Newsonomics: GateHouse Goes Bigger, Buying Austin’s Daily and Eyeing The Palm Beach Post
GateHouse Media, though suffering through all the same revenue woes as its peers, is about to get significantly bigger.
First published at Harvard’s Nieman Journalism Lab
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That’s where The Palm Beach Post, 1,300 miles east, comes into play. Cox put both its Palm Beach and Austin papers on the market last fall, leading to a round of chain strategizing. Companies that already own nearby newspaper properties — Hearst, Gannett, and Tronc most prominent among them — plus a few others (including Digital First Media and GateHouse) kicked the tires and prepared to place offers. GateHouse, with 11 Florida dailies (notably in Jacksonville, Daytona Beach, and Gainesville, but with nothing south of Sarasota), seemed like a distant possibility for Palm Beach. Gannett, with sizable properties to the north, and Tronc with the Sun-Sentinel to the south seemed likelier to win the Post — and then do their own consolidating, which has become the primary strategy of the highly distressed newspaper business. While both companies bid for Palm Beach, Gannett has acknowledged internally that the Post price — at a similar earnings multiple as what the Austin paper is fetching — was too rich for its blood.
As GateHouse finished its final due diligence on Austin, sources tell me, Cox decided that selling both papers to a single buyer would become a key factor in the sales. Cox, like most newspaper chains, has highly centralized its technology platforms. Transitioning from one of these centralized systems to another — in this case, GateHouse’s — is a gnarly process, involving lots of hassle and some cost. Cox came to prefer one difficult transition rather than two. So it appears that GateHouse — again, paying a higher price than it’s used to — has the inside track. As expected, the companies making bids and Cox have all declined comment.
The growth story of GateHouse is a one without precedent. As the company has rapidly bought up properties — often from increasingly eager-to-sell family owners — it’s struggled to become a real operating company. Now, in a short period of time, it’s built that Austin production facility, scaled up its UpCurve marketing services business, and grown GateHouse Live into an events strategy that puts on more than 350 events, across markets, a year. It also last year hired a new senior vice president of consumer marketing, Denise Robbins, from The New York Times, and mobile innovator Guy Tasaka, who now serves as general manager of Gatehouse Mobile. The still-gawky company, under the leadership of COO Kirk Davis, continues to fill out its leadership team, which remains underdeveloped in areas like product and analytics.
