Saturday, September 30, 2023

Council v Gazette

Or should it read Council v Gannett Company.

The former Editor of USA Today, Jim Hopkins has, for a few years, run a blog called Gannett Blog. It is a remarkably in depth but user friendly assessment of how he, as a former high ranking employee, sees the current situation in journalism with specific reference to all the papers under the wing of the Gannett Company, which include the Thurrock Gazette, The Echo etc.

Have a look at his site. In understanding the possible controversy surrounding Thurrock Council possibly launching its own newspaper, the site may clear a few things up.

In a nutshell, key decisions are not made in a desk in Hathaway Road, Grays nor even on an industrial estate in Basildon but at the very heart of Wall Street.

On July 15th, the Gannett Co. announces second-quarter financial results, and discusses the outlook for the near term. It’s likely that Chief Financial Officer Gracia Martore will give Wall Street analysts updated figures on any layoffs.

Jim has assessed that as many as 4.500 jobs, spread over the whole Company could go.

He writes:
“That’s just one estimate for U.S. Community Publishing, the domestic newspaper division, which employs somewhere around 30,000 of Gannett’s global workforce of 41,500 at the end of 2008.

In fact, however, I suspect Corporate is aiming at a financial target. For example, say those 4,500 each cost an average $75,000 in wages, medical and other benefits. (Remember: some worksites, such as USA Today, The Arizona Republic and The Indianapolis Star, have legacy payrolls that are much more costly than, say, the smaller community papers.) Multiply that times 4,500 and you get a savings goal of $338 million.”

Jim then goes on to look at the possible impact on Gannett’s UK arm, Newsquest.

“The community papers do not include the Detroit Free Press and USA Today. And they certainly don’t include the U.K. division, Newsquest, which has received almost zero attention in our discussion.

Newsquest is important to this debate. At Dec. 31, its 17 dailies and hundreds of weeklies employed 6,600, down more than 18% from 2007. Recall that Corporate’s nearly $3 billion writedown last summer was almost exclusively for the U.K. division, once a reliable hedge against the U.S. dollar.

But as the pound sterling has fallen, Newsquest is no longer delivering those goods. CEO Paul Davidson (left) has been cutting jobs there like crazy; Newsquest recorded the biggest percentage decline in jobs among Gannett’s divisions last year vs. 2007.

It has adopted the Information Center business model first rolled out for the domestic papers in late 2006. But that may have not been enough, given the meltdown in real estate prices there. London might have been hurt less, because it’s the economic engine. But Newsquest’s papers are outside the city. It’s conceivable that Gannett may sell some or all of Newsquest for pennies on the pound. Corporate paid $1.5 billion cash for the chain in 1999.

(A year later, in an even bigger deal, Gannett paid $2.6 billion cash for The Arizona Republic, The Indianapolis Star and other papers owned by Central Newspapers. Also in 2000, Gannett paid a bit over $1 billion for Thomson papers in Wisconsin, Ohio, and three other states. In all, Gannett was buying at or near the top of the market, just before the dot-com crash that sent values skidding.)

Some of those 6,600 Newsquest jobs could more than make up the difference between Dickey’s 1,400 and the reported 4,500.”

So in understanding the Council’s proposal to run a newspaper (nothing set in stone/nothing decided), they may well have their eye on the pages of the Wall Street Journal.


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