Wednesday, March 04, 2009

GateHouse Media formed as part of Conrad Black's criminal enterprise

The Girard Press appears headed for extinction, and two other Kansas newspapers, the Derby Reporter and the Kansas City Kansan have all been shuttered by GateHouse Media.

GateHouse Media, formerly Liberty Group Publishing, was a doomed scheme from the beginning. The company continued to buy one property after another, trim costs as much as possible (often by eliminating the newspapers' community ties) and continued to go further and further into debt buying one newspaper after another, rarely adding quality to any of their products.

Now communities across the U. S. wait for the ax to fall on their daily and weekly newspapers and it is all happening because of the greed.

The company, in fact, started because of the greed of one man, Conrad Black, who is now residing in a federal prison after being convicted of fraud for fleecing his former company Hollinger.

Liberty Group Publishing was formed in 1998 when Hollinger made the decision to sell its smaller daily and weekly publications to California investment firm Leonard Green & Partners.

As I wrote in the Sept. 3, 2004, Turner Report:

The 1998 sale of The Neosho Daily News, The Carthage Press, and other newspapers that belonged to American Publishing (a subsidiary of the Canadian company Hollinger) to the newly-formed Liberty Group Publishing marked the start of a long period in which Hollinger CEO Conrad Black looted his company coffers, according to a report filed with the federal Securities Exchange Commission earlier this week.
Most of American's community newspapers were sold to a California-based leveraged buyout firm, Leonard Green and Associates to $310 million with $31 million going toward a "non-compete" clause.
What was never explained is why Hollinger should have been paid a non-compete clause when it is almost impossible to start a newspaper in a small community which already has one and make it financially successful. One of the selling points for these newspapers, which Liberty is using now that it has them on the block, is that they have no competition.
Liberty officials appear to be lucky. As Hollinger continued to sell off the remainder of its community newspapers in the late 1990s and early this century, even more money went into these non-compete clauses, according to the report, and most of this money made its way into the personal bank accounts of Lord Black and two or three other high-ranking company officials. Buyers were also required to pay non-compete money to another publishing concern, which was totally owned by Lord Black and this handful of confederates.
The report indicates these robber barons took Hollinger for more than $400 million over the past five years.

I was lucky to be in on only the first year of Liberty Group Publishing's ownership of The Carthage Press, and apparently, I was with one of the few newspapers which actually was allowed, albeit for a brief time, to actually add quality to the newspaper.

With Ralph Bush as publisher, the company opened the purse strings slightly to add three solid reporters, Jo Ellis, who had just received a buyout from the Joplin Globe, John Hacker and Rick Rogers, joining Ron Graber and me. That arrangement, however, only lasted nine months before Hacker and I were shown the door.

Liberty and its predecessor, American Publishing, had already begun to inflict the damage on The Carthage Press that has left it a mere shell in 2009.

As I have written numerous times in The Turner Report, when American Publishing bought The Carthage Press, it was a stronger paper than the Neosho Daily, with a better news staff, better advertising sales, and a solid printing business that included the Webb City Sentinel, the Wise Buyer, other weeklies, and nearly every high school newspaper in the area.

The company shut down the printing operation, sold our printing press, sent the print jobs to Neosho, where then-publisher Valerie Praytor scrapped nearly all of them, and forced us to have unrealitically early deadlines for an afternoon newspaper.

The dismantling of The Carthage Press continued over the years with the elimination of the inserters, the composing room, and everything except basic news and advertising positions, was farmed to Neosho.

Eventually, with nothing left to fill up the historic three-story building it had occupied for half a century, the Press was moved to a site that was more suitable for a fast food place. Its files and bound copies were sent to the Courthouse Annex and the newspaper's publisher and editor are both from Neosho.

Naturally, those moves have not pleased the community and last I looked, The Carthage Press, thanks more to the moves made by Liberty and not the economy, had lost more than 60 percent of the readership it had when I left nearly 10 years ago.

Sadly, The Carthage Press is not the only newspaper that GateHouse Media has destroyed in its misguided attempt to corner the small newspaper market, and at least, for now, the newspaper still has a chance, albeit slim, to bounce back.

That option is no longer available to the Derby Reporter, the Kansas City Kansan, and most likely, the Girard Press.


Anonymous said...

In defense of some of your comments, Liberty provided smaller newspapers with good special section content at a very affordable rate. This content did a lot for revenues in the smallest of markets.
Then GateHouse stepped in and has improved even more in that area and it has aided many smaller properties toward the internet.
As of the last six to nine months economic conditions have really put a serious squeeze on individual newspaper markets.
GateHouse may have stepped out to far, but you would have to be good at looking into the future to know that the economy was going to tank as heavily as it has.
The economy is a major factor in what has upset the apple cart in GateHouse.

Anonymous said...

I want to know exactly what that previous poster was smoking. Gatehouse provides nothing the newspapers want or need or couldn't get anywhere, and charges them out the wazoo for what they do get from the company. It buys papers, sucks the revenue from them to pay bloated salaries of idiots in New York who know nothing about the newspaper business, sucks them dry, then, saying the business community didn't support them enough, kills them. It's the business model of a leach, except a leach is smart enough to take what it needs and leave its host alive. Gatehouse leaders aren't even that smart. How are Derby, Kansas City Kansas or Girard better than they were before? All the economy did was expose the flaws in Gatehouse's business model, or lack there of.

Anonymous said...

I worked, and still do, for one of the small dailys in Missouri that Hollinger owned, then sold to American, which then sold to Liberty, which then became GateHouse. It really doesn't much matter which corporation owns you, they all suck the life out of you. Actually, back in the day, Hollinger probably did less daily damage to us. But times are different.

Anonymous said...

I work for one of the GateHouse papers that was part of the Liberty group. I have to say that in some ways, things have actually improved. Benefits and vacation policies got slightly better, and while GateHouse made major cuts at papers it acquired from other groups, it seems like the Liberty papers were already extremely lean, so we didn't get cut as much. In addition, the syndicated content is much better than the crap that Liberty's specialty division used to put out.

That said, it has many, many problems, not the least of which is that it acted like a shopaholic with an unlimited credit card, buying property after property and ending up saddling its otherwise profitable newspapers with mountains of debt.

Anonymous said...

I normally don't post to blogs, etc, but some of the information in this story is not correct.

When the decision was made to move the Carthage printing to Neosho, the Neosho crew had already been printing the Saturday edition for Carthage for well over a year. Before closing the Carthage press operation down completely, many of the special sections were being printed in Neosho because the Neosho press had the capability to print more pages and much better color capabilities.

This is not a dig against the Carthage production staff, they just did not have the proper equipment to work with. Placing the proper equipment in Carthage would have cost in excess of 500K. Neosho had the equipment in place due to proper planning in the 70's and 80's by Ken Cope, and improved on in the 90's and beyond by Randy Cope.

Also, any requests by Ron Graber and now publisher Buzz Ball for later deadlines to accommodate late breaking stories have always been given serious consideration.

Commercial work moved to Neosho from Carthage resulted in those customers also being able to improve their products due to better print quality and color capabilities.

I know there are many complaints against GateHouse, and rightfully so, but I will not stand for rumors and misinformation about our press operation. I have worked tirelessly for years to build one of the best press operations in the GateHouse chain, as well as in the 4 state area. We have the best pressman experience on our floor than anybody.

James (myself) has 21 years, Mike has 23 years, Gary has 30 years, Frank 19 years experience, and 3 apprentices with several years combined. James (myself and Frank originate out of Neosho, Mike came from the Morning News in Northwest Arkansas, and Gary from the Reno, Nevada operation.

I know this is true, because I am there.


James T Abruzzo
Neosho Daily Production Manager
GateHouse Media Regional Production Manager
1988 to present

Barry Johnson said...

Seems rather simple. Small dailies should remain independent and not sell their souls to the big corporations. There are plenty of healthy, strong and profitable weeklies right here in Missouri. Local ownership is the key.