Read all about it…

April 19, 2007

images-3.jpegWe all know the newspaper industry is in trouble, right? We see the headlines everyday, read the tales of woe, including this one in the premier issue of Portfolio and the cover story that I wrote in the current issue of Worth (not available online — sorry) with Mark Cuban’s thoughts on reviving newspapers.

So what is newly public Gatehouse Media (GHS) doing handing out a $1.5 million sign-on bonus to its CEO, Michael E. Reed? And more specifically, how many reporters at small papers — people in places like Utica, New York or Huntington, West Virginia, where the company last week purchased four papers from Gannett (GCI) Co. Inc. for $410 million — could be hired for that amount? (A brief aside: one of my old editors, who was one of the biggest kiss-asses out there, used to make me spell out the full name of the company each time I reported regurgitated the company’s earnings verbatim from the press release). While I don’t have specifics, based on my experience, it’s hard to imagine most of these reporters making much more than $35K a year, even with benefits.

By most accounts, Reed is an impressive executive, so perhaps he deserved the money. Then again, as the proxy that Gatehouse filed yesterday spells out, the 300,000 shares of restricted stock that Reed received, which the proxy values at $4.3 million, should be enough of an incentive if newspaper companies really do start bouncing back. Or, if Gatehouse, whose focus is on small markets that haven’t suffered as much turmoil as larger papers, gets acquired by someone else.

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