Wes Edens, Fortress Investment Group
One Wall Street investor that has long had its hand in the newspaper business is private equity firm Fortress Investment Group, helmed by billionaire Wes Edens, who co-owns the Milwaukee Bucks.
Its history in local news extends at least as far back as 2005 when Fortress bought Liberty Group Publishing for $527 million and then rebranded it as GateHouse, expanding its circulation and reach.
This year, though, its lifespan in that business received an expiration date, when GateHouse was merged into Gannett as part of a gigantic newspaper merger set to slash $300 million in costs in two years.
Along with those changes, Fortress’s ownership of New Media, the parent company of GateHouse, will sunset. Yet its involvement in the business continues to live on after making an indelible mark.
Mike Reed, the former CEO of New Media, is now the CEO of Gannett, and continues to maintain ties to Fortress.
That’s how he is able to enjoy public company CEO compensation without having to disclose the amount, according to a person familiar with the matter.
Reed is technically an employee of Fortress, and the pay is treated as a management contract with the private equity firm, this person said.
A check of SEC filings showed as much, with New Media’s April proxy statement excluding Reed’s compensation. The pay arrangement has also been noted by Poynter.
The New Media filing said that its “manager” compensates Reed based on “the overall value of the various services that he performs” and “is not able to segregate and identify any portion of the compensation awarded to him as relating solely to service performed for us.”
Business Insider posed a series of questions to Reed through a spokesman, including questions about his compensation arrangement. He declined to comment for this article.
Still, Reed strikes a contrast to Edens, whose Fortress charged tens of millions in fees in managing GateHouse and whose involvement in local news has seemed to lessen lately, having exited from New Media’s board of directors.
Reed is a believer in local news, and thinks it can have a bright future, people close to him say.
Colleagues refer to him as soft-spoken, sharp, and thoughtful, and he’s been in the news business for much of his career, having served on the boards of directors of the Associated Press and Newspaper Association of America.
As Reed settles into his new role and Edens’ involvement fades into the background, though, private equity is still bound to shape Gannet’s future.
The huge investment firm, Apollo Global Management, is funding the GateHouse-Gannett merger with a $1.8 billion loan.
The newspaper company will have to pay off the loan over five years, at an 11.5 percent interest rate.