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Thursday, May 23, 2019 12:21 am

GateHouse loves stockholders, not newspapers

 With GateHouse Media, owner of the State Journal-Register, things could always be worse.

Five news reporters are left at Springfield’s daily newspaper – three times that number were employed when the paper hired me in 2006, one year before GateHouse arrived. This isn’t as bad as in Missouri, where the Columbia Daily Tribune last year was reportedly down to a single reporter to cover a city of more than 100,000 less than two years after GateHouse took over. The Tribune now has three news reporters, with an equal number of scribes assigned to cover sports, but still lacks a government reporter. This is not ideal if you want to be a watchdog.

“Content is our number one priority,” a newspaper executive said in a 2018 interview about GateHouse, which has spent more than $1 billion buying papers since 2014 while treating ones it already owns like birdcage liners. “The people in the industry who are making extremely excessive cuts in the newsroom are not only damaging their own products forever, but they’re damaging us, because everybody gets painted with the same brush.”

The executive was Michael Reed, GateHouse chief executive officer who’s been in charge of the company since it came to Springfield spouting rot about hyperlocal coverage.

Messiahs are rare in the newspaper business. For every Jeff Bezos and Patric Soon Shiong, billionaires who’ve poured money into the Washington Post and Los Angeles Times, there’s a Warren Buffett, who, seven years after making a $142 million bet on newspapers, declared defeat this spring, saying that local newspapers will disappear.

At the SJ-R, circulation has plummeted to less than 19,000; in 2010, more than 50,000 people paid to read the paper each day. Absent reporters assigned full time to such beats as education, police and courts, the paper is filled with stories written elsewhere.

Last year, Reed insisted that the number of stories can increase under a slash-and-burn business model. Three reporters who each write one story every two or three weeks, he reasoned, can be replaced by one reporter who writes four stories a week. “And so, what the misnomer is, is that just because your newsroom staffing is reduced, you’re doing less journalism,” Reed said during an interview with Ken Doctor for the Nieman Journalism Lab at Harvard University. Reed also promised a commitment to investigative journalism.

Reed always was a slickster you shouldn’t let near the silverware drawer, the sort of guy who’d be pulling three-card-monty schemes if working for corporate greedheads didn’t pay better. I never saw a reporter file once every two or three weeks when I worked for the SJ-R. I did see fliers with Reed’s name on them, with the tease stolen from a TV quiz show: Who wants to be a millionaire? GateHouse promised to give $1 million to any employee who thought of a way to save or generate $50 million. Fine print warned that the company might already have thought of your idea without telling anyone, and so you might not get paid. Winners of journalism contests didn’t get prizes until months after the fact, by which time many were no longer employed by GateHouse, which still hasn’t cut me a check for winning News Writer of the Year before I jumped to Illinois Times in 2011. After I left, the air conditioning broke. Temperatures in the newsroom climbed into the 80s while GateHouse took two weeks or so to fix it.

The company has tried ridding itself of the Friend In Deed program that helps the needy during the holidays. Ticket prices for the paper’s First Citizen award ceremony have zoomed from $20 to $35 since 2010 – the event was free before GateHouse bought the SJ-R. In 2011, the SJ-R didn’t return calls from the National Park Service when the feds warned that the Great Western Depot, owned by GateHouse and cherished as the place where Abraham Lincoln delivered his farewell address to Springfield, might have to be shut down because it needed work. If local attorney Jon Gray Noll and his wife Pinky hadn’t purchased the property, smart money says it would be shuttered.

“The thing that we always have to think about and remember is that our first objective is always what’s the best thing for our shareholders, since we’re a public company,” Reed told Doctor. This month, New Media Investment Group, GateHouse’s holding company, paid nearly $100 million in dividends, mostly to institutional investors. At 38 cents per share, the dividend has risen while the stock price has declined, from $25 in 2015 to $10 today, with same-store revenue falling by more than 5 percent annually in 2017 and again in 2018. Lee Enterprises, which owns the St. Louis Post-Dispatch and 45 other papers, hasn’t paid a dividend since 2008. Gannett, second only to GateHouse in number of papers owned, sliced its dividend in 2015 and most recently paid 16 cents per share.

Against this backdrop, SJ-R editor Angie Muhs, once a GateHouse Editor of the Year, resigned this month and was walked out of the building. She reportedly told her staff she hoped her departure would save sufficient salary to prevent more layoffs. She might have been gone no matter what – GateHouse has signaled a move to centralized management that would have a single editor assigned to oversee multiple newspapers. The future is uncertain. But it doesn’t look good.

Contact Bruce Rushton at brushton@illinoistimes.com.

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