The Boston Herald is heading into the hands of a Denver-based media company known in the journalism industry for implementing steep cost-cutting measures at its newspaper holdings across the country.
Digital First Media, backed by the investment firm Alden Global Capital, emerged as the top bidder in a bankruptcy auction Tuesday to takeover the paper. The deal has to go before a bankruptcy judge Friday before the sale is finalized.
The paper's current publisher, Pat Purcell, put the Herald up for sale in September. In December, Purcell announced the Herald had filed for bankruptcy and that he was in the middle of negotiations to sell the paper to New York-based GateHouse Media. GateHouse, also known for significant cost-cutting, has amassed an empire of local newspapers in Massachusetts and across the country. WGBH News media analyst and Northeastern University professor Dan Kennedy said GateHouse Media was pegged as the front-runner to assume control.
"It seemed to be teed up for GateHouse media, but Digital First came into the picture pretty late — they did not make a formal bid until last week," Kennedy said. "The understanding of most people looking at this was that they were going to outbid GateHouse. And in the end, they outbid GateHouse by quite a lot."
Digital First agreed to buy the Herald, which finished $3 million in the red last year, for nearly $12 million in cash — an offer more than double GateHouse's initial bid of $4.5 million. It also promised to assume the paper's outstanding liabilities. Kennedy said that regardless of who assumes control, the Herald newsroom is anticipating layoffs to its 240-person staff.
"GateHouse had said they were going to cut back to 175. According to early reports ... at least at first, Digital First will also go with about 175. But there is — and a lot of this is speculative ... some reason to believe that in the long run, Digital First will cut more deeply than even GateHouse," Kennedy said.
Digital First owns the Lowell Sun and Sentinel Enterprise in Fitchburg, which just announced the closing of its physical office to switch over to a “virtual newsroom.” The company also owns the The Denver Post, The Mercury News of San Jose, and a number of Bay Area newspapers that just underwent a series of layoffs.
While the entire print news industry is struggling to rework its business models to remain profitable in the digital age, the Herald faced problems specific to its position in Boston's media landscape, according to Kennedy.
"There are some real Herald-specific problems, mainly stemming from being the No. 2 paper in the city. There are virtually no No. 2 papers left," Kennedy said. "They've been closing since the 1950s, so really it's remarkable that the Herald has hung on as long as it has, and by all indications will continue to hold."
For more about media analyst Dan Kennedy's thoughts on Digital First buying the Boston Herald, read his latest commentary.