Gannett holds merger talks with Gatehouse Media

USA Today publisher Gannett held merger talks with Gatehouse Media, according to a report, which sent stocks of both newspaper companies surging on Thursday.

Gannett closed at $7.75, up 1.6 percent, while Gatehouse parent company New Media Investment Group saw its stock jump 4.7 percent, to $9.

The talks centered on both companies’ desire to “bulk up and trim costs,” according to the report in The Wall Street Journal, which said Gannett has also held talks with Chicago Tribune owner Tribune Publishing and the Miami Herald owner the McClatchy Company.

Gannett owns 109 newspapers, including USA Today as well as local titles The [Bergen] Record, the Asbury Park Press and the Journal News.

Gatehouse owns 156 daily papers, including the Austin-American Statesman and The Oklahoman, but most are in very small markets.

The discussions come only two weeks after Gannett beat back a hostile takeover bid by much smaller MNG Enterprises, also known as Digital First Media, owner of the Denver Post and the Boston Herald, which is backed by the cost-slashing Alden Global Capital.

“It is my opinion that the industry needs to consolidate for scale and efficiencies that come from consolidation of print facilities and distribution,” said Michael Kupinski at Nobel Capital. “Gannett and Gatehouse makes sense from the standpoint that Gannett has papers near Gatehouse markets. Consequently, there would be operating efficiencies from consolidation of facilities.”

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