12-31-10 | Printable Version

Year-End 2010

Year in Review
Small market dailies garnered most interest from buyers in 2010

With a couple of notable exceptions, small market newspapers dominated the deal list in 2010.

More than three-quarters of the dailynewspapers sold in 2010 had circulation less than 10,000. This was in sharp contrast to 2009, when only a handful of small dailies changed hands, and the average circulation of daily newspapers sold was one of the highest in modern times.

This turnabout was in part a reflection of the relative health of the small market newspaper sector. Many smaller newspapers were posting gains in year-over-year advertising revenue at year-end. Meanwhile, those in larger markets – demonstrated in the public company reports – generally continued to see lower revenue.

It was also a reflection of availability. Family owners represented six of the 10 sellers in transactions involving daily newspapers in 2010, and this ownership class is heavily weighted toward smaller markets.

By the Numbers

Some 13 daily newspapers were sold in those 10 transactions in 2010, totaling $148.9 million.

These statistics were largely in line with the annual totals in the post-recession era: 11 transactions in 2008 worth $883.5 million and 16 transactions in 2009 worth $183.7 million. (The 2008 dollar volume was inflated by the $650 million sale of New York Newsday, which closed before the meltdown of the financial markets in the second half of the year.)

Deal Market Outlook

Two major issues have conspired to limit the newspaper deal market over the past three years.

First, newspapers have suffered through dramatic declines in advertising revenue beginning in late 2007. Second, lending for newspaper and other transactions all but disappeared in 2008.

While newspapers are recovering from a business perspective, the ability to finance deals continues to be very difficult. Until the financial markets show some signs of life, the number of publishing transactions is likely to be limited.

Our view is that if the U.S. economy continues to improve in 2011, some loosening of credit for newspaper deals is likely to occur, but probably not until the latter part of the year.

Year in Review

The largest daily newspaper sold in 2010 was the 127,000- circulation Honolulu Advertiser. David Blacks’ Oahu Publications, which owned the competing Honolulu Star-Bulletin, acquired the Gannett daily and combined the publications.

Another large newspaper operation sold in 2010 was Freedom Communications’ East Valley Tribune, with controlled distribution of nearly 100,000 in suburban Phoenix communities.

These deals, however, were the exception. The bulk of the daily newspaper deals involved dailies under 10,000 circulation, including many with less than 5,000 circulation.

Local owners sold small market newspapers in Washington and Tryon, North Carolina; Laconia, New Hampshire; Maryville, Tennessee; and Franklin and Morgan City, Louisiana.

In many cases, the buyers also were family owners and privately held companies. These included Scoop Sample, the Jones family in Tennessee, Boone Newspapers, Randy Miller and Murray Cohen.

Family-owned Brown Publishing went through a bankruptcy auction resulting in ownership being transferred to its senior lenders.

After taking over in September, the lenders shed most of the company’s business journals located throughout the country. Brown’s community newspapers in Ohio are expected to be sold in 2011.