(MENAFN- AFP) US newspaper giant Gannett on Monday announced an $815 million bid for rival Tribune Publishing to create a powerhouse combining USA Today with the Los Angeles Times and Chicago Tribune.
The plan would bring together two large newspaper groups which have been spun off from larger media conglomerates amid woes in an industry suffering from a loss of print circulation and advertising as readers shift to digital.
The plan "would deliver substantial strategic and financial benefits for the combined company," said Gannett chairman John Jeffry Louis.
Gannett chief executive Robert Dickey said the deal "would bring together two highly complementary organizations with a shared goal of providing trusted, premium content for the readers and communities we serve."
Gannett, spun off from its parent group last year, operates more than 100 newspapers including its national flagship USA Today.
The deal would add to this empire major metropolitan dailies in Los Angeles and Chicago as well as the Baltimore Sun, Orlando Sentinel, Hartford Courant and others.
A Gannett statement said the offer had been rejected by Tribune Publishing, but urged the board of directors to reconsider, saying that the proposal offered a premium to the most recent stock price and could "create a company with the financial stability and flexibility equipped to preserve journalistic integrity, high standards and excellence for years to come."
However, Tribune Publishing said only that it had received the proposal and would respond "as quickly as feasible."
The group was spun off the larger Tribune Co. in 2014, and has been examining options such as the sale of the coveted Los Angeles daily.
- Hostile effort -
Lance Vitanza at CRT Research said in a note to clients that by going public with the proposal "Gannett may be seeking to turn up the heat on Tribune's board" to consider the deal.
Vitanza said the deal faces an uphill battle.
"Hostile takeovers are virtually unheard of in the newspaper industry, where cultural fit is paramount and regulatory concerns loom large," he said in the note, adding that "Gannett has room to up its bid" to win over investors and board members.
Dan Kennedy, a journalism professor at Northeastern University who follows the newspaper sector, said a Gannett-Tribune tie-up "would not be a good development for the newspaper business," potentially leading to significant job cuts and a decline in local coverage.
"I think it's understandable that since the newspaper business is in dire straits there will be an impulse to do these combinations to try to get bigger scale to offset the shrinkage in revenues," Kennedy said.
"But I think people who depend on newspapers would be far better off if we moved in the other direction, to local ownership."
Kennedy added that "as bad a shape as newspapers are in, if they operate under local ownership without debt and they aren't shipping revenues to some corporate headquarters, those newspapers can get by."
The news comes amid turmoil in the newspaper sector.
Earlier this month, Gannett closed a deal for Journal Media Group, including its 15 daily newspapers including the Milwaukee Journal Sentinel.
Tribune Publishing meanwhile last month lost a bid for the Orange County Register after US antitrust officials objected to its merger with the Los Angeles Times, claiming it would have too much dominance in southern California.
Gannett last year became the latest media conglomerate to break itself apart, splitting off its television operations into a new firm called Tegna.
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