GateHouse Media’s owner and Gannett have agreed to merge in a deal aimed at cutting overlapping costs and enabling the combined company to pursue a digital transformation as the media industry grapples with the disruptive forces of online news, social media and smartphones, reports USA TODAY.

USA TODAY added that New Media Investment Group has “reached a deal to acquire Gannett, which owns USA TODAY and more than 100 other daily publications and digital marketing services such as ReachLocal.

“Pittsford, New York-based GateHouse, the operating subsidiary of New Media Investment Group, will combine with McLean, Virginia-based Gannett, the larger of the two companies, in a cash-and-stock deal worth about $1.38 billion and financed in part with new private-equity debt.

“Together, the two companies would operate more than 260 daily news operations – far more than any other U.S. news publisher – and boast potentially the largest online audience of any American news provider.”

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