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Gannett Faces Hostile Bid From Company Known For Gutting Newsrooms

MARY LOUISE KELLY, HOST:

One of the nation's largest newspaper companies, Gannett, is facing a hostile takeover bid from a company known for acquiring and then gutting newsrooms. Gannett owns USA Today and about a hundred other papers across the country. Digital First Media owns more than 50 papers, including The Denver Post and The Boston Herald. It is offering nearly 1.4 billion to buy Gannett.

Well, the deal is raising concerns. And to find out what those concerns are, let's bring in NPR media correspondent David Folkenflik. Hey, David.

DAVID FOLKENFLIK, BYLINE: Hey, Mary Louise.

KELLY: So we have here one big newspaper group trying to take over an even bigger newspaper group. A lot of people are really not so happy about this. Why?

FOLKENFLIK: Well, particularly journalists and perhaps those who are served by the newspapers that Digital First already owns. Digital First, it's worth pointing out, is actually controlled and majority-owned by a hedge fund in New York called Alden Global Capital. And its plan, when it takes over companies that are newspaper companies and newspaper properties, is generally to cut it back. Take The Denver Post, which is where Digital First's notional headquarters is.

KELLY: Right.

FOLKENFLIK: That's a company that is about as third as large as it was in 2012. Their executives came to them and said, look, we can move you out of the historic old headquarters in Denver to - after a round of layoffs to the suburbs and the printing plant. They'll forestall future layoffs. The unions and employees agreed to that because they said, let's keep the staff as best we can. And then a few short months later, another third of their staff was let go.

So this is - has - a company that has a tradition of cutting and cutting and then cutting some more, maintaining significant profit margins to apparently help support investments in other places.

KELLY: Right. I mean, there seems to be some evidence to support the argument that this is a company that acquires and then guts newsrooms.

FOLKENFLIK: Strong evidence.

KELLY: Yeah. A spokesman for Digital First, to give - to give them their say, has put out a statement. They told The Wall Street Journal, we believe these publications need to survive, but they need to have their costs come into line with their revenues. Costs in line with revenues seems hard to argue with.

FOLKENFLIK: It seems certainly unobjectionable. In no place does there seem to be any notion of growth or of solving, you know, their real problems affecting the newspaper industry and that Gannett itself has been suffering along with many others. There's no sense that this is a question of, we have a strategy to persevere and to survive. It's a question of, how do we cut and cut and cut?

And let's be clear. Gannett is a company that's been famous within the newspaper industry for cutting. It's just that Digital First does so to a much greater degree. They've been - they have condemned Gannett's leadership for making certain kinds of digital investments, some of which have not panned out.

And they say, we think we can do this better by just paring back the expectations of readers and of staffs - need to be not so significantly high. And at the same time, we think we can eke out enough in print and digital subscriptions to make this valuable as an investment.

KELLY: All right. I mean, the historical irony will not - will not escape a lot of people listening that Gannett was once known as the big guy that gobbled up smaller local papers and cut staff. How is Gannett to responding to this offer?

FOLKENFLIK: Gannett says it will look at it. Gannett has been, you know - is not in the position...

KELLY: Do they have much choice?

FOLKENFLIK: I think they have to do it. They're being offered a premium of, you know, nearly a quarter over what they were going for on the market just a few short days ago. Although, their stock had been valued at more in the last year than what's been offered.

Gannett's got to look at it. But it's looking at it warily. It was hoping not so long ago to take over the Tribune Publishing newspaper chain. It had sought to maybe consolidate with others to try to survive and ride out this huge storm.

KELLY: Right.

FOLKENFLIK: And yet, we're going to see if it turns out to be one of the minnows rather than one of the whales.

KELLY: All righty (ph). Thank you, David.

FOLKENFLIK: You bet.

KELLY: NPR's David Folkenflik.

(SOUNDBITE OF NEU!'S "HALLOGALLO") Transcript provided by NPR, Copyright NPR.

David Folkenflik was described by Geraldo Rivera of Fox News as "a really weak-kneed, backstabbing, sweaty-palmed reporter." Others have been kinder. The Columbia Journalism Review, for example, once gave him a "laurel" for reporting that immediately led the U.S. military to institute safety measures for journalists in Baghdad.