Will a mega-merger kill off your local newspaper?

A mega-merger has given birth to the nation’s biggest newspaper company, but it could mean the death of your favorite local weekly.

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GateHouse Media through its parent firm -- New Media Investment Group -- is acquiring Gannett, for an estimated $1.4 billion worth of cash and stock. The merged company will control more than 260 dailies, across 47 states with a print circulation of 8.7 million readers.

But consolidation has been the name of the game in print media with cutbacks becoming the norm at newspapers across the country and shutdowns increasing. According to a recent report by the University of North Carolina more than 1 in 5 local papers have closed since 2004. Staffing at newspapers is down 47 percent since 2004, according to data from the Bureau of Labor Statistics’ Occupational Employment Statistics.

How can the “new” Gannett buck the trend?

“I see most players in the industry as looking for ways to reinvest in newsrooms and journalism, rather than cutting the product,” David Chavern, president and CEO of the News Media Alliance which represents nearly 2,000 news organizations, told FOX Business. “It’s part of an overall understanding that in a digital marketplace, the only thing you have to sell is quality journalism -- so I expect most on-going reductions to come on the business/operations side.”

Investors were not quite as optimistic today. Gannett and GateHouse parent New Media Investment Group stocks closed down in trading. Still, the deal values Gannett’s stock at $12.06 a share, a 12-percent premium to its closing price last Friday.

TickerSecurityLastChangeChange %
GCINEW MEDIA INVESTMENT GROUP INC6.17-0.33-5.08%
NEWMn.a.n.a.n.a.n.a.
MNIMCCLATCHY0.36-0.02-4.19%

Even if the newly merged company maintains or increases its levels of investment in the publications, change is still likely to be the news of the day at several papers. Other large chains such as Hearst and Digital First Media / MNG Enterprises have turned to “regionalization” or “clustering”  – where resources are shared by several papers—to trim costs and staff.

Ken Doctor, a former editor and executive with the now dismantled Knight Ridder chain, in his widely read blog for the Nieman Journalism Lab, wrote that the “clustering of Gannett/GateHouse papers would be profound.” It is due in large part to the overlap in regions with the merged companies. In Florida for example, the new Gannett will own daily newspapers in Jacksonville, West Palm Beach, Sarasota, St. Augustine, Naples, Brevard County, Fort Myers, Pensacola, Tallahassee, Gainesville, Lakeland, Daytona Beach, Ocala, Winter Haven, Panama City, the Treasure Coast and the Space Coast.

Another option could be these news organizations ending their print product and concentrating on digital-only publications as such newspapers as the Pittsburgh Post-Gazette – which started in print as a weekly in 1786 -- recently announced.

Still, as newspapers have migrated to the digital arena, it has not been a road paved with gold. Google and Facebook dominate digital advertising and despite the rash of mergers in the newspaper industry to gain scale and compete, it has been painfully difficult for most publications to make a profit.

“It is obviously hard to compete with the tech giants when it comes to scale," says NMA’s Chavern. “But we can’t forget that the overall audience for news is larger than it has ever been and news as a form of content drives incredibly high reader engagement and attention. Many advertisers want to reach a news audience and Gannett can now make a huge claim about their ability to deliver that audience.”

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