12-31-16 | Printable Version

Year-End 2016

Year in Review: Lots of deals, but mostly smaller in size 

In each of the past few years, one or two large, marquee transactions have driven the annual dollar volume of newspaper deals to new post-recession era highs.

In 2013, it was the sale of the Washington Post to Jeff Bezos for $250 million. In 2014, New Media Investment Group bought Halifax Media Group for $280 million. And last year, Journal Media Group went to Gannett, also for $280 million.

This year, with the collapse of Gannett’s negotiations to buy tronc (the former Tribune Publishing), no defining deal occurred.

As a result, 2016 clocks in as a very busy year, but one in which dollar volume lagged.
The number of transactions involving daily newspapers in 2016 numbered 28, the highest total since 2008. However, the total value of those transactions was just under $200 million, the lowest level since 2010.

The activity was driven largely by family owners of individual newspapers or small newspaper groups deciding to exit the business. Most have cited the difficulties of operating small publishing entities that lack sufficient scale in today’s environment.

Buyers tended to be larger concerns or owners of neighboring properties who can bring synergies to the table.

Looking into 2017, we expect the deal flow to continue at a similar pace at least through the first half of the year.

By the Numbers
In total, 50 daily newspapers changed hands in 2016 in 28 transactions worth $198.81 million.

The number of transactions eclipsed 2015 by one deal and set a new post-2008 high. The number of dailies involved was down somewhat from recent years (it was 70 in 2015 and 67 in 2014), primarily because there were no large group deals. The dollar volume was much lower; 2015 set a new post-recession record at $826.96 million.

Transaction announcements remained relatively steady throughout the year, with no major changes in the deal flow from the first half to the second half of the year.

Prominent Owners Exit
The year saw a number of longtime newspaper owners sell their holdings. Among these were the Simons family in Lawrence, Kansas, which also owned newspapers in Colorado and Arizona. The family had owned the Lawrence Journal-World and its predecessors for 125 years.

The Waters family sold the Daily Tribune in Columbia, Missouri, after 111 years of ownership. Others making the decision to leave the industry were the Dille family in Elkhart, Indiana; the Harris family in Kansas; the Jones family in Greeneville, Tennessee; and the Mitchell family in Rutland, Vermont.

In fact, of the 50 daily newspapers sold in 2016, the average number of years each newspaper had been owned by the seller was 46.3 years.

Of course, not all of the transactions in 2016 follow this trend. In Pittsfield, Massachusetts, a local ownership group bought the Berkshire Eagle and two other daily newspapers nearby in Vermont from Digital First Media.

In addition, some family owners of smaller operations made the decision to expand. The Kramer family in Arizona acquired the Payson (AZ) Roundup. The Wise family in Butler, Pennsylvania, bought the alternative City Paper in neighboring Pittsburgh. And the White/Walker family in Emporia, Kansas, bought nearby publications in Junction City and Abilene.

Kansas, in fact, saw significant ownership change in 2016. Of the 32 daily newspapers in the state, eight were sold last year, including some of the largest. Harris Enterprises owned five of these. The others were the Lawrence Journal-World and two small dailies acquired by White Corp.

Outlook
Over the past several years, the number of dailies sold each year has generally been in a range of 50 to 80, although dollar volume has fluctuated depending on whether any large group deals occurred.

We expect to see the number of dailies sold in 2017 to be within that range, based on activity we were seeing at year-end. Valuations likely will remain steady and consistent with those over the past 12 months.