American-Statesman being sold to GateHouse in $47.5M deal

The Austin American-Statesman is being sold to New York-based publishing company GateHouse Media, executives said Tuesday, ending more than 41 years of ownership by Atlanta-based Cox Enterprises.

The purchase price is $47.5 million. The sale is expected to close April 2.

GateHouse Media, based in upstate New York, is the nation’s largest owner of daily newspapers across the country, with more than 10,000 employees.

Along with the Statesman, the sale includes the newspaper’s Spanish-language weekly newspaper ¡Ahora Sí!, and the Austin Community Newspapers group, which includes the Bastrop Advertiser, Lake Travis View, Pflugerville Pflag, Round Rock Leader, Smithville Times and the Westlake Picayune. Related digital offerings such as Austin360, 512tech and also are part of the sale.

RELATED: Publisher: The Statesman works for you, Austin

GateHouse publishes 130 daily newspapers, hundreds of community publications and more than 540 local market websites that reach more than 21 million people each week, according to the company. Based in upstate New York, the company is part of publicly traded New Media Investment Group.

“New Media is very excited to add the Austin American-Statesman and its associated publications to our portfolio of local media assets,” Michael E. Reed, New Media president and CEO, said in a statement. “In addition to being known for its strong and trusted journalism and having high digital engagement, the city of Austin is a very attractive market for our growing business offerings. … We look forward to working with Austin employees to further build upon their partnerships and carry on the strong local journalism they do in Austin.”

Cox Enterprises put the Statesman on the market Oct. 31, saying it expected to close a sale in six to 12 months. The sale does not include the nearly 19 acres on Lady Bird Lake that is home to the Statesman’s offices. The land at 305 S. Congress Ave. is now owned by members of the Cox family and is the subject of ongoing redevelopment plans.

In a written statement, Kim Guthrie, president of Cox Media Group, said the Statesman “has a long history of serving the Austin community through in-depth journalism and impactful outreach initiatives, such as the annual Season for Caring program.”

“During these times of disruption, we feel that (Cox Media Group) is better equipped to operate our newspapers in Atlanta and Dayton, where we also have strong TV and radio operations,” Guthrie said.

As newspapers across the country have closed or downsized in the digital age, GateHouse has continued to make acquisitions. Most recently, the company purchased the Register-Guard in Eugene, Ore., officially assuming ownership March 1. It bought a number of newspapers last year, including its $120 million purchase of Morris Publishing Group, owner of the Lubbock Avalanche-Journal and the Amarillo Globe-News in Texas and newspapers in Florida, Georgia and elsewhere.

New Media, GateHouse’s parent company, reported 2017 revenue of $1.34 billion, up 6.9 percent from 2016. The company reported a net loss for the year of $915,000.

Jason Taylor, president of the western U.S. publishing operations for GateHouse, said that, upon the Statesman sale closing, “Austin would become one of the top 10 local media companies within GateHouse.”

Taylor said GateHouse has no specific plans for the Statesman yet. He said GateHouse executives will be talking to the local leadership team to discuss how the Statesman and GateHouse can benefit each other.

“Austin is such a dynamic market,” Taylor said. “Most media companies would covet it. The leadership role it takes in the state is impressive and impactful, and we want to be part of that.”

GateHouse has been criticized for cutting staff at the papers it acquires, often to a point that media analysts have said it can be a detriment to the communities served by its newspapers.

Rick Edmonds, media business analyst at the Poynter Institute, a nonprofit journalism center in St. Petersburg, Fla., said GateHouse “has a deserved reputation for running things with tight expense control.”

“Some expense reductions and lost jobs in services they can handle in house are a sure thing. But the newsroom may not get the worst of it,” Edmonds said.

Taylor said GateHouse plans to continue the Statesman on its path of doing important, community-oriented journalism.

“GateHouse is committed to the rich legacy of quality journalism that the Statesman has contributed to both Austin and the state of Texas,” Taylor said. “I can promise you now our mission is to sustain local journalism.”

Taylor said GateHouse, as one of the largest media owners, is unfairly singled out when it makes cuts at its properties. He said GateHouse’s reductions are in line with industry standards but often draw more attention because of the size of the company. He said GateHouse’s goal is to get the papers it acquires “fixed and stabilized.”

The Statesman, with a daily circulation of 85,000 and digital subscriptions of 16,786, will be one of GateHouse’s largest newspapers. The Statesman, a presence in Central Texas for more than 140 years, has been named Texas Newspaper of the Year three of the past four years by the Texas Associated Press Managing Editors.

Texas already is an important market for GateHouse, Taylor said. The company operates seven daily publications, eight weeklies and nine shoppers in the stateincluding Lubbock and Amarillo. Additionally, GateHouse’s Center for News and Design, located in Austin, employs more than 240 designers and editors who perform design and editing work for GateHouse newspapers and other publications.

Taylor said GateHouse views Austin as an up-and-coming “innovation lab,” with its existing news and design hub being “the logical incubator.”

Statesman editor Debbie Hiott said she doesn’t anticipate changes in how the newsroom approaches journalism.

“We have a strong team of journalists who will continue doing what they do well,” she said. “And typically, that’s doing the things we know readers expect from us, from investigations to telling them what’s going on in Austin around the clock.”

When it comes to news coverage, Taylor said, GateHouse takes a hands-off approach, leaving news decisions to local newsroom leaders.

“Unequivocally, GateHouse does not weigh in on content decisions,” Taylor said. “You know the market. You are the experts. We never tell a newsroom what to cover, or how,” although he added the company will advise management “on ways to enhance it.”

He said GateHouse sees numerous opportunities for growing revenue in the Austin market, buoyed in large part by GateHouse’s size, scale and the synergies it can achieve.

He said those opportunities include increasing revenue from video, due to GateHouse’s ability to sell video on a national level; “significant opportunities” from revenue-generating events and promotions; and “additional enhancements” to local advertising solutions.

Once the sale is final, Taylor said, GateHouse “will begin exploring every possible option across all facets of the business.”

Taylor said that, although GateHouse believes in print journalism, “we are dramatically committed to growing alternative revenue streams” that will allow its papers to “preserve quality local journalism.”

“We want to find the answers that won’t just keep newspapers alive, but growing again,” Taylor said.

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