Two of the nation’s bigger publishers of newspapers remained quiet Friday about the fate of a proposed merger that would have united the owner of USA Today with the publisher of The Los Angeles Times and the Chicago Tribune.
Shares of both Gannett Co and Tronc Inc. tumbled Thursday in the wake of a Bloomberg report that said banks prepared to finance a potential Gannett purchase of Tronc had backed out of the deal, worried that the ongoing decline in the newspaper industry’s financial health made the deal less palatable. Tronc shares fell as much as 28% Thursday, while Gannett shares fell 17%. On Friday, Tronc shares had earlier risen 71 cents, or nearly 6%, while Gannett shares fell another 20 cents, or 2.44%.
The seeming demise of financial backing for the deal, which would have joined together two of what have become a small handful of large U.S. newspaper owners, crystallized for many the accelerated erosion of the sector. New York Times Co., and News Corp.’s Dow Jones unit have both indicated some head-count reductions are looming among staffs -and Gannett has as well. Magna Global, a media-research unit of advertising holding company Interpublic Group, recently projected ad-revenue growth at U.S. newspapers would fall 11.1% in 2016 and 12.5% in 2017. In that year, Magna said, newspaper ad revenue would total about $10.9 billion, compared with $14.1 billion in 2015.
Spokespersons from Gannett and Tronc did not respond immediately to queries about the recent movement of their stocks or the state of the proposed merger.
Their courtship has been a prolonged one. Gannett is said to covet Tronc’s big-city newspapers in Chicago, Baltimore and Los Angeles, among other places, believing they would complement its large trove of mid-size and community newspapers. Those Tronc publications could also help accelerate a Gannett strategy that has the company buying up a variety of print outlets to help it gain bulk while advertisers shift dollars once earmarked for the medium to digital venues like social and mobile. Gannett recently acquired newspapers in and around Milwaukee and northern New Jersey.
Tronc, meanwhile, is under the control of technology entrepreneur Michael Ferro. He has resisted previous Gannett offers. Whether the deal is permanently scuttled or remains viable is something that could be a topic of discussion on Tuesday, when Tronc talks to investors about its third-quarter earnings performance.