Gannett says it will sell or close Tucson Citizen

Gannett Co., the largest newspaper publisher in the country, will close the Tucson Citizen if it does not find a buyer for certain assets owned by the paper by March 21.

Robert J. Dickey, president of Gannett U.S. Community Publishing, made the announcement in a brief meeting with employees Friday.

"The Tucson Citizen has been part of Gannett since 1976, and we deeply regret having to take this step," Dickey said. "But dramatic changes in our industry combined with the difficult economy - particularly in this region - mean it is no longer viable for our partnership with Lee Enterprises Inc. to produce two daily newspapers in Tucson."

The Citizen, an afternoon newspaper, operates under a joint operating agreement with the Arizona Daily Star, a morning paper owned by Davenport, Iowa-based Lee Enterprises Inc. Print production, distribution, sales and other non-editorial functions for both the Citizen and the Star operate under the name Tucson Newspapers Inc.

Gannett and Lee Enterprises split any profits from TNI equally. Dickey told Citizen employees the paper as its own entity is losing money and the newspaper had become an increasing drain on Gannett operations over the last eight months.

However, through the JOA that runs through 2015, Gannett received about $13 million in 2007, TNI President Mike Jameson said. He added that the profit split from 2008 will be much less. He did not specify the amount.

Gannett spokeswoman Tara Connell said the company was selling "the softer assets" of the Citizen - "the name, the Web site, the URL, the contact list, advertising list, contracting list, subscriber list."

Dickey declined to announce an asking price or the estimated value of the newspaper.

Jameson said the fate of the JOA depends on whether there's a buyer and what offer the buyer would make.

He also said a sale would have to receive the approval of Gannett, Lee Enterprises and the Justice Department, which regulates the agreements.

"If there are no buyers within a certain amount of time, then (Gannett) can and will close the paper on March 21," Jameson said.

If the paper closes, the Citizen's nearly 70 full-time employees will be offered severance pay depending on years of service.

The Citizen and the Star maintain separate newsrooms and the editorial operations are independent. The Citizen, which publishes Monday through Saturday, is one of Arizona's oldest newspapers, operating since 1870. The Citizen's average daily circulation is about 17,000 newspapers, compared to the Star's 117,000.

Tucson becomes the latest city on the verge of losing its second daily newspaper as the industry suffers from the poor economy, falling retail advertising and circulation declines.

Denver's Rocky Mountain News, owned by E.W. Scripps Co., was recently put up for sale and could close if a buyer isn't found soon. Hearst Corp. put Seattle's oldest newspaper, the Seattle Post-Intelligencer, up for sale last week and said it would likely close or exist only online if a buyer wasn't found by March.

Gannett, based in McLean, Va., publishes 85 daily newspapers in the United States, including The Arizona Republic and USA Today, and operates 23 television stations.

Earlier this week, Gannett announced that nearly all employees at all its publications and broadcast outlets would be furloughed for one week without pay during the first quarter of 2009 to avoid layoffs.

The San Diego Union-Tribune, which is also up for sale, announced plans Friday to furlough employees, halt company contributions to employees' 401(k) retirement accounts in 2009 and increase the amount that employees pay for health insurance premiums.