Just months after Warren Buffett, once an avid investor in newspapers, dismissed the newspaper industry as “toast,” the two largest U.S. players are said to be negotiating to combine in an effort to survive.

Gannett and GateHouse Media are in advanced talks to merge, according to the Wall Street Journal, which cited confidential sources. The deal would combine under one roof 265 dailies, including Gannett’s USA Today, the largest U.S. paper by circulation, and have a combined circulation of 8.7 million. The nearest rival would be McClatchy, with 1.7 million.

Financial woes of traditional print have caused a wave of consolidations as companies seek economies of scale in hopes of staying afloat. 

Local newspapers — many of which are alive after being bought by a large consolidator like Gannett — are bleeding users as newspaper readers age and younger consumers turn to social media and mobile phones. Newspaper closures, cost-cutting and circulation dips typically affect smaller local outlets more than their larger urban counterparts.

According to the Wall Street Journal, GateHouse “has a reputation for aggressively slashing expenses” at its papers. Most of GateHouse’s 156 publications are in smaller markets such as Pine Bluff, Arkansas; Bloomington, Indiana; or Cheboygan, Michigan. 

  • Since its peak in the mid-1980s, U.S. newspaper circulation has sharply declined. In 1985, weekday paper circulation was about 63 million. Today’s total is estimated to be about 28.5 million, according to Pew Research Center
  • A 2018 University of North Carolina report titled “The Expanding News Desert” found that almost 1,800 U.S. newspapers have disappeared since 2004. Additionally, fewer than a dozen cities in the U.S. have two competing daily papers, which limits diversity of thought and coverage of local and state government.
  • Struggles of local publications has spurred tech giants, credited with squashing local digital advertising efforts and breeding fake news, to launch local news initiatives. 
  • On Thursday, Google announced Youngstown, Ohio as the inaugural city for The Compass Experiment, its joint local news initiative with McClatchy, and Facebook’s Journalism Project awarded its first class of $25,000 grants to local newsrooms.
  • Karma Takeaway: Without a pivot to a sustainable business model, fallout caused by the newspaper industry’s consolidation will continue to disproportionately affect local journalism.