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Gatehouse, Gannett combine into largest U.S. newspaper company

NEW YORK — Twoofthe country’s largest newspaper companies have agreed to combine in the latest media deal driven by the industry’s struggles with a decline in printed editions.

Gatehouse Media, a chain backed by an investment firm, is buying USA Today owner Gannett Co. for $12.06 a share in cash and stock, or about $1.4 billion. The combined company would have more than 260 daily papers in the U.S. along with more than 300 weeklies. It would be the largest U.S. newspaper company, with a print circulation of 8.7 million, 7 million more than the new No. 2, Mcclatchy, according to media expert Ken Doctor.

The companies said Monday that the deal will result in up to $300 million in annual cost savings and help speed up a digital transformation.

Newspaper consolidation has picked up as local papers find it hard to grow digital businesses and replace declines The was owned by Gatehouse Media from

in print ads and circulation. Although papers with national readerships like The New York Times and The Washington Post have had success adding digital subscribers, local papers with more limited readerships are having a difficult time. Hundreds of such papers have closed, and newsrooms have slashed jobs.

According to a study by the University of North Carolina, the U.S. has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research, and layoffs have continued this year.

Both Gatehouse and Gannett are known as buyers of other papers.

Bulking up lets companies cut costs — including layoffs in newsrooms — and centralize operations.

Those cuts could give the owners “a cushion of time” to figure out how to improve their digital businesses, longtime industry analyst Rick Edmonds of the Poynter Institute wrote Sunday.

Several experts said they do not expect the Justice Department to have an issue with the deal, as the two companies have papers in different markets. The companies expect it to close this year.

The combined company would take the Gannett name and keep its headquarters in Gannett’s current home of Mclean, Virginia.

Gannett shares added 31 cents, or 2.9 percent, to $11.06 in afternoon trading. New Media stock lost 75 cents, or 7 percent, to $9.95.