Cost-cutting equity funds have hollowed out scores of daily newspapers, turning their communities into “news deserts,” the critics say. But Kirk Davis, CEO of GateHouse Media, replies that though its publicly traded parent, New Media Investment Group, is externally managed by an affiliate of Fortress Investment Group, GateHouse is transforming its 144 dailies into tribunes of the people that are on their way to becoming financially healthy.
In this Q&A with “The New News,” Davis makes his case:
How, even as it cuts the size of editorial staffs at its newspapers, is GateHouse succeeding in your public goal of preserving its “front-line reporting resources”?
To build a sustainable future for local journalism going forward, we must optimize our cost structure and develop and scale new revenue streams.
Our Center for News & Design in Austin, Tex., enables local newsrooms to focus on local reporting. The CND provides consistent, award-winning design services for our newspapers and digital products while not taking away from what identifies our unique markets.
Editors, producers, reporters and other staff focus on high-interest, high-engagement journalism—in fact, #DoJournalismWithImpact has become our newsrooms’ hashtag. In 2017 and 2018 to date, our newsrooms won more than 70 national and regional awards, from business coverage to investigative reporting to public service. In the just-released SPJ Florida Pro Sunshine State Awards finalists, many of our newspapers did well, but I was extremely pleased to see that for “Journalist of the Year,” Barbara Peters Smith, of our Sarasota Herald-Tribune, was named one of three finalists (for 1st, 2nd or 3rd place), as was Nate Monroe from The Florida Times-Union.
Our most prestigious recent award was the Sarasota Herald-Tribune’s 2016 Pulitzer Prize for investigative reporting, shared with the Tampa Bay Times, for their year-long collaboration and series detailing the violence and neglect in Florida’s mental hospitals.
Our quarterly newsroom certification program (Inner Circle) takes a close look at enterprise efforts, story planning, digital urgency and community engagement activities at each of our papers. Inner Circle results inform the focus of our popular training programs.
In revenue, our major new business initiatives, such as UpCurve (SMB cloud, SaaS and digital marketing services) and GateHouse Live and Promotions (community events, sponsored contests), all grew more than 25% in Q1 2018. We are building a consumer marketing agency to serve all our 144 daily newspapers—a serious investment in growing our content subscription business in combination with a greater data- and product-driven approach.
We have just launched a national roll-out of a text-based offers platform we invested in—Tap On It—and plan to become THE consumer data expert for every market in which we operate. We’re also adding sales engineers and more digital sales executives as we centralize our nationwide sales organization. All this in our quest to GROW organically and sustain that growth.
GateHouse critics have included staffers who lost their jobs in cost cutting. Two and a half years ago, this comment was made on Glassdoor by someone who said he or she had formerly worked at your Providence Journal for 10 years: “… most employees are unhappy, overworked, and poorly treated … The newspaper is no longer a watchdog for the communities it serves because it stopped covering routine meetings of local and state government.” Your comment?
Shortly after we took ownership of the Providence Journa [in 2014], we brought in Janet Hasson, an accomplished publisher from Gannett, as our new publisher. In October 2015, we hired Dave Butler as executive editor, someone I’ve known and respected for over 30 years.
Good leadership makes a big difference!
In October 2016, the New England Newspaper and Press Association named the Providence Journal New England’s “Newspaper of the Year” among large dailies. The award carries distinction—judging is conducted by a panel of readers, not journalists.
As far as meeting coverage goes, covering routine government meetings doesn’t automatically equate to earning “watchdog” status. Reporters that develop good sources, understand budgets and know which issues resonate with residents, can go beyond meeting coverage to develop stronger watchdog stories.
We deliberately incorporated more community coverage, while devoting less time to features. The Journal struck a partnership with the Hummel Report, a nonprofit 501(c)(3) whose mission is to expose waste and corruption in government in Rhode Island, to publish more investigative pieces.
Does GateHouse create advisory councils in communities where it has newspapers to get external feedback on the papers’ performance?
We encourage editors to establish advisory councils, hold public forums and town halls and create opportunities to interact with residents. One of the best examples of a reader advisory council comes from the Columbus Dispatch, our flagship property in Columbus, Ohio, and recently named best newspaper in the state of Ohio in the large daily class.
The Dispatch is entering its third year hosting approximately 30 individuals who are selected among 400 applicants for a one-year term. The goal of the council is to engage a diverse group to provide insights on the paper’s coverage, contribute product ideas and help uncover issues of importance to Central Ohio residents.
Two of our Illinois newspapers, the Rockford Register Star and Peoria Journal Star, have been national leaders in community engagement, particularly involving issues of race. Corina Curry’s award-winning reporting for the Register Star on the “resegregation” of Rockford’s public schools showed that most African-American students were enrolled in poorly performing schools while white students were concentrated in higher-performing ones. The Register Star’s reporting has been supported by forums and other extensive community outreach that has led to the public seeking more accountability from the school district. In Peoria, the Journal Star’s “City of Disparity” coverage of racial inequities where many African Americans are segregated in one zip code has fostered new dialogue and awareness in the community. Peoria’s outreach has drawn national attention for changing the newspaper’s perception among African Americans and spurred renewed coverage. The Guardian highlighted Journal Star Executive Editor Dennis Anderson’s reasons for the outreach.
How about readers—do you have a system to get their feedback about your performance in covering their communities?
Our newsrooms are encouraged to create Facebook groups around high-interest community topics, and several get considerable feedback from readers. An example is the Daytona Beach News-Journal’s Developing Daytona Beach Group. The group’s interest in changes to the City Council’s meeting comment protocol prompted an article explaining the new process and rationale.
We’re currently working with a nationally recognized media studies organization, which is testing reader engagement practices among 20 GateHouse newsrooms across the country.
An industry source—not from GateHouse—said to me: “You should look at the first six months of GateHouse’s ownership of a newspaper and how the property evolves as it is integrated. It’s where a lot of papers get a ton of resources and help they wouldn’t otherwise have in every area of the business. It’s also where a lot of expense is taken out, but much is improved about the operation.” Is this accurate?
I’m extremely proud of the reputation of our corporate team for being accessible, inquisitive, open-minded and friendly. We thrive on the talent, excitement and energy we’re seeing from some of our newest properties.
From a newsroom perspective, we have a team of news executives who are eager to provide top-level training, new digital resources and supportive advice on how to improve the quality of local journalism while facing the reality of a challenging industry environment.
We quickly identify opportunities that are obvious and not so obvious. We do this exceedingly well. We implement savings plans mostly through centralization, consolidating overhead and purchasing benefits. And then the focus shifts to the revenue capabilities we bring, and they are generally over-the-top.
Our playbook for Live Events astounds, bringing communities some of the largest and most memorable sit-down dinner events of the year. Our “Promotions” platform, contests and quizzes that we feature in print, online and via social media offer multi-advertiser and custom sponsorship opportunities. This platform generally results in significant new revenue right out of the gate. ThriveHive, our digital marketing services agency, unleashes opportunities on a scale not often seen before by local SMBs.
Does GateHouse plan to extend digital subscriptions across its daily properties?
We are intensely focused on growing our nearly 100K digital subscriber base but remain committed to print readers, too. Last year, Denise Robbins joined GateHouse as SVP for consumer marketing. Denise came to us from the New York Times, where she led consumer marketing and revenue generation for Home Delivery and All Digital Access.
Under Denise’s leadership, we are building a consumer marketing agency that will bring deep experience in digital acquisition, engagement, funnel optimization, marketing capabilities and lifetime customer experience.
GateHouse’s owner, New Media Investment Group, has been getting good readings recently from stock analysts. Still, after its stock soared to above $25.75 per share in January 2015 from $10.25 in April 2014, it’s been trading recently in the high $16 range. Is this a correction of the earlier peak price or possibly a reflection on GateHouse’s newspaper business?
While our share price can move with general market, newspaper, and/or media industry sentiment, we have maintained a premium multiple to our peers. Over the past 12 months, total returns for shareholders were 37.4%, including dividends, significantly exceeding our peer group average. And, total returns since our inception in February 2014 (through our earnings release of May 3, 2018) have been 68.8%, including dividends.
GateHouse has been on a recent roll in buying newspapers. Your company had a goal of making acquisitions totaling $1 billion. With your recent flurry of purchases, you’re close to that goal, aren’t you?
More important than investing a billion dollars is the value we see in local media properties that fit our investment criteria. We’ve deployed $993 million in approximately four and a half years while maintaining a disciplined approach. However, I frequently remind the team that, while growth is exciting, bigger doesn’t mean better—better is better. Quality is our goal.
Reflecting on our growth, we’ve been extremely fortunate that so many family owners of newspapers have entrusted their businesses to us. Family owners have many options when selling their business, but our respectful approach and strategies earn their confidence that we are well-intentioned and focused on building a sustainable future.