The two largest newspaper chains in the country, USA Today publisher Gannett and Chicago Tribune owner Tribune, may reignite merger talks, now that both have dispatched with hostile takeovers by smaller suitors.
Sources tell Media Ink that there have already been back-door reach-outs in recent months.
“A Gannett-Tribune merger remains a live possibility, while McClatchy seeks the right partner,” said Ken Doctor, who writes the Newsonomics column for the Nieman Journalism Lab.
Gannett, of course, emerged victorious on Thursday after successfully beating back a bid by Alden Global Capital-owned MNG Enterprises to land three insurgents on the Gannett board.
Heath Freeman, the CEO of Alden, hoped that he and two allies would crack the Gannett board and help pave the way to approving a $1.36 billion hostile takeover by the much smaller MNG, owner of the Denver Post and Boston Herald. Instead, the Gannett shareholders backed all eight incumbent candidates, sinking any hopes of pulling off the takeover.
Tribune in recent months was also busy fending off an unwanted bid from debt-heavy McClatchy Co., owner of the Miami Herald and Kansas City Star, which was attracted by Tribune’s debt-free balance sheet.
The wheeling and dealing may be ready for another go-round.
“It is likely that consolidation will continue,” said Michael Kupinski, an analyst at Noble Capital Markets. “In my opinion, the newspaper industry needs scale to survive.”
Where it ends is a guessing game.
Doug Arthur at Huber Research thinks Gannett may take it slow on the M&A front. “With MNG seemingly putting up the white flag, I would assume any near-term need by Gannett to do something [with] Tribune, which really doesn’t fit their strategy — i.e., smaller markets, local digital assets — is off the table.”
On the other hand, Doctor in February wrote a report revealing a telling investment banker “swap” between Gannett and Tribune.
Goldman Sachs, which had teamed up with Tribune (then known as Tronc) when then-chairman Michael Ferro was opposing Gannett’s overtures in 2016, switched sides and joined up with Gannett and its adviser, Greenhill Partners, to provide advice.
At the same time, Lazard and Methuselah Advisors, which had been linked with Gannett, are now advising Tribune.