MNG Enterprises (aka Digital First Media) could soon once again own the Lebanon Daily News.
For an already-beleaguered newsroom, this would be out of the frying pan and back into the fire.
Yesterday MNG made its official bid for Gannett at $12/share, a 41% premium over the December 31 closing price (although Gannett’s stock has gone up a bit since then). The bid notes that MNG has already established a 7.5% ownership position of Gannett through stock purchases.
In the letter to Gannett’s board, MNG claims that it alone can save newspapers no one else will touch: “When other people won’t step up, we do. We save newspapers and position them for a strong and profitable future so they can weather the secular decline.”
Others would claim that the hedge fund-owned MNG does quite the opposite, cutting operations to the point that the company was unable to invest in the people or technology needed to reinvent local news for the digital age
MNG divested the Lebanon paper in 2015 as part of a larger reshuffling that saw Gannett take 100% ownership of a southeastern Pennsylvania newspaper group that was previously jointly-owned between the two companies
MNG first bought the Lebanon Daily News around 1997, when owner Dean Singleton was acquiring a number of US dailies from a Canadian company, Thomson Newspapers.
According to Lebanon Daily News history, Singleton was responsible for putting the “Lebanon” back into the paper’s name (under Thomson it had been simply The Daily News). It’s not clear what role, if any, Singleton plays in the ongoing strategy of MNG, which is today majority owned by the hedge fund Alden Global Capital.
Although industry experts note that MNG has kept a significant profit margin despite unfavorable macroeconomic conditions, that profit has been maintained through aggressive cost-cutting measures that have left many newsrooms with a fraction of the headcount they had even five years ago. It’s hard to imagine how the Lebanon Daily News could be harvested further, given that they don’t own their building and have already seen immense staff and service reductions. But Alden Global Capital in particular is known for its form of vulture capitalism.
Jim Friedlich, director of the Philadelphia-based Lenfest Institute for Journalism, quipped to the Wall Street Journal that, “This is the lumber company trying to buy the national park.”
Yet the market may not care. According to the same Journal report, Gannett’s stock rose more than 20% on Monday following the release of MNG’s official bid letter, which widely panned Gannett leadership for the difficulties the company’s stock has seen since its 2015 spinoff of its TV assets through TEGNA. The Journal also quoted a JP Morgan analyst as saying, “We view MNG Enterprises interest as a potentially favorable exit strategy.”
The Lebanon Daily News discontinued walk-in service at its Poplar Street offices in December.
USA Today, also owned by Gannett, reported its own version of the story, quoting analysts as saying the MNG offer is too low and that the Gannett board is likely to decline the offer.
Update 1:45pm: A reader writes in with some more context. As of January 1, 2012, the Daily News had 13 editorial employees. Today there are four.