper.
USA Today publisher Gannett received a takeover offer this week from a hedge fund-backed media group that in 2016 was unable to buy Tribune after weak earnings eroded its financial firepower. Tribune last month ended talks to be acquired by McClatchy, publisher of the Miami Herald.
This time around, newspaper publishers are in weaker financial shape. Tribune Publishing’s stock plunged as much as 40% in the past 12 months, while Gannett’s fell as much as 30%. Deal chatter this month has led to rebounds in their shares.
MNG Enterprises, a bidding group backed by hedge fund Alden Global Capital, bought an interest in Gannett and offered to buy out the entire company for $12 a share. That would mean the company was valued at $1.4 billion, compared with Gannett’s $1.1 billion market capitalization before this week’s bid.
An investor group seeking a healthy return is likely to slash headcount and other costs to squeeze out more value from the company. On the other hand, Gannett already is a public company subject to the withering scrutiny of thousands of shareholders. It’s not clear what MNG sees that others may have missed.
Either way, a hedge fund isn’t going to tolerate slim profits or losses.
For generations, newspapers have been playthings for the wealthy, a way to influence public opinion and exert power. Of course, they also made healthy profits. There are still remnants of that era, except that newspapers are less likely to make money.
Rich benefactors like Amazon founder Jeff Bezos bought The Washington Post and financier John Henry acquired The Boston Globe. Pharma billionaire Patrick Soon-Shiong owns the Los Angeles Times and San Diego Union-Tribune, while casino magnate Sheldon Adelson has the Las Vegas Review-Journal.
The Murdoch, Newhouse and Cox families also own newspapers.