GateHouse success no path for big city papers

Aaron Pressman

I felt a little frisson of anger this morning when I noticed the latest hot IPO from leveraged buyout world: GateHouse Media (Symbol: GHS). The company priced 13.8 million shares (a couple million more than expected) at $18 (the high end of its range) for an almost $250 million take and an implied market cap of over $600 million. Trading started at $21.60 this morning -- a pretty nice pop for a company with operating income of less than $14 million for the first half of this year and an operating loss of almost $9 million, thanks mainly to interest payments. A money-losing newspaper company investors want to own? Shouldn’t this be a beacon, a rallying point, a moment of joy for all of us in the media biz? Not exactly. GateHouse runs the kind of weeklies that give local journalism a bad name.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.