Washington (AFP) – USA Today publisher Gannett agreed to a merger Monday with rival GateHouse in a deal creating the largest US newspaper group, aiming for bigger scale to face the challenges of the troubled sector.
GateHouse parent New Media Investment Group will buy Gannett in a cash-and-stock transaction valued at around $1.4 billion that creates a media company with 263 dailies and reaching 145 million customers.
Michael Reed, New Media chairman and chief executive, said he expects the deal “will transform the landscape in the print and digital news business” and help the firms accelerate the transformation to digital.
The combined company will operate under the Gannett brand, with former Bloomberg and Dow Jones executive Paul Bascobert named chief executive in the deal, expected to close before the end of the year.
Jeffry Louis, chairman of the Gannett board, said the tie-up could help the publishers “leverage the combined company’s enhanced scale and financial strength to continue to drive growth in the digital future.”
Under the deal, New Media will offer stock and cash worth $12.06 per Gannett share and New Media shareholders will hold approximately 50.5 percent of the combined company.
The deal comes with the newspaper sector mired in an extended slump as consumers and advertisers shift to digital platforms.
According to a recent Pew Research Center survey, newspaper circulation has fallen to its lowest level since 1940, even accounting for online readership.
A separate report by the University of North Carolina last year found some 1,800 local US newspapers, including many weeklies, had failed since 2004, leaving many communities as “news deserts.”
Gannett earlier this year fended off a hostile takeover bid from hedge fund-backed Digital First Media, and in 2016 failed to seal a deal to combine with Tribune Publishing, another newspaper chain.
GateHouse operates in numerous small- and medium-sized markets, with newspapers including the Austin American-Statesman in Texas, Providence Journal in Rhode Island and the Akron Beacon Journal in Ohio.