Newsquest staff fear being collateral of hostile bid by “vulture capitalist” company
11 April 2019
Journalists working for Newsquest are concerned they could be collateral in a hostile take-over bid by MGN Enterprises for its parent US company, Gannett.
The NUJ said that while these American companies slug it for control, the 800 journalists and 2,600 employees overall at Newsquest have been ignored by both sides and called for greater clarity, particularly concerning recent litigation against MGN for the way it has handled corporate funds.
Gannett turned down a $1.4bn (£1bn) bid from its rival. In January its shareholders were offered $12 a share to purchase the company outright by Media News Group (MGN), which is controlled by hedge fund Alden Global.
Gannett, the owner of US Today and a vast array of daily and weekly local newspapers, is the parent company of Newsquest, which has more than 200 print and online publications in the UK, including the Northern Echo, Oxford Mail, Brighton Argus, Bradford Telegraph & Argus and Glasgow's Herald.
MGN has a worse reputation for hollowing out newspaper titles and cutting jobs than even Newsquest. Last year the Denver Post called its majority shareholder a “vulture capitalist” and said that, “since Alden took control, the decline of local news has been as obvious as it’s been precipitous”.
In a letter to Gannett shareholders, in the run up to the company’s AGM on Thursday 16 May, The NewsGuild-Communications Workers of America (TNG-CWA) and the Newspaper and Graphic Communications Conference of the International Brotherhood of Teamsters (IBT) said they must reject the six director nominees put forward by MNG.
The letter laid bare Alden’s reputation:
- The Washington Post summarised its modus operandi as “buy newspapers, slash jobs, sell the buildings”.
- The New York Times referred to Alden as “the destroyer of newspapers”.
- Heath Freeman, Alden’s president, has been likened to Gordon Gekko from the movie “Wall Street” by business journalist Joe Nocera who also said: “His layoffs aren’t just painful. They are savage.”
The letter said:
“For those investors who are also concerned about the fate of journalism, MNG/Alden Global approach to news has to be worrisome. Stripping news staffs to bare bones means certain activities are no longer funded and news organization cannot play the role of independent oversight of elected officials and private organisations. Newspapers are a public good. They educate the public and are therefore critical to democratic governance. Whether it is local government or the competition of political ideas, newspapers allow citizens to make informed choices in electing leaders. They shed light on the expenditure of monies so that citizens have insight into how their tax revenues are spent.”
Gannett also wrote to shareholders saying that three months after its bid, MNG did not appear to have secured financing and had “refused to answer basic questions around antitrust regulatory risks, pension liability funding and the combined leadership and its operating plan”. There is concern following a lawsuit instigated by Solus Alternative Asset Management and MNG. Gannett said:
“In legal filings, MNG admitted to making a number of investments with diverted cash, including investing $248.5 million of workers’ pension funds in funds controlled by Alden and investing $158 million for a 24.8 per cent stake in [discount retailer] Fred’s, Alden’s largest single holding. Fred’s stock has declined 87 per cent since Alden announced its investment.
“Solus’ lawsuit also alleged that there is a precedent for Alden’s taking management fees from MNG subsidiaries without any disclosure to minority shareholders."
Federica Bedendo, Newsquest group chapel MoC, said:
“Our members are already under an incredible amount of pressure – we work in understaffed newsrooms and paid poverty wages. And we, the underpaid and undervalued staff, seem to be the only ones who care about the quality of the products we produce and the communities we represent. To hear this toing and froing between Gannett and MNG without a single mention of Newsquest and what might happen to it after the AGM leaves us with very little confidence for our future. Even Gannett thinks MNG is bad news for local papers. The last thing we need is uncertainty for jobs and the future of local journalism.”
Chris Morley, Northern and Midlands senior organiser, said:
“As the board of Gannett trade blows with those pushing for the company’s hostile takeover, the massive empty space in the war of words is what either plans for Newsquest on the other side of the crucial AGM votes. This is especially true of the MNG side that has expended a good deal of time trashing Gannett directors’ stewardship of the company but its narrative ominously ignores the UK business that provides 10 per cent of total group income and supports more than 800 journalists in this country.
“We are very concerned to hear details of the litigation involving MNG and involving allegations about how employee and corporate funds are handled. We want clarity from MNG on these allegations well before the Gannett shareholders’ vote at the company’s annual meeting next month. Newsquest employees deserve to know what they should expect were Gannett to fall to MNG’s hostile takeover.”