Friday, December 28, 2012

The GateHouse Media success story: Six cents a share, $1.5 million in bonuses

GateHouse Media, delisted by the New York Stock Exchange a couple of years ago, closed at six cents a share today.

The company is billions of dollars in debts, fired hundreds of designers and copy editors while setting up central copy desks in Massachusetts and Illinois, and to top it all off, the company, which has done everything it can to take the "community" out of community newspapers, has had its new management structure investigated by the SEC.

Using the same dictionary that enables it to call its products "journalism," GateHouse officials awarded themselves $1,495,000 in bonuses today, according to a filing with the SEC.

The amounts of the bonuses are listed below:

Michael E. Reed
Chief Executive Officer
Kirk Davis
Chief Operating Officer
Polly Grunfeld Sack
Senior Vice President, Secretary and General Counsel
Melinda A. Janik
Chief Financial Officer
Mark Maring
The company began as a sort of pyramid scheme, buying up as many small town newspapers as it could collect, cutting them to the bone (and then some), combining services, centralizing operations and continuing to grow to more than 400 publications as it grew further and further into debt.

Finally, the time came when it could no longer make any more cuts on a regional basis, so the decision was made to reorganize according to the size of the publications and farm out copy desk and layout functions to central desks in Illinois (for larger newspapers) and Massachusetts (for smaller ones).

It awarded the contract to a company, Saxotech, a startup that had never done anything on this large a scale, something that quickly became obvious. The conversion was a miserable failure and has still not been completed (even though GateHouse has already eliminated dozens of jobs to pave the way for the new venture). Now the company is indicating that some of its newspapers might not go through the central copy desk until late fall next year.

Give those GateHouse officials a bonus. In fact, despite mounting losses, the top officials collected $80,000 more in bonuses than they did in 2011.

And as GateHouse Media and the hundreds of "community" newspapers it represents head toward their own fiscal cliff (2014 when its billions of dollars of debt are due),  the company's top officials, especially CEO Michael Reed have nothing to worry about.

SEC filings indicate Reed, who has referred to the firing of hundreds of loyal employees as "rightsizing," will be sitting pretty when GateHouse finally goes under or when it decides to rightsize him.

 If the company sells and the new owners send him packing, Reed is guaranteed three quarters of a million, including $500,000 in severance pay, a $200,000 bonus and continued health insurance payments.

This week, the forward thinking Reed showed how he earned his $800,000 bonus when he announced another new deal. Don't get your hopes up. It has nothing to do with investing more money into his newspapers to restore them to their former places of respect in their communities.

That would be too much to ask for. Instead, GateHouse trumpeted the announcement that it will now be using TV Guide to provide its television listings.

That ought to be worth another $1.5 million next year.


Anonymous said...

Lots of sour grapes. They rightsized their wallets.

Rick Nichols said...

At, say, $50,000 per reporter, that $1.5 million in bonuses would have kept 30 more people working somewhere in trying to keep the "community" in "community journalism". How sad.

Anonymous said...

Saw this coming a year ago. Sad!

tri jones said...

This is so disgusting!!! I am a Gatehouse employee in Massachusetts and have not
had a raise in 5 years. I earn a small amount over minimum wage. No bonuses ever!
I work Saturdays, evenings...any time I am needed to accommodate the company.
Rick Daniels has mysteriously disappeared off the grid. There have been five layoffs
in our location last week alone. What the heck!!!! Could they have donated 2%, at least,
to cover our social security increase.....apparently not. the company motto seems to be ..."You are lucky to have
jobs". Really...looks to me like they are the lucky ones

tri jones said...
This comment has been removed by the author.
dwain said...

i did work there for 35 yrs until hurt then with doctors note i tried to return was told im to old and was told to go home because i took lunch break and used rest room when delivering in my union truck was followed in unmarked car was given warnings not to .was told to use trash bags in truck not rest room in stores i refused this is illegal and trucks smelled horrable