A hedge fund-owned newspaper company signaled in a response to questions from U.S. Senator Chuck Schumer D-N.Y. that it would cut costs and consolidate operations if it succeeds in its unsolicited bid to take over Gannett Co.
MNG Enterprises Inc. told the Senate Democratic Leader in a letter that it would “right size overhead costs” at Gannett, which owns USA TODAY and more than 100 other publications, if the proposed deal happens.
MNG’s letter came in response to Schumer’s recent request for information on the company’s bid to acquire Gannett, including its newsroom staffing plans. Schumer wrote Thursday to MNG in a publicly released letter that he was “troubled” by MNG’s response, including what he called the company’s failure to “make commitments regarding newsroom staffing, and how you would address potential regulatory concerns.”
Gannett has rejected MNG’s unsolicited bid for $12 a share as not credible and has recommended that shareholders oppose MNG’s nomination of six members to Gannett’s board of directors.
“Consistent with our experience running local newspapers efficiently and effectively so they can remain viable, our proposed acquisition of Gannett would include a strategic focus on economic realities,” MNG Chairman R. Joseph Fuchs said in the March 5 letter, which was released Friday by Schumer’s office. “With respect to real estate, strategic steps might include, where feasible, consolidating print sites, editorial production hubs, advertising production hubs and financial services.”
MNG, which is majority-owned by hedge fund Alden Global Capital and is also known as Digital First Media, has faced criticism for implementing steep cuts at its newspapers, such as The Denver Post. Analysts have said that MNG’s bid is too low and that after years of cost cutting by Gannett that MNG is likely betting on a level of cost savings that is unrealistic.
MNG proposal implications: Gannett says MNG’s proposed tie-up would be overloaded with debt
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Schumer also wrote to the Department of Justice and the Pension Benefit Guaranty Corp. requesting information on the impact of a potential combination of MNG and Gannett on the news industry, including antitrust issues.
Representatives for MNG were not immediately available to comment. Gannett declined to comment.
Gannett shareholders will vote on May 16 at its annual meeting on MNG’s director nominees.
In its response to Schumer, MNG argued that its “extensive operational experience and successful track record in the newspaper industry” would “enable us to provide a home for Gannett’s businesses and valued employees so they can continue to serve their local communities.”
The company said it had not yet identified specific consolidation opportunities and how it might use any proceeds from potential asset sales. It also said it’s “confident” the deal would pass regulatory muster.
Gannett said Monday that its growth plan includes increasing digital revenue through innovative consumer products and advertising, engaging journalism, digital marketing solutions, selective acquisitions and “thoughtful and strategic” cost management.
“This is a critical time for Gannett and the industry, and your board and management team are taking actions to deliver on our continued commitment to journalistic excellence and the path to the greatest value opportunity for shareholders,” Gannett said on Monday in a statement.
Contributing: Joseph Spector
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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