Gannett, GateHouse Media in Merger Talks

USA Today publisher Gannett Co. has recently held merger talks with GateHouse Media, according to people familiar with the matter, a possible deal that would bring together the nation’s two largest newspaper groups by circulation.

Gannett—which two weeks ago defeated Digital First Media in a proxy fight and fended off the hedge-fund backed publisher’s hostile takeover bid—has also been speaking recently with others about potential deals, including Tribune Publishing Co. TPCO 6.59% and McClatchy Co. MNI 18.10% , the people said.

All the companies have struggled over the past decade with steep advertising and print readership declines. This year, both GateHouse and Gannett have had substantial rounds of layoffs, while McClatchy offered buyouts to hundreds of employees.

A tie-up could help the companies bulk up and trim costs to better weather the brutal environment for local newspapers around the country. A merger would give Gannett a far wider geographic footprint to sell digital advertising through its USA Today network and help speed the companies’ reorientation away from print.

Should GateHouse and Gannett reach a deal, the combined company would be the largest U.S. publisher by number of titles and circulation. GateHouse is currently the largest newspaper publisher in the U.S. by number of titles owned, with 156 daily papers and 464 weeklies, most of which are in very small markets. GateHouse also is second in circulation among newspaper publishers in the U.S., behind Gannett.

GateHouse’s parent is the publicly traded New Media Investment Group Inc., NEWM 4.65% which is operated by private-equity firm Fortress Investment Group LLC. GateHouse, like Digital First, is known for implementing deep cuts at papers it acquires and consolidating operations into regional hubs.

Newsletter Sign-up

GateHouse has spent close to $1 billion in recent years acquiring dozens of small and medium-size papers around the country. Last year, it bought the Austin American-Statesman, the Palm Beach Post and the Akron Beacon Journal.

Tribune—which owns nine big-city dailies, including the Chicago Tribune, the Baltimore Sun and New York Daily News—had rebuffed a takeover attempt by Gannett in 2016, but rekindled talks earlier this year, The Wall Street Journal previously reported.

Last summer, Tribune sold the Los Angeles Times to biotech billionaire Patrick Soon-Shiong and used the proceeds to eliminate all its debt. At the end of the year, discussions for a deal to merge McClatchy and Tribune fell apart over questions about financing and regulatory hurdles.

Write to Lukas I. Alpert at lukas.alpert@wsj.com and Cara Lombardo at cara.lombardo@wsj.com