Bad news: GateHouse Media may buy the Journal Star
That’s the rumor being bandied about on the Internet tonight, and it is not good news for the folks at the
News articles about GateHouse’s business practices don’t look promising. Here are the money graphs, with emphasis added:
To fuel its strategy, GateHouse has borrowed a lot of money. “They’ve been piling up debt in order to grow,” said Lou Ureneck , director of Boston University’s business and economics journalism program. “The danger from a public point of view is that the debt burden gets so high that the company begins to drastically reduce its expenditures on the coverage of news.”
GateHouse, with headquarters in Fairport, N.Y., was purchased last year by a New York hedge fund and venture capital firm, Fortress Investment Group LLC . It was known then as Liberty Group Publishing, but its name was changed in May to GateHouse Media. Fortress also invests in assisted-living centers, cellphone towers, aircraft leasing, and large real estate projects.
GateHouse says it wants to grow in regions where it can build clusters of “hyper-local” publications that have monopolies on news in small cities and towns. It says it can make the papers perform better financially by centralizing operations, including advertising sales and production, and through group purchases of insurance, newsprint, and other products and services. It also is attempting to build a network of local websites that would allow it to leverage its reach into suburban homes.
Just what Peoria doesn’t need: A daily newspaper run by real estate developers. We also don’t need a newspaper that has to keep the bean counters happy through continual cost cutting, and the biggest costs are in the wages it pays to have the people necessary to collect the news.
The one positive thing I learned about GateHouse is that it invests heavilly in the Web. The company used Creative Commons licensing on all its sites, which allows folks to use the material for non-commercial use without prior concent. Why? Profit.
GateHouse’s decision to CC license its content may be a response to the cut-and-paste world of weblogs, which frequently quote and point to newspaper stories. Making it easier — and legal — for bloggers to quote stories at length means that bloggers are pointing their audience at the newspaper. Getting a boost in traffic from weblogs may have an impact on online advertising revenue, and links from weblogs also have an impact on how high a site’s pages appear in search results from search engines such as Google. Higher traffic, and higher search engine rankings build a site’s ability to make money on online ads.
Many of the company’s Web sites also rely heavilly on reader-generated content. As valuable as that is, that doesn’t replace have reporters on hand to actually get the content that the bloggers will put on their sites.
Billy Dennis is a former reporter and editor at small daily and weekly newspapers in Illinois and Missouri. He comments on media, news and politics. He also owns and operates 
This has been generally known by rank-and-filers at the JS for a couple weeks. Where else have you seen rumors, Bill?
My daughter works for the Pekin Daily Times and she confirms this rumor. She has worked there for five years and her major complaint is the low pay, but they have full insurance and paid vacations. Management seems to be friendly and supportive with an overall positive work climate.
Fortress Investment Group also recently closed on its purchase of RailAmerica, the country’s largest shortline holding firm. They own the Toledo, Peoria & Western Railway, among others.
Very interesting.
Hey not all Bean Counters are the same. Some of us are good people. It isn’t like we are lawyers,
While this purchase might make sense geographically, it doesn’t fit the GateHouse business model of having monopolies on news in “small towns.” Too much competition here and Peoria is not a small town. Most of their dailies have circulation in the 5,000 range.
Two of the papers in our area here in Mass. were recently bought by Gatehouse, and from what I hear, most of the folks seem pleased with the new owners, though not everyone made the transition from the old to new.
The worse horror for the PJS would be for them to get bought by the Journal Register Company out of Pennsylvania, the above papers’ previous owners. But JRC is in pretty dire economic shape, from what I’ve read, so PJSers can probably breathe easy about that awful scenario …
Yes indeed. A key factor in the google rankings are the number of links it finds on other pages.
just gogle on “mid illini” and you will see we are number 4 out of 766,000 returns. Billie, wanta trade links. Don’t worry about the traffic – worry about the links. 
Some of their ideas sound good, but I question how they actually work in practice. It sounds like a smart idea to consolidate the pedestrian operations of several papers in one area while specializing the news staffs to their local market – HR, health insurance, sales and advertising, these are functions that seem easily consolidated and seemingly more efficient as such, without sacrificing the quality of the journalism. Billy, can you take a gander at the other papers they own – see if you can gather their quality and local relevance?
I work for GateHouse Media on the East Coast, and things seem to be changing fast, all the time. Good, dedicated editors, reporters, and photojournalists are leaving by the dozens. (No problem because they will be replaced by less talented people for lower pay, which makes the bosses happy). A lot more work is pushed on all for the same low pay. The quality of our work is suffering due to loss of talent, but as long as the websites get hits the bosses don’t seem to care where the content is coming from. It’s wrong and things need to change, in favor of their employees and the dedicated readers of our newspapers.