Digital First Media, the hedge
fund-controlled firm known for extreme cost-cutting in newsrooms
from the Philadelphia suburbs to California, is making a
$1.4-billion hostile bid for Gannett Co., the publisher of more than
100 daily newspapers, including USA Today and the Milwaukee Journal
In an open letter to the Gannett board, the firm proposed on Monday
to acquire the company for $12 a share, or 41 percent of the
company’s closing stock price on Dec. 31, and called for the company
to halt investments into digital news properties. Gannett shares
were trading at around $11.70, up nearly 20 percent, by mid-day
The firm making the offer is MNG Enterprises, better known as
Digital First and part of New York hedge fund Alden Global Capital
LLC. A deal, if it goes through, would make Digital First the
largest publisher of newspapers in the country.
“Really their biggest claim is cutting costs,” Rick Edmonds, media
business analyst for the non-profit Poynter Institute in Florida,
said of Digital First. “This should be worrisome for Gannett
The Digital First bid surprised industry experts on Monday because
the company has built its national chain of newspapers over the last
decade by acquiring distressed or bankrupt papers and then cutting
their staffs to the bone and selling off buildings.
Gannett had $711 million in revenues and $13.4 million in profits,
along with cash of $108 million, for the quarter ended on Sept. 30.
Based on last Friday’s closing price, stock market investors valued
the company at $1.32 billion.
“Frankly, the team leading Gannett has not demonstrated that it’s
capable of effectively running this enterprise as a public company,”
MNG Enterprises said in a letter distributed publicly on Monday.
“Gannett shareholders cannot sit by and watch further value erode
while the board casts about for a strategy and a leader, especially
when there is an opportunity to maximize value right now.“ Gannett
confirmed the offer on Monday morning, saying in a statement that it
will review it. “No action needs to be taken by Gannett shareholders
at this point,” it said.
“You can imagine what the mood is,” said one employee at the
Courier-Post in Cherry Hill, N.J., a Gannett newspaper, on Monday.
All calls were being referred to Gannett’s corporate headquarters in
Gannett newspapers include the Detroit Free Press, the Arizona
Republic and the Milwaukee Journal Sentinel. Other Digital First
newspapers include the Denver Post and the Orange County Register in