12-31-15 | Printable Version

Year-End 2015

Year in review: Deal volume sets new post-2008 record

The newspaper deal market set new post-recession highs in dollar volume and number of transactions involving daily newspapers as the year ended with a flurry of activity.

Driven by a large number of small-market transactions and a handful of significant group deals, the value of newspaper sales surpassed $800 million for the first time since 2008.

The largest deals of the year inclued Gannett’s agreement to buy Journal Media Group for $280 million (expected to close in 2016), the sale of the Las Vegas (NV) Review-Journal, the earlier sale of Stephens Media (which included the Review-Journal) and the acquisition of U-T San Diego by Tribune Publishing.

A number of regional daily newspapers changed hands as well, such as the Fredericksburg (VA) Free Lance-Star, the Erie (PA) Times-News and the Portland (ME) Press Herald.

Nearly all of the buyers were existing newspaper owners, and public companies made their presence felt in a major way in the marketplace.

We expect the deal flow to remain strong through 2016.

By the Numbers
In total, 70 daily newspapers were sold last year in 27 transactions worth $826.96 million. The dollar volume was just ahead of 2014 ($760.20 million), and the number of dailies changing hands also beat out the number sold in 2014, which was 67.

The dollar volume eclipsed the previous post-recession high of $788.75 million set in 2011, which was driven largely by the sales of the Omaha World Herald Co., Journal Register Co. and the New York Times regional newspaper group.

The number of transactions in 2015 squeaked past the mark of 25 deals set in 2012, a year that saw divestitures by Media General and Freedom Communications and a number of other lender-driven sales.

Big and Small
The public companies dominated the high end of the market. Gannett and Journal Media Group emerged as new, newspaper-focused public companies in 2015 – Gannett separated from its broadcast and digital properties, and Journal Media Group spun off from the merger of E.W. Scripps and Journal Communications.

Gannett, however, proved to be the aggressor. It acquired full ownership of 11 daily newspapers in Texas, New Mexico and Pennsylvania from its majority partner Digital First Media.

And early in the fourth quarter, Gannett agreed to buy Journal Media Group, owner of 15 dailies, for $280 million. The announced purchase price is equal to the amount paid by New Media Investment Group for Halifax Media Group at year-end 2014. These represent the two largest transactions by dollar volume since 2008.

New Media, meanwhile, remained busy in 2015 as well, buying or agreeing to buy 11 daily newspapers. Early in the year, it paid $102.5 million for Stephens Media, whose eight daily newspapers included the Las Vegas Review-Journal. At year-end, New Media sold just the Las Vegas daily for $140 million to local interests.

Among other public companies, BH Media Group (a unit of Berkshire Hathaway) acquired two dailies, and Tribune Publishing bought U-T San Diego.

There also was a fair amount of activity at the smaller end of the market. Community newspaper buyers included Adams Publishing Group (six dailies), Sample News Group (four dailies) and Boone Newspapers (three dailies).

For nearly all of the deals involving daily newspapers, the buyer was an existing newspaper owner. The biggest exception was Las Vegas, sold to a group led by casino owner Sheldon Adelson. Home News Enterprises was sold to a newly formed company, AIM Media Indiana. However, the head of the new company, Jeremy Halbreich, has a separate newspaper company based in Texas.

Outlook
Over the past five years, annual newspaper transaction volume has been in a fairly tight range between $642 million and $826 million. We do not expect any major deviation from that range in 2016.

We expect the flow of newspaper deals, particularly for smaller-market newspapers, to be steady in 2016 and consistent with the past 12 months.

Valuations strengthened in the second half of 2015. Looking forward we believe those valuations will hold through the year.