3rd Quarter 2013
Newcomers buy iconic papers: John Henry and Jeff Bezos enter the industry as newest private owners
The sales of the Washington Post and the Boston Globe highlighted the 3rd quarter activity. The combined $320 million aggregate value of the deals represents almost half the total dollar volume of newspaper transactions thus far in 2013.
The Washington Post is the 7th largest circulation daily in the country, with 671,000 Sunday circulation, and the Boston Globe is the 22nd largest with 363,000. Both papers were acquired by individuals who were buying their first newspapers.
Other transactions in the quarter included the sale of the Harte-Hanks shopper group in California (see page 3), Aaron Kushner expanding in southern California and Halifax Media’s addition in Florida.
How much does he know?
“In Boston they ask, how much does he know? In New York, how much is he worth? In Philadelphia, who were his parents?”
Many in Boston are asking, how much does John Henry know? Henry, principal owner of the Boston Red Sox, agreed in August to buy the Boston Globe and other publications from the New York Times Co. for $70 million.
Henry knew enough to make a fortune trading commodities. He knew enough to buy and sell various interests in professional sports franchises and ultimately end up buying the Boston Red Sox. He knew enough to find a way to break the curse of the Bambino by winning championships in 2004 and 2007.
Henry is part of a small but growing trend of newspapers returning to local ownership. Local leaders seemed to welcome the deal, hoping that Henry’s business acumen combined with his proven concern for the area and his investment in the market will strengthen the newspaper.
The Boston Globe was acquired by the New York Times in 1993 for $1.1 billion from Affiliated Publications – the first single newspaper to ever to break the $1 billion price tag. Six years later in 1999, the Times then paid $295 million for the nearby Worcester Telegram & Gazette, which was also included in the $70 million sale to Henry.
Affiliated Publications, controlled by members of the Taylor family, had owned the Boston Globe since 1921. It was reported that members of this family were contemplating making an offer to reacquire the Boston Globe when it was put on the market in February of this year.
Along with the enthusiasm about Henry’s purchase, there are some who have raised concerns on how the Boston Globe will now cover his hometown Red Sox. This situation is certainly not a first in Boston, or in other parts of the country where a media company has owned a professional sports franchise both operating in the same city. Some examples:
- The New York Times Company owned a minority position in the Red Sox for a number of years prior to selling it back to the current ownership group in 2010.
- Tribune Company owned the Cubs in Chicago for nearly 30 years.
- The Denver Post currently owns a minority position in the Colorado Rockies.
- The Nutting family owns the Pittsburgh Pirates as well as nearby newspapers in Wheeling, West Virginia and eastern Ohio.
- News Corp.’s Fox Entertainment Group owned the Los Angeles Dodgers from 1998 to 2004.
- CBS owned the New York Yankees from 1964 to 1973.
- Rogers Communications owns the Toronto Blue Jays.
- Turner Broadcasting owned the Atlanta Hawks from 1977 to 2004.
- The Atlanta Braves were owned by Ted Turner at a time when he controlled Turner Broadcasting and now are owned by Liberty Media.
- James Dolan runs both Cablevision, which bought Newsday in 2008, and the company that owns the New York Knicks, New York Rangers and other sports teams.
49-year-old buys 136-year-old Washington Post
In the biggest and also the quietest deal of the third quarter, Jeff Bezos bought the Washington Post for $250 million.
Bezos, best known as a technology pioneer and founder and CEO of Amazon, now finds himself owning a newspaper for the first time. The Washington Post is generating in excess of $500 million in annual revenue, but losing money according to public filings. The newspaper last changed hands in 1933 when Eugene Meyer bought it in a bankruptcy auction for $825,000.
The 49-year-old Bezos was born one year before famed executive editor Benjamin Bradlee took control of the newsroom of the Washington Post.
The head of the world’s largest retailer made it clear that his purchase was a personal investment and not connected in any way to Amazon. He said he had “no map” for the operation and implied that because of his financial strength he would be able to test some new concepts.
The publicly traded Washington Post Co. retained its television and educational operations. Shares of the Washington Post closed at $628 on October 1, the day of the closing of the transaction, up 16.3% from the day before the announcement of a sale.
Kushner Adds in SoCal
Aaron Kushner’s Freedom Communications Holdings agreed to buy the Riverside (CA) Press-Enterprise from A.H. Belo Corp. for $27.25 million. The deal will add to Kushner’s newspaper group in Southern California, which includes the Orange County Register and Victorville Daily Press.
Kushner acquired Freedom’s western newspapers and the corporation in 2012. He has since sold several of the former Freedom newspapers, leaving him with a core group south and east of Los Angeles.
Freedom Communications' Strategic Acquisition
Belo had owned the Press-Enterprise since 1997, when it bought out the remaining interest in it. Prior to that, it had owned a 38% interest in the newspaper. Belo still owns the Dallas (TX) Morning News, Providence (RI) Journal and other publications.
News Corp. to Newcastle
Dow Jones Local Media Group, better known to most reading this as the Ottaway Newspapers, was sold by News Corp. to Newcastle Investment Corp. in an $82 million transaction. The group consists of eight dailies and a number of non-daily publications in seven states.
Newcastle is a publicly traded commercial real estate investment trust managed by Fortress Investment Corp. Newcastle also owns 52% of the debt of GateHouse Media, also controlled by Fortress.
Newcastle has entered into an agreement with other lenders to restructure GateHouse in a pre-packaged bankruptcy, which has been filed. Newcastle is considering a spin-off of GateHouse and the former Dow Jones newspapers into a separate publicly traded company dubbed “New Media.”
The former Dow Jones newspapers acquired were the final papers once owned by Ottaway Newspapers. Ottaway merged with Dow Jones in 1970, but operated somewhat autonomously from Dow Jones. Dow Jones was acquired by News Corp. in 2007.
The Ottaway business was founded by James H. Ottaway in 1936, when he bought the Endicott (NY) Bulletin. His son James H. “Jimmy” Ottaway , Jr. continued to build the community newspaper division after the merger to the point where it was one of the 20 largest newspaper companies in the country, with 23 dailies and more than 500,000 daily circulation. Dow Jones began a divestiture of some of the portfolio prior to its merger with News Corp.
Halifax Media Group expands Florida footprint
The 21,700-circulation Daily Commercial in Leesburg, Florida is now the 23rd daily newspaper owned by Halifax Media Group. Non-daily newspapers in Sebring and Clermont were also included in the transaction.
Leesburg is located just an hour’s drive from Halifax’s News-Journal in Daytona Beach and Star-Banner in Ocala. It fills out a circulation footprint in north central Florida stretching more than 100 miles. It also is an operation where Halifax’s CEO, Michael Redding, was publisher at one point in his career.
The Leesburg operation had been owned by HarborPoint Media LLC, which was owned by Sandler Capital Management, a New York City private equity firm with $1.7 billion of assets under management. HarborPoint acquired the Leesburg operation along with weekly newspapers in Arkansas and Washington DC in 2004 from Better Built Media.
Shaw Media acquired a weekly newspaper in Prairie City, Iowa. Shaw owns the nearby Newton (IA) Daily News. The Prairie City News, in existence since 1875, is the oldest continually operating business in the community.