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Gannett and New Media announce $1.38 billion newspaper merger

California investors who follow the media and communications sectors may be aware that two of the nation's most prominent newspaper publishers have announced merger plans. New York-based New Media Investment Group and Virginia-based Gannett made their plans public in an Aug. 5 press release. The deal is reported to be worth in the region of $1.38 billion.

According to the press release, the merger will allow the companies to lower their overheads by between $275 and $300 million by eliminating overlapping costs. The emerging leaner company will also be better able to transition away from traditional print news toward digital information distribution. New Media shareholders will own 50.5% of the new company with the remaining 49.5% being distributed among Gannett stockholders. The company will operate out of the current Gannett building in McLean and conduct business under the Gannett name.

If the merger is completed, the new Gannett will publish about one in six of the newspapers sold in the United States. New Media currently operates in 39 states and prints newspapers serving 612 markets. Gannett publishes many of the country's most popular local newspapers along with the national daily USA Today. News of the proposed deal is not likely to be welcomed by labor advocates as previous media mergers have led to widespread layoffs.

Mergers worth seven figures or more are often opposed by labor, business and public interest groups. Attorneys with experience in mergers and acquisitions may identify organizations or associations that could seek to block a proposed deal during the due diligence stage. They could then advise opening a dialog to find out if differences can be resolved amicably. Attorneys could also anticipate the legal steps these groups could take to delay or stymie a deal and develop contingency plans to deal with them.

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