Dean Starkman: Telegram & Gazette Becomes a Thanksgiving Leftover
Friday, November 29, 2013
That didn’t take long.
The Telegram & Gazette, a wallflower among New England newspapers that has suffered years of benign neglect by distant owners, seemed poised for a revival, after John Henry scooped it up as part of his landmark deal to buy the Boston Globe.
Now a month later, he’s putting it on the block.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn remarks to the newsroom, reported in that same Telegram & Gazette, Henry says he wants to sell to local ownership, if possible, and that if he can’t find a local buyer, he’ll keep the paper.
"I think you need a local owner. A local owner can sit down with advertisers, readers and community leaders and ask for their support. I'm looking for someone with tremendous energy and a passion for this newspaper…This is not a forced sale. If we don't find the right owner, you're stuck with me."
As usual, Henry is saying all the right things. But in this case, everything boils down to the definition of the word “local.” One thing should be clear, Wall Street, in Lower Manhattan, should definitely not be considered part of the Greater Worcester Metropolitan Area. More on this scenario in a moment.
Not A Great Sign
It was never a great sign that Henry had never even mentioned the name of the T&G after the Globe purchase, even in a two-thousand-plus long explanation of why he bought the Globe, which was part love-letter, part elegy.
But still, as I wrote, what an opportunity: here is a newspaper with a 147-year presence in the community (and one of the few that can claim to have been founded by a dentist!), with daily circulation still at a reasonably healthy 75,000 and declining at a slower rate than the Providence Journal, its formerly dominant rival 40 miles away. And, most importantly, its newsroom that, thanks to its otherwise indifferent owners at The New York Times Company, is more or less intact. At last count, it had more than 60 staffers on its masthead. Journalistically speaking, that’s enough to do some damage. What’s more, the Massachusetts economy is doing better than most regionally, certainly better than Rhode Island’s. So there seemed to be a chance for something good to happen in Worcester.
A Throw In
The important thing to remember is that the T&G was basically a throw-in to the $70 million deal. The paper contributed only 12 percent or so to the revenue of the group that Henry bought (The Globe to an overwhelming makes up most of the rest, followed by the free digital boston.com). The T&G was bought for basically nothing, making it an attractive potential laboratory for experimentation. My belief is that this news-hungry area would respond well to an initiative like that underway at the Orange County Register, where Freedom Communications under new owner Aaron Kushner, has reinvested in the newsroom and worked hard to stop the revenue bleeding by charging readers the same price, $1 a day, no matter how they get the paper – in print, online or via mobile – and reemphasizing the print product, where most newspapers still earn the overwhelming majority of their revenue. And while Kushner’s experiment is still in the early stages, it is considered a bullish sign that he recently agreed to expand by buying the Providence Journal’s sister paper in Riverside, California, a sale that, while on the rocks for a while, went through last week.
But a Kushner-style push requires capital, and lots of it, plus a long-term horizon – precisely what Henry has on both counts.
Not To Be
Alas, it is, for all appearances, not to be. News that the T&G would be sold was first reported by the well-sourced Craig Douglas of the Boston Business Journal, who also revealed that Henry apparently going all-in on a digital initiative by bringing in Andrew Perlmutter, a digital media specialist formerly with Newsweek/Daily Beast, and before that the more successful Atlantic Media in Washington.
The prospective buyer for the T&G is unknown, but the market is not promising.
Henry says he has spoken to local people who have “expressed an interest,” but added, “There is absolutely nothing imminent.” That doesn’t sound too good.
For one thing, GoLocal has learned, local Worcester business leader Ralph D. Crowley Jr., who led a group that came close to buying the T&G when the TimesCo. last put it up for sale in 2009, will not be a bidder this time. “Definitely not,” said a spokeswoman at Polar Beverages Corp., where Crowley is chairman and chief executive. She said Crowley has no interest whatsoever.
The 2009 sale fell through after the two sides could not come to terms, and TimesCo. took the paper off the block. At the time, Crowley emphasized the importance of maintaining local ownership since the T&G then, too, faced the prospect of a Boston-based buyer taking over. “The Telegram was going to turn into a fold-in to The Boston Globe and we would lose our local press,” Mr. Crowley told the T&G at the time. “That was just not an acceptable possibility.”
A Leading Bidder
That’s in fact exactly what happened this time. But another scenario is looming that would be the worst of all possible worlds – not a mogul in Boston but a hedge fund in New York. Word has it that Gatehouse Media Inc. is in the mix.
The Boston Business Journal reports that speculation places Gatehouse as “a leading bidder.”
And Christopher M. Mayer, the Globe’s publisher who accompanied Henry to the T&G, said he had received calls from “local” parties, but mentioned Gatehouse – the only named party so far – as being among those expressing interest.
He did not say whether he considered Gatehouse local or not.
Now, Gatehouse may have bought some of Southeastern New England’s most venerable titles, including the Quincy Patriot Ledger, the Norwich Bulletin, and the Fall River Herald News, among its 78 dailies (and 235 weeklies, 91 free “shoppers,” 350 websites, and more) around the country. But in no way should it be considered “local.” For one thing, it’s based in Fairport, New York, which is near Rochester. New England, this is not. For another thing, its roots lay further south.
Wall Street Player
And if Gatehouse ends up as the buyer, this is decidedly not good news for the T&G and Worcester, for that matter. For one thing, Gatehouse has never made a profit as public company, and now it is in bankruptcy .
But worse, Gatehouse has never had a strategy to reinvest in journalism content for long-term growth, but rather has always been a financial play for its ultimate owner, Fortress Investment Group, a publicly traded Wall Street investment giant that owns everything from railways to insurance companies. Fortress bought the newspaper company, originally Liberty Group Publishing, back in 2005 and then took it public the next year. The idea, as a 2008 Wall Street Journal story reported, was simple: “take a firm with reliable cash flows but limited growth prospects, add millions of dollars in debt and pay investors a rich dividend using the company's steady stream of cash flow." But it’s precisely the ladling on of “millions or dollars in debt” to pay dividends – instead of investing in operations– that is what led to its bankruptcy filing this year.
Few Good Scenarios
Recent moves following Gatehouse’s other acquisitions are not especially heartening. In September, for instance, an affiliate of Gatehouse’s parent companybought the Cape Cod Times, the New BedfordStandard Times, and Portsmouth Herald, in New Hampshire, and other assets from Rupert Murdoch’s News Corp., and gave them to Gatehouse to manage. What ensued almost immediately were layoffs: Eight staffers were laid off at the South Coast Media Group, which is dominated by the Standard Times, of New Bedford, 17 at the Cape Cod Media Group, including 12 jobs eliminated in the Cape Cod Times newsroom, and more.
That a bankrupt concern can be allowed to continue to acquire additional properties is a problem all by itself. And yet it appears to be a leading contender in Worcester.
Indeed, there appear to be few good scenarios for the T&G. Perhaps a sale won’t come to pass at all. But even if it doesn’t, Henry has made it plain his priorities lay elsewhere. And perhaps any sale won’t be to Gatehouse. But there aren’t that many newspaper buyers in the market these days, and even fewer well-capitalized buyers who happen to live in the Worcester market.
If a sale to Gatehouse does come to pass, it’s too bad.
The Telegram & Gazette does indeed deserve local ownership. It deserves better than what it appears to be getting.
Related Slideshow: Changing Newspaper Industry
In a column entitled, The smartest guys in media give up on print, Alan Mutter, the former editor of San Francisco Chronicle, writes "For all the corporate-speak accompanying the dramatic restructurings of Twenty-First Century Fox, Time Warner and Tribune Co., the simple reason these diversified media giants are jettisoning their publishing assets is that their leaders fear for the future of print."
Throughout New England and across the country there is a dramatic decline in the print newspaper business.
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