USA Today owner Gannett to acquire Journal Media Group
08 October 2015Publishing house Gannett, the owner of USA Today and media businesses across 92 local markets said late Wednesday that it had agreed to acquire Journal Media Group for around $280 million, as part of a strategy aimed at acquiring additional local news outlets after it was spun off from its former parent in June.
Shareholders of Milwaukee-based Journal Media Group would receive $12 a share in cash which was a 45 per cent premium from the Wednesday closing price of $8.30.
Journal Media Group (JMG) is the owner of the 178-year-old Milwaukee Journal Sentinel, The Commercial Appeal of Memphis, 15 other daily newspapers, 18 weeklies and their affiliated websites in 14 US markets.
The deal is expected to close in the first quarter of 2016 after approval by both companies' boards of directors and was subject to approval from Journal Media Group shareholders.
Shares of Gannett closed at $14.94, up almost 4 per cent.
McLean, Virginia-based Gannett will finance the deal through cash and borrowing under the company's $500-million revolving credit line.
''Gannett is doubling down on newspapers,'' said Ken Doctor, a media analyst. ''They paid what they needed to pay and they are smart about the assets they want and clustering geographically,'' The New York Times reported.
The media business has been in turmoil with many companies shedding newspapers and magazines, and focusing on faster-growing assets.
Gannet underwent a split into two companies in June, with Gannett retaining the newspapers and the faster-growing TV stations going to Tegna, a new company.
Tegna and Gannett will go their separate ways with the completion of print spin off.
Time Warner spun off its publishing assets including its flagship magzines Time and Fortune into Time Inc in 2014, while the Tribune Company, owner of The Chicago Tribune and The Los Angeles Times, was also splitting into separate entities.
According to commentators the JMG deal, represented significant expansion for Gannett, increasing its revenue by nearly half a billion dollars.
According to the two companies the deal would be accretive to Gannett's earnings immediately, with plans for $35 million in cost savings over the next few years.
''It's about cutting expenses,'' Alan D Mutter, a veteran editor and media executive who teaches media economics at the University of California, Berkeley, told The New York Times.
''I am sure the companies have identified lots of ways to cut costs,'' he added, including cutting ''corporate staff, reducing head count, sharing content, pooling digital development and consolidating national sales teams.''