WHITE PLAINS, NY — As part of a broader financial restructuring plan, Gannett Company, Inc. is expected to announce Tuesday its plans to spin off several struggling newspapers including the Journal News. The move comes in the wake of a bid by MNG Enterprises to take over the USA Today publisher.
Gannett is a publicly traded American mass media holding company headquartered in McLean, Virginia. It is the largest U.S. newspaper publisher as measured by total daily circulation.
The Gannett board will provide details of the plan at its annual meeting of shareholders to be held on Thursday, May 16, 2019, at Gannett’s corporate headquarters.
The decision to sell Westchester County’s “paper of record” to the local government is raising eyebrows within the industry.
“While this may take some in the industry by surprise it is the logical conclusion of a strong partnership developed between LoHud and government officials here in Westchester,” said Ted Carroll, a partner in a private equity fund that specializes in media properties. “As newspapers continue to struggle, these sorts of public-private deals will look increasingly attractive to shareholders.”
Under the plan, Gannett would spin off the Journal News and related properties by distributing 100 percent of its ownership interest in that business unit as a stock dividend to a new corporate entity owned by existing shareholders and the government. Westchester County would also acquire preferred equity with voting rights giving the government majority control of the newspaper. Gannett shareholders who do not wish to participate will be offered a discount to exchange their shares in the spinoff for shares in the parent company.
Under the deal, The Journal News would continue to contribute stories to USA Today and retain membership in the Associated Press. Content from lohud.com will be transferred to a standalone web site operated by the County’s IT Department.
Media critic Michael Wolff, a columnist and contributor to USA Today, sees government acquisition of media outlets as part of a broader global pattern only now reaching the shores of the United States.
“The combination of taxing authority and media dominance offers government officials the best of both worlds while offering journalists a stable, reliable income,” said Wolff. “The ability to raises taxes and increase spending without oversight and accountability by the so-called fourth-estate will be welcome relief to elected officials”.
Wolff points to the success of government-owned media outlets such as the Granma newspaper in Cuba, the Islamic Republic of Iranian Broadcasting television network and National Public Radio in the U.S.
Gannett CEO Robert J. Dickey, who has announced he will retire from the company in May, was philosophical.
“Why now?” Dickey asked, “when the company’s core businesses are in full expansion and there’s a first rate opportunity for tremendous growth with additional investment?”
“It’s all about shareholders’ demand for adding additional liquidity without impairing the future growth of the business,” he said.
County officials are excited about the deal.
“Despite years of decline in quality and readership, the Journal News still has what we used to call ‘brand equity’ back in my days in the marketing business ,” said Westchester County Executive George Latimer. “By exploiting the last remaining credibility of the brand we can both get our message out and undermine whatever opposition remains to our policies.”
Latimer pointed to recent successes such as suppressing inquiries from Journal News reporters on a plan by an investor in Standard Amusements to sell off beachfront property at Rye Playland and help passing off a proposed 14% tax increase as a 1% tax increase.
“While few journalists can do basic math some voters can so it is helpful to have a compliant local media able to muddy the water from time to time,” said Latimer.
In the occasional instance where a story not to the County’s liking gains traction beyond the control of the Westchester media establishment — such as the recent decision of County officials to free an illegal alien child rapist despite a detainer from Immigration and Customs Enforcement — Latimer appreciates the counter-programming opportunities afforded by direct media ownership.
“If a story slips past our nets, the Journal News has proven adept at working with our communications team to change the narrative,” said Latimer. “It is gratifying to see how quickly a story about our releasing a child rapist into an unsuspecting community becomes a story about dueling press releases.”
Asked why the County government was not going further with its media acquisition strategy, senior officials speaking on background said they had looked at purchasing a stake in the two local cable television stations but opted to hold off for now.
“Local governments already have a significant degree of regulatory control over cable systems through their franchise agreements,” said one official. “They (the cable television operators) need rights-of-way for their network of wires which gives local governments an effective veto on what can and cannot air through their franchise arrangements.”
“With News12’s most prominent on-air personality married to a senior Democratic Party official and FioS1News reliably coordinating their news coverage with us already we effectively own both stations now,” said another official. “Why buy the cow when you can get the milk for free?”
Should that change, County officials say they stand ready to invest tax payer money into further media control for themselves.
Reached for comment, the author of this bit of satire expressed no small degree of bemusement.
“That some readers may have even briefly considered this story plausible tells you all you need to know about the state of local media in the United States,” said independent journalist Robert Cox. “Happy April 1st!”