Some 500 to 600 people from marketing, administrative and other positions could be dismissed, said insiders and an observer familiar with the deal. It is unclear whether the cuts will only affect Gannett's 1,500 staffers or include some of Outdoor Systems' 300 people.
"I'm sure there is going to be some shaking out, but we really don't know how many people will be affected," said a spokesman for Outdoor Systems. President-CEO Arte Moreno was unavailable for comment pending completion of the deal.
NEW OWNERS BRING CONCERNS
The sale is expected to be finalized by the end of this month. Last week, Outdoor Systems sold its Denver operations to win Justice Department approval of the pact.
With the Gannett sale following recent acquisitions of Patrick Media Group by Eller Media Co. and Transportation Displays by Infinity Broadcasting, concerns are growing about what changes the new owners will bring to the outdoor industry.
The industry enjoyed the larg-est jump in revenue in more than a decade last year, hitting $1.83 billion, an 8.2% gain over the previous year, according to the Outdoor Advertising Association of America.
"It's a bit of a worry," said one Gannett executive, adding that more and more growth is coming from national advertisers in what has been largely a local business. "Patrick and Gannett did a lot of business development work."
Karl Eller, CEO of Eller Media, said industry consolidation "will help the advertiser to buy a broader spread of markets and make buying easier."
Another concern is that Outdoor Systems will pull its membership from the OAAA to save the annual dues, the most of any outdoor group. While some say it would be an unlikely move, others note Outdoor Systems isn't a member of the Traffic Audit Bureau, another major trade group.
The Outdoor Systems spokes-man said he wasn't aware any such move was being considered.
"There is no reason to believe [Mr. Moreno] would do that; he's been a long-time member," said OAAA President-CEO Nancy Fletcher, who says Mr. Moreno is "a good friend." The group's annual budget is $4 million.
LEAN AND MEAN
Mr. Moreno's leadership of the largest outdoor group is expected to have an impact on new business development. The executive, who worked for Gannett from 1979 to 1984, is known for running a lean, efficient organization more than developing new business.
"He's done extremely well in the businesses that he's run, but he has not put a lot of value in research or technology," said another Gannett executive.
"To Gannett's credit, they've really been a maverick. They've been behind a lot of industry organizations and been leaders in industry marketing," said Jody Yegelwel, senior VP-marketing at Transportation Displays. "[Mr. Moreno's] commitment doesn't seem like it will be there."