Austin American-Statesman Sold For $47.5M To GateHouse Media

AUSTIN TX — The Austin American-Statesman has been sold to New York-based publishing firm GateHouse Media, officials at the local daily announced Tuesday.

The imminent deal ends more than 41 years of ownership by Atlanta-based Cox Enterprises. The daily will be sold for $47.5 million, with the sale expected to officially close April 2. GateHouse Media is the nation's largest owner of daily newspapers, with more than 10,000 employees.

The sale includes not only the newspaper but the publisher's ancillary products: The Spanish-language weekly newspaper ¡Ahora Sí!, its Austin Community Newspapers group, which includes the Bastrop Advertiser, Lake Travis View, Pflugerville Pflag, Round Rock Leader, Smithville Times and the Westlake Picayune and digital formats that include Austin360, 512tech and Hookem.com.

Patch wrote of the imminent sale on Feb. 22 following a published report identifying GateHouse Media as the buyer. At the time, both editor Debbie Hiott and publisher Susie Gray Biehle declined comment, the former dismissing the validity of "...that completely unsourced story," she wrote in an email. For her part, Bray Biehl simply responded to Patch with an email reading: "I have no comment."

Related story: Buyer Reportedly Found For Austin American-Statesman

But sources at the San Antonio Express-News told Patch they'd known about the deal for some time now, speculating the transaction had already been finalized ahead of Tuesday's announcement. Staffers at the Hearst-owned newspaper have some insight given that the Statesman some years ago inked a deal to print its papers at the San Antonio printers as part of a cost-saving deal to share the presses.

GateHouse publishes 130 daily newspapers, hundreds more community publications and more than 540 local market websites reaching more than 21 million people each week, according to information found on the company's website. The publishing concern 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 prepared statement conveyed by the Statesman. “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.

Cox Enterprises previously put the paper up for sale in late October 2017, with a sale expected to take place between six months to a year, according to the Statesman. The sale to GateHouse doesn't include the nearly 19 acres of land fronting Lady Bird Lake that houses the Statesman's operations. Members of the Cox family have retained the prime real estate at 305 S. Congress Ave. with plans for redeveloping the site, officials noted.

One worry over the imminent sale is the possibility of layoffs. GateHouse Media is notorious for cutting staff at newspapers it acquires in a quest for a hyperlocal digital format in lieu of more traditional print media amid a diminishing newspaper landscape. A private Facebook page dubbed "What's Your Plan B" with members largely comprising laid-off journalists invariably features negative commentary on GateHouse Media's aggressive cost-cutting tactics — often with expletives not deleted.

As American Prospect reported in a piece titled "Saving the Free Press From Private Equity" last December: "Cost-cutting measures at GateHouse are absurdly draconian, ranging from the fact that editorial staffers don't even get complimentary subscriptions to having to buy their own coffee for the office machine."

The report continues: "Companies with names like Alden Capital, Digital First Media, Citadel, Fortress, GateHouse, and many others that you’ve never heard of have purchased more than 1,500 small-city dailies and weeklies. The malign genius of the private equity business model...is that it allows the absentee owner to drive a paper into the ground, but extract exorbitant profits along the way from management fees, dividends, and tax breaks. By the time the paper is a hollow shell, the private equity company can exit and move on, having more than made back its investment."

As an example of the alleged business model, American Prospect cites the example of the Bastrop Daily Enterprise in the northeast corner of Louisiana. Founded in 1904 as part of a small family-owned chain, the newspaper was thriving — with 30 employees and $1.5 million in annual revenues — until GateHouse Media gobbled them up, promptly gutting the newsroom and centralizing its operations.

“Now they’ve got maybe eight people,” a former employee told American Prospect. “They’re lucky if they’re doing $600,000 gross. I remember what these papers used to be. It’s unrecognizable.” The report adds: "Few citizens of Bastrop, however, know the reasons behind the wasting of the Enterprise because no one has reported on it."

Jason Taylor, president of the western U.S. publishing operations for GateHouse, suggested his company is often unfairly singled out for such tactics — yet didn't say the company wouldn't lay off Statesman staffers once the deal is officially consummated. In the Statesman report, Taylor said his company's post-purchase reductions reflect industry standards but GateHouse often draws more attention for them given its immense size and, presumably, heightened profile.

The goal of such cutbacks is not wholesale cuts for cuts' sake but a tactic intended to get their acquired properties "fixed and stabilized," he told the Statesman. In furthering assuaging such concerns, he added: “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.”

The Statesman has a daily circulation of 85,000 and digital subscriptions numbering 16,786 subscribers.

>>> Read the full story at Austin American-Statesman

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