Sandusky Strikes Quickly with Right Opportunities
Sandusky Newspapers, Inc., has not been the most active company in recent years in terms of daily newspaper acquisitions, but the 133-year-old family-owned company is a patient player that strikes quickly when the right opportunity presents itself.
The company proved that yet again with its purchase of the Carl A. Jones Newspapers, including its flagship Johnson City (TN) Press, in one of the largest transactions thus far this year. The morning Press has a daily circulation of 29,961 and a Sunday circulation of 34,100.
Sandusky Newspapers is developing a history of making big acquisitions. In 1993 the company caught the industry by surprise with its acquisition of the 61,324-circulation Ogden (UT) Standard-Examiner. At that time the company had no other newspaper holdings west of the Mississippi and had not acquired a daily in 24 years.
“We are extremely flexible and can strike pretty quickly where we think the opportunity exists,” said David Rau, president and chief executive officer of Sandusky Newspapers.
Ownership of the Johnson City Press gives the company dailies in two of the three cornerstone markets that constitute the “Tri-Cities” metropolitan area of northeastern Tennessee and southwestern Virginia. Sandusky has owned and operated the 42,015-circulation Kingsport (TN) Times-News 25 miles north of Johnson City since 1962 (see map below). The other daily in the Tri-Cities market is the Bristol (VA-TN) Herald-Courier owned by Media General, Inc. Media General also owns the CBS television affiliate in Johnson City.
“It’s a great fit for us,” Rau said, but cautioned that it is still too early to tell what other synergies the company will realize from the deal, which closed April 30.
Rau, who served as publisher for the Kingsport Times-News from 1983 to 1993, said that while there are regional issues that affect the Tri-Cities market, Johnson City and Kingsport have separate identities, and the company has no intention of consolidating its news-editorial coverage.
“They are big rivals in high school sports,” Rau said. “They are separate newspaper markets and are both better served as separate newspapers pursuing local editorial. I think we have to be as intensely local as we can be in both markets.”
Carl A. Jones Newspapers consisted of two dailies and six weeklies in Tennessee. In addition to the Johnson City Press, the sale included the 8,815-circulation daily Lebanon Democrat east of Nashville and its companion weekly, the Hartsville Vidette. Also included in the deal were two Memphis-area weeklies: the 7,770-circulation Covington Leader and the 3,650-circulation Fayette Falcon. Sandusky Newspapers sold the Memphis-area weeklies in two separate transactions in June.
David Rau, a fifth-generation family member who took the helm as the company’s chief executive officer in 1994, said the company’s growth has always come by maintaining a healthy balance sheet and being patient for the right deals to come along. Rau succeeded Dudley White, Jr., who initiated the company’s growth from its roots in Norwalk and Sandusky, Ohio during his 37-year tenure as chairman.
With the addition of the Carl A. Jones Newspapers, Rau said the company is projected to generate annual revenue in 2002 of approximately $130 million, almost $100 million more than the company posted 10 years ago.
Much of the company’s growth in recent years has been fueled by radio station acquisitions. From 1992 to 1998, the company picked up seven radio stations (four FM and three AM) in the Phoenix and Seattle metropolitan areas, bolstering the smaller presence in these markets.
Rau said the radio investments have paid off handsomely, helping fuel the company’s growth. “Our radio division has grown very rapidly,” he said. “So much so that by the year 2001, when the Jones family’s newspapers came on the market, we had more cash than debt, and despite the economic downturn, we were in a good position to buy.” At the time of the Johnson City acquisition, Rau said the company was sitting on $43 million in cash, with $31 million in debt.
Rau’s brother, Norman, is president of Sandusky Radio. The family has a long history in the newspaper business dating back five generations. David and Norman Rau are the sons of Alice W. Rau, who until her retirement served as vice president and treasurer of Sandusky Newspapers, in addition to her duties as publisher of the Grand Haven (MI) Tribune. She is still a director.
The company has its roots in Sandusky, Ohio, where it has owned the Sandusky Register since 1869, making it the 12th longest continuously owned daily newspaper in the nation. In 1912 the company purchased the Norwalk Reflector, 30 miles from Sandusky, creating perhaps what is now one of the longest held newspaper clusters in the United States. To this day, however, both of these newspapers are run by separate management and vigorously compete for local news.
“We have found that as long as you have a strong community paper in a good market, you don’t need a clustering strategy,” Rau said.
With the widely anticipated lifting of cross-ownership restrictions on the newspaper industry expected later this year, Rau said the company might consider pursuing radio station acquisitions in the same markets as its newspapers. “We want to continue to buy newspapers and radio when they make sense for us,” he said.