Two of the country’s largest newspaper companies have agreed to combine in the latest media deal driven by the industry’s struggles with a decline of printed editions.

GateHouse Media, a chain backed by an investment firm, is buying Detroit Free Press and USA Today owner Gannett Co. for $12.06 a share in cash and stock, or about $1.4 billion. The combined company would have more than 260 daily papers in the U.S. along with more than 300 weeklies. It would be the largest U.S. newspaper company by far, with a print circulation of 8.7 million, which is 7 million more than the new No. 2, McClatchy, according to media expert Ken Doctor.

The Detroit Free Press is currently owned by Gannett, which has a partnership with MediaNews Group, owner of the The Detroit News, to combine business operations of the two newspapers. The newsrooms remain separately owned and independent.

The companies said Monday that the merger will cut up to $300 million in costs annually and help speed up a digital transformation.

Newspaper consolidation has picked up as local papers find it hard to grow digital businesses and replace declines in print ads and circulation. Although papers with national readerships like The New York Times and The Washington Post have had success adding digital subscribers, local papers with local readerships are having a difficult time. Hundreds of such papers have closed, and newsrooms have slashed jobs.

According to a study by the University of North Carolina, the U.S. has lost almost 1,800 local newspapers since 2004. Newsroom employment fell by a quarter from 2008 to 2018, according to Pew Research, and layoffs have continued this year.

Former Michigan resident Paul Bascobert has been named the new CEO of Gannett, effective immediately. Bascobert is the former president of XO Group Inc., a media and technology company.  Under the combined company with GateHouse, Bascobert would become CEO of its operating subsidiary, while Michael Reed, CEO of GateHouse parent NewMedia Investment Group, would maintain his leadership role as CEO and chairman.

Bascobert began his career as an engineer at General Motors Co. and Benton Harbor-based Whirlpool Corp. He graduated with his bachelor's degree in electrical engineering from Flint's Kettering University in 1987. In two weeks, his son is starting school at the University of Michigan.

"I've spent my whole career trying to find ways to improve things," Bascobert said Monday during a town hall with Gannett employees. "Early it was machines and circuit boards. More recently it's organizations, usually in times of change or some interesting point where we have to find out the answer to the future and try to come up with a way to make things better."

Referencing his stint in Flint and the city's recent water crisis, Bascobert emphasized the need for a free press.

"I know firsthand bad things can happen in communities when you don’t have a free press to hold people to account," he said. "I want to make local media, national media in our country thrive, not just survive."

Both GateHouse and Gannett are known as buyers of other papers. Bulking up lets companies cut costs – including layoffs in newsrooms – and centralize operations.

Those cuts could give the owners “a cushion of time” to figure out how to improve their digital businesses, longtime industry analyst Rick Edmonds of the Poynter Institute wrote Sunday.

But it’s no panacea. “I don’t think, just by these companies merging, they’re going to somehow magically find a new business model, make everything all right and produce robust journalism at a local level,” Butler University journalism professor Nancy Whitmore said.

Still, a bigger, combined newspaper company could sell more national ads and boost their ad revenue, she said.

Several experts said they do not expect the Justice Department to have an issue with the deal, as the two companies have papers in different markets. The companies expect it to close this year.

The combined company would take the Gannett name and keep its headquarters in Gannett’s current home of McLean, Virginia.

Consolidation is nothing new to either company. Gannett’s last big U.S. print purchase was in 2016, when it bought papers in the Journal Media Group chain for $280 million, including the Milwaukee Journal Sentinel and The Commercial Appeal in Memphis. Gannett also owns dailies in major cities such as the Cincinnati Enquirer and Arizona Republic.

Besides the Detroit Free Press, other Gannett properties in Michigan include the Battle Creek Enquirer, Lansing State Journal, Observer and Eccentric Newspapers

and The Times Herald, Port Huron

Gannett's recent merger efforts have been unsuccessful. It failed in an unsolicited bid for newspaper chain Tribune. Gannett then fended off an unwanted bid by MediaNews Group, better known as Digital First Media, a hedge-fund backed media group with a slash-and-burn reputation for cutting jobs and letting papers wither.

GateHouse, a little-known name to U.S. readers, is also controlled by an investment company, but it doesn’t have the same scalding reputation as Digital First. It is owned by the publicly traded New Media Investment Group, itself managed by investment firm Fortress Investment Group, which is in turn owned by Japanese tech giant SoftBank. Gannett and GateHouse said Monday that Fortress will end its management arrangement at the end of 2021.

GateHouse has grown quickly in recent years, and its buying spree includes the Palm Beach Post, bought last year for $49 million, and the Austin American-Statesman, on which it spent $47.5 million. It publishes 156 daily newspapers, most in small- and mid-sized towns.

Detroit News reporter Breana Noble and the Associated Press contributed.

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