Gannett Co. Inc. has fended off a hostile takeover by Denver-based MediaNews Group, parent of The Denver Post and Boulder Daily Camera, which unsuccessfully tried to install three directors on the newspaper chain's board Thursday to push through its $1.36 billion purchase offer.
McLean, Virginia-based Gannett is the nation's largest publisher of newspapers, including USA Today and the Fort Collins Coloradoan. Denver-based MNG's Colorado properties include dailies in Canon City, Fort Morgan, Longmont, Loveland and Sterling; also publishes newspapers in Boston, San Jose and St. Paul.
Gannett's board had rejected the takeover bid three months ago, noting that MediaNews had said it planned to borrow money to pay for the takeover but hadn't even contacted any potential financiers.
MNG responded by asking shareholders to elect three of its nominees to Gannett's board, which hires the CEO and sets the company's strategic direction. That would have given the would-be acquirer control of almost half the eight-member panel, a possibility shareholders rejected during a vote at Thursday's annual meeting.
Instead, according to a preliminary tally of votes, investors backed up Gannett's decision, electing all eight of the company's nominees.
"This outcome demonstrates that Gannett shareholders recognize the continued progress we have made toward our ongoing digital transformation and agree that our strategic plan is the best path to deliver value for all Gannett shareholders," the newspaper chain said afterward.
MNG is controlled by the New York hedge fund firm Alden Global Capital, which has come under fire for severe cost cutting and staff reductions at many of its newspapers, including the Post.
In an extraordinary move, the Post's editorial department last year published a special opinion section calling on Alden to sell the paper.
Those cuts, however, have helped make several MNG properties among the most profitable in the newspaper industry by some accounts.
Gannett's board had argued the offer from MNG, which included a $254 million premium, undervalued a company with established news brands in areas from Detroit to Phoenix and central Florida to attract and retain consumers shifting from print to digital news products.
“This is a win for an entrenched Gannett board that has been unwilling to address the current realities of the newspaper business, and sadly a loss for Gannett and its shareholders," said MNG, which holds a 7.4% stake in the company.
“Gannett’s newspapers are critical local resources, and we hope that Gannett’s incumbent board and management shift course to embrace a modern approach to local news that will save newspapers and serve communities," MNG added.
Otherwise, the snubbed suitor said, "we believe the stock will drop further.” The shares tumbled 1.4% on Thursday alone, widening the decline over the past year to 24%.
While the newspaper industry faces an array of challenges, Gannett Chairman J. Jeffry Louis maintained that existing management has the expertise needed to navigate them and grow.
The firm comprises publishing operations separated from the broadcasting business of a once-larger company that bore the same name; the TV operation is now known as Tegna Inc. and owns Denver stations KUSA-9News and KTVD-Channel 20.
Gannett's revenue has declined about 12% in the past five years, dipping to $2.92 billion at the end of 2018, as newspapers struggle with the loss of advertisers who can promote their products more effectively, and less expensively, online.
While media companies have embraced digital advertising, it typically generates far less revenue than its print counterpart.
At the same time, media companies of all stripes have found themselves grappling with growing hostility from some supporters of President Trump, who has labeled coverage with which he disagrees as "fake news" and referred to the industry broadly as an "enemy of the people."
Colorado Politics contributed.