Bullish on GateHouse Media, not so bullish future for jobs
Gatehouse Media is another of her top suggestions. The publisher benefits from cost efficiencies by consolidating local newspapers and online media, she explained.
“They have a really interesting model,” Evans said. “They pay out 80% of free cash flow and investors can expect dividends to grow as Gatehouse continues to consolidate.”
Shares of
Gatehouse Media added 49 cents on Friday to $20.19.
This would be good for GateHouse stockholders, anyway. But if GateHouse wants that stock price to stay high (and it does), it has to live up to the market’s expectation and consolidate, consolidate, consolidate. The market doesn’t want to hear about how quality reporting builds loyal readership. Investors and analysts want to pick the Wall Street Journal and read that GateHouse has trimmed its payroll. Period. There is not one single person who works for Alpine Dynamic Dividend Fund who cares whether or not the Journal Star wins any state Associated Press or Illinois Press Association awards. Nada. There’s not one stock holder who is more than vaguely aware than the Journal Star even HAS an editorial page, let alone cares whether it’s fair or not. At least the Copley organization — while a corporation — was owned by a family that made its fortune in newspapers. These GateHouse people … they are just money changers who have set up shop in the temple. Feh.
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 
The GateHouse business model is attractive to investors because of the high dividends. However, without investing heavily in infrastructure to accomplish the consolidation, the true potential of the company will not be realized. Community newspapers typically have weak technology and scarce/outdated resources. GateHouse needs to find a way to maximize the return on the 20% of free cash flow, otherwise the proposed economy of scale will not materialize and the reverse will happen – the company will become large but unmanageable.