OCTOBER 9, 2019 — PUBLISHED REPORTS PAINT A BLEAK PICTURE FOR EMPLOYEES IN 2020
Expect aggressive early moves to begin achieving the $300 million in cost-cutting synergies the dealmakers have claimed to justify the deal.
More than 10 percent of the chains’ combined workforce — about 25,000 in the United States — will likely get the dreaded call from HR that their services will no longer be needed. How big a cut will that be? If the headcount reduction reaches 3,000 — which would be 12 percent of the workforce — that’s the equivalent of McClatchy’s entire employee count. And McClatchy will be the second-largest newspaper chain in America after this merger is complete.
New Gannett CEO Mike Reed has emphasized that the coming cuts will come almost entirely outside the newsrooms. Business-side functions — from advertising to production to finance to circulation — will take the brunt of the cuts. Most of the headcount cuts will come in the merged company’s first year, but some will bleed into Year 2.
There is little doubt in anyone’s mind that conventional media has lost much of its audience to the internet and consolidation and economies of scale are one of the few remedies to allow these entities to survive. So it should come as no surprise that the Fairport, New York-based Gatehouse Media, owned by New Media Investment Group (owner of 150+ local newspapers) will merge with McLean, Virginia-based Gannett (owner of USA Today and 100+ others). The new organization will be operated under the Gannett brand and be headed by New Media CEO Michael Reed. The deal is expected to be finalized by the end of 2020.
According to a joint statement issued by both companies, “With strategically-aligned leadership and significant scale of operations, the Merger will accelerate the combined company’s digital transformation. The Merger also affords an opportunity to realize run-rate cost synergies of $275 - $300 million annually across the combined company in a judicious manner, while continuing to invest in newsrooms.”
According to its filings with the Securities and Exchange Commission, Gannett had an estimated 16,980 employees at the end of 2018 and GateHouse had and estimated 10,638 employees. This will surely result in layoffs as the companies consolidate operations and move toward a digital platform which requires few employees to maintain operations.
The operator of the combined company will continue to be the New York, New York-based Fortress Investment Group, itself owned by Minato, Tokyo, Japan-based multinational conglomerate SoftBank. Fortress will remain in operational control until 2021 and exit with a golden parachute.
Definitely, the handwriting is on the wall for employees in duplicative functions or associated with operations to be discontinued.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?