August 2008
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GateHouse Media continues to spiral downward

GateHouse Media, the parent company of the Peoria Journal Star and Peoria Times-Observer, saw its stock fall to just 44¢ per share at the close of trading today. Also, according to Compliance Reporter:

GateHouse Media’s corporate family rating and probability of default rating was downgraded last Monday by Moody’s Investors Service, on concerns the Fairport, N.Y.-based publisher is facing possible default on its credit agreement. The corporate family rating was dropped to Caa1 from B2 and the probability of default rating was dropped to Caa2 from B3.

And, of course, Billy Dennis has been outdoing himself in his coverage, even getting an interview with analyst Lauren Rich Fine.

But you won’t hear about this in the local media. No coverage from radio or TV, and certainly nothing in the Journal Star or Times-Observer. I guess mum’s the word on their imminent demise. All analysts agree that GateHouse will need to sell off a lot of the newspapers they’ve bankrupted themselves buying. Who knows what that portends for our newspaper of record here in Peoria. They’re certainly not telling.

16 comments to GateHouse Media continues to spiral downward

  • Bookworm

    I have yet to find a word in ANY Gatehouse paper in Illinois about the company’s precarious financial situation.
    Remember, they don’t just own the PJS, they own dozens of downstate daily newspapers… Pekin, Lincoln, Galesburg, Freeport, Rockford, Springfield, Kewanee, Macomb, Monmouth, Pontiac, Canton, Olney, Marion, Benton, to name only a few. Not to mention the dozens of weeklies and shoppers they own.
    The demise of GateHouse places nearly every daily AND weekly newspaper in central and western Illinois in jeopardy. I believe the only daily newspapers of any size in central Illinois that are not GateHouse are the Pantagraph and Decatur Herald and Review… which are owned by Lee, which is also in serious financial trouble.

  • Ian Schwartz

    …call me when they go under

  • Oh Please

    Yes, Ian, call me, too, but please realize that Gatehouse is not your newspaper. It’s your friends and neighbors trying to maintain a high standard under a huge corporation who ‘doesn’t get it’.

    When the newspaper world, obviously still the source for any news of value is silent on an issue of this magnitude, there’s a reason. That reason is because that silence is bought, paid for, and has to be maintained. People are scared even though the ‘demise’ signifies hope. People who look at the same stack of bills every month, people with families to support and they are just like you–and agree with you because they are suffering, trying to give you all your daily news, doing the jobs that were previously managed by 3 or 4 people.

    The absolute silence still proves that at least in Illinois, journalism still matters, otherwise the ‘news’ would be all over the place.

    Suppression? Yes and there shouldn’t be any question of why. In fact, I wish this event would open people eyes and make them realize just how much is riding on their hometown paper and that ability to inform.

    This more than anything else proves that people still rely on their hometown newspaper for the news, despite what’s going on the bigger markets.

    My suggestion is that if you want to keep your local source of news, let what’s happening in New York happen, and then continue to support your local newspaper. That means buying a subscription and advertising. Because if you don’t, this big black information hole you’ve just noticed is going to continue and when that happens, it’s going to get bigger. Then it won’t be Gatehouse you’re hurting, though the mismanagement is clear… it’s your local newspaper, whom you obviously care about, regardless of its ownership.

    These are two separate issues.

    Unfortunately, I can understand anyone wanting to puke up Gatehouse right back from where they came from–because it’s pretty clear that they have no interest but themselves and the bottom line, but in the meantime, what happens to the paper?

    I’m not sure there’s an answer.

    Babies and bathwater occur to me.

    But in this case how do you stop from throwing out both?

  • Is the printing press obsolete? Will the “daily newspaper” evolve in to smaller offices of reporters and editors that put all of their reporting on-line, to be downloaded every morning by subscribers? The need for professional journalism will be ever-present, but it does seem that the days of killing forests to throw multiple tons of paper every day around a city might be coming to an end.

  • Ian, why is this less newsworthy than Cat’s stock going up? Professional courtesy?

  • Ian Schwartz

    haha. No. It was more of a joke-I get tired of reading about both. One could argue CAT stock affects more people on a day-to-day basis. You could argue the same for GateHouse in the gutter. I am familiar with larger cooperation pulling strings at the local level with profit in mind. It gets to a point where you get tired of hearing the frightening possibilities and just say, “call me when we close our doors.” It’s hard to work in an environment stewing about these possibilities.

  • Gatehouse Media isn’t the problem. The industry is the problem. The industry still refuses to accept the incontestable fact that those of us who are journalists or newspaper owners are facing a brave new world. ailing to face the brave new world will lead to insolvency and the end as we know it today.
    Right now – today – newspapers all over the nation need to cut at least 20% of their staffs and re-work their forces in order to remain relevant – which allows a newspaper to remain solvent, which protects the jobs of remaining employees.
    Newspaper people and faithful readers wishing for some kind of status quo or a return to yesterday – or who even are trying to hold onto the vestiges of the past today, are doomed to disappointment.
    The Internet has changed everything and we must change in order to meet that challenge.
    Newspapers are competing with the Internet. This is folly. Newspapers are now an industry almost totally unto themselves. We used to be the Internet. We are no longer the Internet and yet many, many companies and independent newspaper groups are not meeting the new challenge with the right responses.
    We need to be leaner, more focused, and more connected with the communities we serve. This strategy implies that there must be a total reorganization of newspaper resources throughout the industry with the understanding that we will be here in the future, that we will remain profitable and that with shrewdness and stealth, with an eye toward the future instead of being mired in memories of the past, newspapers will grow stronger and will remain an important component in the information food chain.
    Notions of days long past have to be out the window.
    Everyone employed by a newspaper has to do more in order to maintain their relevance as employees – and there have to be fewer employees, and smaller papers that are better even though they are smaller.
    The Internet components aren’t working for newspapers. There is no payback here at a time when precious capital needs are crying elsewhere.
    As for Gatehouse … the stock may go to 0, and it appears this is where it is headed, but the company is far from bankrupt. The stockholders are left holding worthless pieces of paper but the company will go on, and ultimately, it will prosper.
    Gatehouse’s weeklies are strong and profitable. Many of the dailies, like the ones in Illinois and in Peoria remain relevant – but there are any dailies that are bleeding as though a major artery has been cut and Gatehouse will be forced into making hard choices in order to remain competitive. If Gatehouse files for Chapter 11, it will receive the protection it so badly needs to reorganize itself.
    This is not bad. It is good and frankly, it is possibly necessary although I believe Gatehouse will not have to file and will continue to grow and to remain profitable by selectively ridding itself of losers and buying more winners.
    The industry model is dead.
    The industry needs to be a hybrid.
    Everything must change.
    Those who don’t, won’t be here in five years.
    Don’t worry about Gatehouse.
    Worry about your own city newspaper and what must be done to keep it alive and healthy.
    There should be no sadness about one era ending and another beginning.
    The new era will be different but newspapers will be here – and will remain important from Peoria to Boston and from Iowa to California.


  • To commenter “Oh Please”: I don’t want to throw the baby out with the bathwater. I want to see the Journal Star survive. It appears to me that GateHouse is ruining the paper, so it won’t hurt me at all to see them go away. But what will happen to the Journal Star?

    By the way, I’m a subscriber, as was my father, and his father before him — home delivery every day.

    Diane, Josh, et. al., what do you think of this idea for the future of printed newspapers?

  • Ryan Johnson

    I agree with Ian. Speculation is not news. When something happens, it becomes news.

  • And something happened: GateHouse Media’s stock dropped below $1 and was removed from the NYSE big board. There’s no speculation in that.

    Their stock closed at 44¢ on Friday. There’s no speculation in that. It’s exactly the same as reporting when Cat’s stock reaches record highs. GateHouse has reached record lows. What’s the difference?

  • Ruth

    Gatehouse is obviously a company in trouble. But assets are usually sold off at rock bottom prices if the parent company dissolves. I don’t think that is a bad thing for the Journal-Star. A new owner could refine or redefine the paper and that could be for the better all things being considered. I would doubt the JS moves out of its present offices under such a scenario and into an old grocery store to deliver Observer type copy.

  • Ryan Johnson

    I still disagree. The stock dropping below a dollar doesn’t effect readers yet and most readers won’t even understand why it’s important. Hell, I follow media news and I still can’t tell you what it means other than changes are likely in the next 6 months.

    The problem is, all media is going through the same problems. Yeah, Gatehouse stock is dropping…yeah, the content is getting weaker and the papers not as good as it was just a few years ago. It’s like that in all media….not just newspapers and not just in Peoria. The MSM is not going to report on it, because they’re not going to tell you that they are cutting staff to save money and relying on network news service to fill their papers or broadcasts. One of the TV station owners in town slashed jobs across the company yet when they issued their release about their financial status, they claimed to have an 8% gain projected revenue…because they cut staff, but they didn’t mention that.

    I’m going to agree with Ruth. The best thing that could happen to the PJStar is for them to be sold off to a smaller company. The big media conglomerates are hurting the most right now. The smaller companies or family owned companies are the ones who aren’t stressing out and figure out how to bring revenues in line. It’s just not going to happen under the current model of doing business.

    All of this has very little effect on the reader that will be noticeable to the average reader. These changes are happening so slowly, that it’s almost unnoticeable.

    Do you think anyone is ever going to admit that cutting staff is beneficial to the subscriber or viewers? No…they’re going to spin it the best they can…tell you they can do more with less and stories are going to be more focused. All the while, if you pay attention, you’re going to see high turnover rates and less coverage of outlaying areas.

    What’s the difference between Cat and the PJStar? Nothing…except Cat sends press releases. You never hear about Cat stocks when they don’t make records.

  • I wonder how much the cost of union labor is a factor. Some daily papers employ non-union people and have no contracts to worry about negotiating every three years. Some people would rather see a company go under than to give up the pay and benefit gains they have achieved.I know the Journal-Star has a union shop at least for some of its employee’s.

  • kcdad

    If you want Gatehouse’s stock to go up then keep buying it.
    The only reason reason it is going down is more people are selling than buying… so buy more.

  • commiekcdad

    From communist to stock market guru. So is that how it actually works, Dr. kcdad? Buy and the stock goes up? You must have gone to Wharton.

  • you are just one of those Americans who is brainwashed with this whole "Terrorism Propaganda" that Bush thrown upon us. None of it is true. Our real enemy is our own government. The only thing that we could be greatful for is cheap oil.