Media Watch

Dan Kennedy does Gatehouse

EDITOR'S NOTE: Dan Kennedy is the region's best media critic.
He is an assistant professor at the Northeastern University School of Journalism, and writes for The Guardian, CommonWealth Magazine and the Boston Phoenix, and is a regular commentator for WGBH-TV's "Greater Boston with Emily Rooney".  His blog MediaNation is the bible for New England journalists.
Gatehouse Media owns eight weeklies on Cape Cod & Islands: The Banner, The Cape Codder, The Harwich Oracle, The Register, Sandwich Broadsider, Falmouth Bulletin, Bourne Courier and the Nantucket Independent.

Wolves at the GateHouse
The Cape's biggest newspaper chain may be in financial trouble

I read a GateHouse paper. You probably do, too. Maybe even two: the chain owns good-size dailies such as The Patriot Ledger (Quincy), The Enterprise (Brockton), The Daily News Tribune (Waltham) and The MetroWest Daily News (Framingham), in addition to 100 or so weeklies in Eastern Massachusetts.

   523 Newspapers and Shoppers



98 daily newspapers with total paid circulation of approximately 872,000;

292 weekly newspapers (published up to three times per week) with total paid circulation of approximately 656,000 and total free circulation of approximately 933,000;

133 “shoppers” (generally advertising only publications) with total circulation of approximately 2.1 million;

Over 260 locally focused websites, which extend our franchises onto the internet; and
Seven yellow page directories, with a distribution of approximately 758,000, that covers a population of approximately 2.0 million people.Anyway, sorry to bury the lede. GateHouse Media may be in deep trouble. According to the blog 247WallSt.com, the chain — based in suburban Rochester, N.Y. — is doing so badly that you might be able to get some furniture and computers cheap in a few months. After turning itself into a publicly traded company several years ago, the stock price has tanked, falling 80 percent over the past year.

247's Douglas McIntyre writes: "Watch for GHS to be broken up before the end of the year or to enter Chapter 11." (GHS is GateHouse's symbol on the New York Stock Exchange.) Wow.

What's more, the Motley Fool recently listed GateHouse as one of "5 Deathbed Stocks."

GateHouse does some interesting things, but it has clearly been hampered by a lack of resources. Its Wicked Local sites were supposed to be a model of hyperlocal and citizen journalism, but they have yet to achieve critical mass. The company also pushes its reporters to shoot and edit low-end video, which is pretty smart. Earlier this year I wrote a post on Cathryn O'Hare, editor of the Danvers Herald, after I followed her through the process.

Mostly, though, the GateHouse papers in Massachusetts are good, solid community papers that have suffered under revolving-door ownership for many years.

During the 1980s, they were owned by a half-dozen or so regional groups, some based in Massachusetts, some out of state. Then, in the 1990s, most of them were combined by Fidelity into a chain that was dubbed Community Newspaper Co. Fidelity sold CNC to Boston Herald publisher Pat Purcell for a reported $150 million in 2001.

Purcell did one thing wrong and one thing right. On the one hand, he simultaneously took the Herald downscale, which made his purported flagship a weird fit with the affluent, well-educated readership he had just acquired.

On the other hand, Purcell unloaded CNC for $225 million just five years later, making him one of the few people to turn a profit on a newspaper deal in the 21st century. The money, many insiders believe, has allowed him to keep the Herald afloat. The CNC deal was part of a larger, $400 purchase by Liberty Group Publishing, which renamed itself GateHouse, moved to New York State and went public.

GateHouse may or may not survive, but its papers should probably be all right in the long run. Community newspapers are in a better market position than major metros these days. Providers of quality local news don't face a lot of competition either from other papers or, with a few exceptions, from the Internet.

The problem is that chains amass huge amounts of debt when they buy papers ($1.2 billion at GateHouse, according to McIntyre), and need to turn an unrealistically high profit in order to pay down that debt and satisfy their investors.

If the economy were rocking along, maybe GateHouse could pull out of this. But it's not. Unfortunately, McIntyre's post is an indication that things are going to get worse both for those of us who read GateHouse papers and the people who work for them.