GateHouse has been on an acquisition tear for the past year, and Ottaway publishes its kind of newspaper: mid-sized dailies that have a monopoly on the local news, and remain the most attractive medium for local advertisers.
Ottaway, which now calls itself "The Local Media Group of Dow Jones," also publishes in regions where GateHouse is growing. GateHouse relocated last year to the upstate New York community of Fairport, about 200 miles from Ottaway's long-time Campbell Hall, N.Y., headquarters. Both publish papers in upstate and along the Hudson Valley.
GateHouse is a natural for Ottaway, and CEO Mike Reed must be watching developments with interest. A spokesperson for GateHouse and its principal owner, the New York City private equity firm Fortress Investments, did not immediately return a phone call seeking comment on whether GateHouse is contemplating a move on Ottaway.
But GateHouse?s business model depends on continued acquisition. The chain, formerly Liberty Group Publishing, launched a successful IPO (initial public offering) last October by promising to fund dividends with growing amounts of free cashflow earned by dailies, weeklies and shoppers that own their smaller markets. GateHouse now publishes 84 dailies and some 200 non-dailies in 19 states.
In just the past six weeks, GateHouse swung two big purchases.
It bought nine papers -- including the Peoria (Ill.) Journal Star; The State Journal-Register in Springfield, Ill.; and The Repository in Canton, Ohio -- in a $380 million deal with Copley Press Inc. A day after that sale close, it announced it was spending $410 million to buy four Gannett Co. dailies: the Norwich (Conn.) Bulletin; the Rockford (Ill.) Register Star; the Observer-Dispatch in Utica, NY; and The Herald-Dispatch in Huntington, WV.
GateHouse made a splash last year by following up the $230 million purchase of four Boston-area dailies and 93 weeklies from Patrick J. Purcell's Community Newspapers Co. with a $180 million deal for the Patriot Ledger in Quincy, Mass., another daily and two dozen weeklies.
As it happens, Ottaway publishes more than a dozen papers in Massachusetts and south-east New Hampshire including the Cape Code Times in Hyannis, Mass., the Middleboro (Mass.) Gazette; The Portsmouth (N.H.) Herald; and The Exeter (N.H.) News-Letter.
Ottaway also publishes two dailies in a ready-made cluster in southern Oregon, a state where GateHouse has no papers.
At 11:30 EDT, GateHouse (NYSE: GHI) was trading at $20.35, down 8 cents or 0.39% from its open.
By: Mark Fitzgerald If Dow Jones & Co. is in play -- and it looked increasingly that way Tuesday -- then its Ottaway community newspaper chain is likely to find a ready bidder: GateHouse Media Inc.