You may have missed it, but an outfit called Digital First Media (DFM) is trying to buy the Gannett newspaper chain. Last year, I wrote a lengthy investigative piece on how private equity and hedge fund companies like DFM are destroying what’s left of America’s metropolitan dailies. You can read about it here.
The basic model is to borrow money, buy a shaky newspaper (or in this case a whole shaky chain), charge the debt to the target company’s own balance sheet, and then cut costs (reporters and editors) to shreds. The distress of the newspaper industry has been widely blamed on the internet, but in fact predatory practices by outfits like DFM are a major contributing factor.
Last year, DFM bought the Boston Herald, and promptly cut the newsroom from 240 to 175. Now the target is to cut editorial employees to just 100. Meanwhile, DFM is shooting for profit margins at the Herald in the 17-percent range.
It’s hard to shed too many tears for Gannett, no slouch when it comes to stripping newsrooms. Gannett’s flagship USA Today is damned thin already. It’s likely to be even worse if DFM manages to take it over.