Gannett Company said on wednesday it will buy journal media group for $280 million – New York Recorder

The price of $ 12 a share represents an almost 45 percent premium to Journal Media's closing share price of $ 8.29

Tysons Corner, Virginia-based Gannett said the deal will immediately add to its earnings by 10 cents to 15 cents per share in the first full year and 20 cents to 25 cents in the second year. The deal, which is expected to close in the first quarter of 2016, will add about $ 450 million to Gannett's annual revenues, it added.

UPDATE 1-Gannett Co to buy Journal Media for $ 280 million

Gannett expects to realize $ 25 million in savings over the next two years as the joint company consolidates printing and distribution assets.

Gannett will finance the acquisition with cash and borrowings under its $ 500 million revolving credit facility.

Closure of the deal is subject to Journal Media shareholder approval and antitrust regulatory clearance.

In April, Journal Media Group was formed from the merger of E.W. Scripps Co and Journal Communications' newspaper operations.

E.W. Scripps said on Wednesday it expects the merger of its newspaper operations with those of Journal Communications to remain tax free for Scripps and its shareholders if Journal Media Group is acquired by Gannett Company.

Gannett Co in June spun off its broadcast and digital business into Tegna Inc, a S&P 500 component valued at $ 5.8 billion, and its publishing arm as Gannett valued at $ 1.72 billion.

Gannett said Stephens Inc is acting as its financial adviser on the deal, while Methuselah Advisors is acting for Journal Media Group.

Gannett Co. Acquires Midwest, South Newspapers for $ 280M

Gannett Co. has reached an agreement to acquire newspaper company Journal Media Group for $ 280 million, giving the media giant control of publications in more than 100 local markets in the U.S., company officials announced Wednesday evening.

Journal Media publications dot the Midwest and South and include the Milwaukee Journal-Sentinel, Memphis (Tennessee) Commercial-Appeal and Knoxville (Tennessee) News Sentinel.

Industry experts say the publications are a natural fit for Gannett's strategy of maximizing short-term profits through managing the decline of publications in less competitive markets.

Gannett's "prevailing strategy is economy of scale," which involves reducing local costs and consolidating or regionalizing many operations, analyst Ken Doctor said.

"Undoubtedly, there will be some (layoffs) in any areas that can be centralized," including technology, newsrooms, human resources, finance and some advertising, said Doctor, who is president of Newsonomics, a website that monitors consumer media.

The goal is to "keep enough of a local presence to make enough people want to read you on a local level," he said. He went on to add, "Anything else you do on a national or regional level."

Gannett's flagship publication is USA Today, and it has used that publication's staff to produce national content for its local products.

Gannett this summer became a company that runs newspapers exclusively, having moved all of its television companies into a separate company, Tegna Inc.

The merger adds 15 daily and 18 weekly papers to Gannett's portfolio, according to the news release announcing the move.

"The publications of both Gannett and Journal Media Group have a rich history, a commitment to journalism, and a dedication to informing and being active members in the communities we serve," Robert J. Dickey, president and chief executive officer of Gannett, said in the statement. "Our merger will combine the best of each of our organizations to create a journalism-led, investor-focused company which will provide substantial value to the shareholders of both companies."

Tim Stautberg, president and CEO of Journal Media Group said the "transaction marks a critical next step in the transformation of our industry as we build local media brands that matter at a time when operational scale is a competitive advantage."

Journal Media Group was formed earlier this year, after Journal Communications Inc. of Milwaukee and E.W. Scripps Co. of Cincinnati combined their broadcasting operations under the E.W. Scripps name and spun off newspaper holdings into a separate public entity.

Gannett in Deal for Milwaukee Journal Sentinel

Betting the local newspaper business still has a profitable future, Gannett said on Wednesday that it would acquire the Journal Media Group, publisher of The Milwaukee Journal Sentinel and 14 other dailies, for $ 280 million.

Gannett will pay $ 12 a share for the Milwaukee-based company, whose other holdings include newspapers in Memphis, Knoxville, Tenn., and Naples, Fla., well above the $ 7 to $ 8 level its stock had been at in recent weeks.

"Gannett is doubling down on newspapers," said Ken Doctor, a media analyst. "They paid what they needed to pay and they are smart about the assets they want and clustering geographically."

The media business has been convulsed by deals in recent years, with many companies shedding newspapers and magazines, and focusing on faster-growing assets.

Gannett was split into two companies in June, with Gannett retaining the newspapers and Tegna, a new company, owning faster-growing TV stations.

Time Warner spun off its publishing assets including Time and Fortune into Time Inc. in 2014, and the Tribune Company, owner of The Chicago Tribune and The Los Angeles Times, is also splitting into separate entities.

Journal Media, which was carved out of E.W. Scripps and Journal Communications in April, represents significant expansion for Gannett, raising its revenue by nearly half a billion dollars.

The two companies said the deal would be accretive to Gannett's earnings immediately, with plans for $ 35 million in cost savings over the next few years.

"It's about cutting expenses," said Alan D. Mutter, a veteran editor and media executive who teaches media economics at the University of California, Berkeley.

"I am sure the companies have identified lots of ways to cut costs," he added, including cutting "corporate staff, reducing head count, sharing content, pooling digital development and consolidating national sales teams." The roots of the flagship Milwaukee paper go back more than 175 years, with the Journal and Sentinel combining in 1995.

With a daily circulation of just over 200,000, The Journal Sentinel is well respected in the newspaper world, having won several Pulitzer Prizes in the last decade.