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Wednesday, May 16, 2007 08:43 pm

Paper cuts

Heads roll at the SJ-R; new parent company, GateHouse Media, announces earnings

Untitled Document At least nine longtime employees of the State Journal-Register were fired last week. The dismissals came less than a month after GateHouse Media Inc. completed its acquisition of the State Journal-Register and other Illinois and Ohio dailies previously operated by Copley Press in a deal worth $380 million. Several advertising and marketing management positions were among those eliminated, including those of advertising director Tim Stacy, ad-production manager Ric Hamilton, online-sales manager Paul Filip, and information-services manager J. Edward Baker. Another casualty was columnist Paul Povse, whose career at the SJ-R spanned more than three decades.
Povse told Illinois Times that he had an enjoyable tenure at the paper and hoped to work in the newspaper business again. He referred other questions to Sue Schmitt, publisher of the SJ-R and the Lincoln Courier. “I can’t discuss personnel matters,” says Schmitt, who joined the newspaper last fall. The paper’s editor, Barry Locher, also declined to talk about Povse’s dismissal; Francie Nagy, spokeswoman for Fortress Investment Group LLC, which controls GateHouse, did not respond to requests for comment. GateHouse, which owns 88 dailies and more than 200 weekly newspapers in 19 states, is best known for its business model of aggregating small papers and its editorial approach of emphasizing “hyperlocal” news coverage. Despite the $792 million debt the company has amassed in its short existence, industry analysts agree that GateHouse is outperforming many of its newspaper-company peers. Two days before the cuts at the SJ-R were announced, GateHouse also finalized the purchase of four daily newspapers from Gannett Co. Inc., the nation’s largest newspaper publisher. The papers that changed hands are the Rockford (Ill.) Register Star; the Norwich (Conn.), Bulletin; the Utica, N.Y., Observer-Dispatch; and the Huntington, W. Va., Herald-Dispatch. The Copley and Gannett deals doubled GateHouse’s size, in terms of revenue, company chief executive officer Mike Reed told analysts and reports in a conference call earlier this week. During the first quarter of 2007, the company reported revenues of $95 million, 90.1 percent higher than last year’s revenues of $50 million. Net income, however, fell from $405,000 in the first quarter of 2006 to a loss of $5.3 million in the first quarter of this year. During the conference call, Peter Appert, an analyst at Goldman Sachs, characterized the numbers as “horrendous.”
Reed disagreed, saying that the acquisition pipeline for GateHouse continues to be robust. “We see really nice upsides, and really fantastic synergies with the Copley properties in Illinois, especially,” Reed says.
Contact R.L. Nave at rnave@illinoistimes.com
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