Evansville Courier & Press, Gleaner and others joining Gannett

Journal Media Group properties will become part of Gannett, a newspaper group whose flagship paper is Virginia-based USA Today.

The Wall Street Journal posted a story about the deal Wednesday. Journal Media Group President and Chief Executive Officer Tim Stautberg confirmed the news in an e-mail sent to employees Wednesday evening.

“I am pleased to announce that we have entered into a definitive agreement under which our portfolio of local media brands will join the Gannett family, a media powerhouse with unparalleled local-to-national reach. This transaction marks a critical next step in the transformation of our industry as we build local media brands that matter at a time when operational scale is a competitive advantage,” Stautberg’s statement said, in part.

The deal is expected to close in the first quarter of 2016.

“We will continue our mission of serving the community,” said Jack Pate, publisher of the Courier & Press and The Gleaner. “Our focus remains on serving our customers and our community with compelling and engaging content.”

Journal Media Group, based in Milwaukee, Wisconsin, is the corporate parent of the Evansville Courier & Press and the Henderson Gleaner. It owns a total of 15 daily newspapers, and its flagship is the Milwaukee Journal Sentinel.

When the deal is completed, Gannett will serve 106 U.S. markets and command a digital audience of more than 100 million unique visitors each month. Within Indiana, Gannett owns the newspapers in Indianapolis, Lafayette, Muncie and Richmond. The Louisville Courier-Journal is also a Gannett property.

Gannett will pay about $280 million cash for Journal Media Group, which as of Wednesday had a market value of $192 million. The deal is subject to the approval of federal regulators and Journal Media Group shareholders.

The transaction has been approved by the boards of directors of both Gannett and Journal Media Group. Under the terms, Journal Media Group shareholders will receive cash of $12 per share, representing a premium of 44.5 percent over Wednesday’s closing price of Journal Media Group stock on the New York Stock Exchange of $8.30 per share.

Both Gannett and Journal Media Group are newspaper-only companies created through recently completed spinoffs.

Journal Media Group formed when two companies that operated both print and broadcast outlets — E.W. Scripps and Journal Communications — formulated a merger/spinoff deal. The two companies spun off and merged their newspaper holdings to form a new company, Journal Media Group. The broadcast holdings were merged into Scripps. The deals became effective April 1.

Likewise, Gannett’s holdings previously included both newspaper and broadcast holdings.

A spinoff split those holdings into two separate companies: the newspaper sites fell under the umbrella of what the company calls the “new Gannett,” and the broadcast holdings became part of a company called TEGNA. That split took effect June 29.

“The publications of both Gannett and Journal Media Group have a rich history, a commitment to journalism and a dedication to informing and being active members of the communities we serve,” said Bob Dickey, president and chief executive officer of Gannett.

“Our merger will combine the best of each of our organizations to create a journalism-led, investor-focused company which will provide substantial value to the shareholders of both companies,” Dickey said. “This transaction is an excellent first step in the industry consolidation strategy we have communicated to our shareholders.”

Gannett will finance the transaction with a combination of cash on hand and the company’s $500 million revolving credit facility. The deal is expected to add approximately $450 million to the company’s annual revenues and about $60 million in earnings before interest, taxes, depreciation and amortization.

The companies estimated in a joint news release that the deal will yield an estimated $10 million in immediate savings and the potential for $25 million more over the next two years. That is anticipated through the consolidation of a variety of functions, including corporate operations, printing and distribution.

During the second quarter, Gannett reported net income of $53.3 million (46 cents per share). As of June 22 the company reported having almost 20,000 employees.

Journal Media Group’s second-quarter net income was $3.3 million (13 cents per share). As of June 30 the company had 1,968 employees.

Aside from the Courier & Press and The Gleaner, Journal Media Group’s newspapers include the (Redding) Record-Searchlight and Ventura County Star in California; the Naples Daily News and Treasure Coast Newspapers in Florida; the (Anderson) Independent Mail in South Carolina; the Knoxville News Sentinel and The (Memphis) Commercial Appeal in Tennessee; the Abilene Reporter-News, Corpus Christi Caller-Times, San Angelo Standard-Times and Wichita Falls Times Record News in Texas; the Kitsap Sun in Washington and the Milwaukee Journal Sentinel and Journal Community Publications in Wisconsin.