Observer’s printing plant remains valuable asset for Gannett

By Scott Nunn, posted Jul 21, 2021 on BizFayetteville.com

**Gannett Co. Inc. announced last week it plans to sell the Fayetteville Observer building at 458 Whitfield St., but the paper will continue publishing.**

Following a nationwide trend in the newspaper industry, Gannett Co. Inc. announced last week it plans to sell the Fayetteville Observer building, located at 458 Whitfield St. But if the 45-year-old building does get a new owner, readers likely won’t notice any differences. And it certainly won't be a “stop-the-presses moment” for the Observer.

With traditional print newspapers still looking to trim costs amid a challenging transition into the digital age, buildings have been both a blessing and a curse. On one hand, many were paid for years ago, in some cases providing a valuable ace-up-the-sleeve at a time when real property is in high demand.

On the other hand, downsized staffs along with outsourced and consolidated services such as printing and design have left some newspapers with mostly empty buildings that are costly to operate and maintain.

Though the real-estate sell-off is not new — “Struggling Newspapers Sell Off Old Headquarters” was a headline in a 2013 edition of The New York Times — the COVID pandemic and the realization that many newspaper employees can work remotely seems to have accelerated the trend.

In a March 24 article for Poynter — a non-profit journalism school and research organization — media-business analyst Rick Edmonds said that “holding on to wasted space left over from the golden days of the business is clearly an unaffordable diseconomy now.”

Selling a building or a large tract of developable land can net huge windfalls for cash-strapped newspaper companies, Edmonds said.

“That money can drop to the bottom line or, as likely, be applied to tech infrastructure for digital.”

Selling the building is part of a larger strategy for the Observer’s owner, Gannett, which with 250-plus publications is the nation’s largest newspaper company.

If the building sells — it’s on the market for $6 million — the Observer won’t be going anywhere. Gannett is selling off real estate in spurts, packaging properties into portfolios. The current version of the “Gannett Co., Inc. Sale Leaseback Portfolio” includes Fayetteville along with the Gannett papers in Jackson, Mississippi; Providence, Rhode Island; and Knoxville, Tennessee.

Although some Gannett papers moved to new locations after their buildings were sold, the offer the Observer is included in requires the new owner to lease space back to each publication, with the rental terms already set.

In the Observer’s case, the paper would continue to occupy 155,000 of the building’s total 195,000 square feet of space. The newspaper would pay about $32,000 a month in rent.

Additionally, a 10-year lease with termination rights after five years is required, according to BellCornerstone, a national firm that specializes in portfolio management and property disposition and is handling the Gannett sales.

The reason the Observer would still need so much of its current space reflects one of its biggest assets — the newspaper currently prints 12 daily newspapers, including other North Carolina Gannett publications, which saves the company money. Additionally, the Fayetteville press plant prints USAToday and the Raleigh News & Observer, generating an extra revenue stream.

The Greater Fayetteville Business Journal reached out to several Observer officials Wednesday seeking comments on possible changes a sale could bring and to find out how many jobs would be needed at the busy printing operation. None had responded by 3 p.m.

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