By Brett Arends, MarketWatch
Newton Hopcraft/Hulton Archive/Getty Images
The merger of Gannett and New Media Investments is off to a rocky start.
Monday’s “$1.4 billion” deal is now worth over $100 million less, thanks to the tumbling stock prices of the two companies involved. But that’s an improvement. Earlier this week it was down more than $200 million.
The deal, says the New York Post, is now “hanging on for dear life.” No kidding.
You have to wonder if New Media Chief Executive Officer Mike Reed and Gannett /zigman2/quotes/202050177/lastsale GCI -19.59% CEO Paul Bascobert are quite as “excited” as they claimed to be before their shares took a pummeling.
New Media is planning to finance the cash-and-stock merger with a $1.8 billion loan from Apollo Capital Management … at 11.5%.
Yes, nothing says “the confidence of the financial community” quite like a collapsing stock price and “Get Shorty” loan rates.
By my math, the interest bill will come to around $200 million a year.
Combined operating income of the two companies last year: Er, $87 million.
‘Synergies’ to the rescue
This should be interesting, even if the deal does go ahead. No wonder the chief executives are talking about “synergies” of maybe $300 million a year. I wonder if the reporters are as “excited” about these coming “synergies” as the honchos are.
Yes, if all else fails, see if you can keep the ship afloat by throwing people overboard.
There’s an old Noel Coward song about the perils of an acting career, titled “Don’t Put Your Daughter on the Stage, Mrs. Worthington.” When people tell me their kids are thinking about pursuing a career in journalism, I look at them in disbelief.
In the past 10 years, newspapers have cut about 33,000 newsroom jobs, according to Pew Research . The number of new internet newsroom jobs? About 6,000. Most online content is now unpaid, including much of the news. As an (extremely liberal!) editor at a world-famous news site said to me a few years ago: “Why would I pay reporters when people will blog for me for free?”
Meanwhile, the number of actual news reporters left? Fewer than 40,000.