4th Quarter & Year-End 2009
Deal Market Shows Improvement
More dailies sold as family owners, equity firms step up
The market for newspapers began to find its footing in 2009, as 31 dailies changed hands and most operations put on the market found new owners.
The improvement came despite problems that lingered from 2008: extremely tight credit markets, lower advertising revenue and high debt levels for many of the nation’s largest newspaper companies.
Even so, attractive newspaper acquisition opportunities brought multiple prospective buyers to the table. And companies with the ability to fund acquisitions took advantage.
These consisted principally of family-owned companies with strong balance sheets, private equity firms with available cash and local businesspeople with a desire to own the hometown newspaper.
This also was true for the final deal of 2009, in which private investors signed an agreement to buy the Daytona Beach (FL) News-Journal and associated publications.
Looking into 2010, Dirks, Van Essen & Murray sees a continuation of this stronger, but still modest, pace of activity. Deal flow will likely strengthen further once the industry’s revenue trends stabilize and some credit once again becomes available. We think this could happen by the end of 2010, but more likely will stretch into 2011.
For the record, the 31 dailies acquired in 2009 were part of 16 transactions totaling $183.7 million. While the total transaction value was relatively low by historical standards, the number of deals was well ahead of the prior year, when just 16 daily newspapers were sold.
The newspapers changing hands in 2009 also tended to be larger newspapers. Just a quarter of the dailies sold had less than 10,000 circulation, and the list included such large titles as the San Diego (CA) Union-Tribune, the Chicago (IL) Sun-Times and the Portland (ME) Press Herald.
The average daily circulation of newspapers sold in 2009 was 51,692. This represented one of the largest average circulations for newspaper deals in a year in modern times. Only 2006 – when McClatchy bought Knight Ridder and subsequently spun off many of the largest newspapers in the group – was comparable.
Hit The Beach
Among the large dailies involved in 2009 transactions was the 78,600-circulation Daytona Beach News-Journal.
In a deal signed at year-end, Halifax Media Acquisitions LLC and Stephens Investments Holdings LLC agreed to buy the east-central Florida daily, its regional Pennysaver operation and two telephone books.
The deal is subject to court approval. The publishing business has been operated under a receivership stemming from litigation between the two principal shareholders in the company, the Davidson family and Cox Enterprises. The Davidson family has controlled the News-Journal company since 1928. Cox acquired a significant minority interest in 1969.
A Family Affair
A number of family-owned newspaper companies, finding themselves largely shut out of acquisitions during the go-go years in the middle part of the decade, were well-positioned in 2009.
The John Kent Cooke family bought the Key West (FL) Citizen in 2000 from Thomson Corp., but nothing else until 2009, when it acquired Cox Enterprises’ publishing cluster based in Greenville, North Carolina. In an interview, Cooke noted that he had looked at many properties before buying these.
The Seaton family of Manhattan, Kansas, similarly bought an attractive newspaper in Colorado that had no synergies with any of Seaton Newspapers’ existing properties.
In making the acquisition, Ned Seaton said, “We believe in the future of newspapers. This is clearly a very difficult time for them; to pretend otherwise is foolhardy. Nonetheless we feel fortunate that the circumstances allowed us a chance to get involved with a paper like the (Grand Junction) Sentinel.”
Other family companies making acquisitions in 2009 included the Sheltons in Decatur, Alabama, who bought a neighboring daily from the New York Times Co.; Southern Newspapers, headed by Lissa Walls Vahldiek; and the Pennsylvania-based Sample News Group.
Enter Private Equity
Equity investors also returned to the game in 2009. In the past, such as in 2003, heightened interest from private equity groups has presaged an increase in deal volume.
Longtime newspaper executive Rich Connor, backed by HM Capital of Dallas, bought the Portland Press Herald/Maine Sunday Telegram and two other Maine dailies in one of the year’s largest deals. Connor and HM Capital also own a daily newspaper in eastern Pennsylvania.
ASP Westward and its private equity owner American Securities added daily newspapers in Longview and Marshall, Texas, which fit with its existing east Texas group.
Finally, Platinum Equity made its first newspaper acquisition with the San Diego (CA) Union-Tribune.
Local, Local, Local
Local ownership could be the new normal.
Waco businessman Clifton Robinson, who had earlier sold his insurance business, bought the Waco (TX) Tribune-Herald in what he termed a “once in a lifetime” opportunity. The newspaper had been owned by Cox Enterprises since 1976.
A group of Chicago businesspeople led by James Tyree was the successful bidder for the Chicago (IL) Sun-Times and related newspapers in the Sun-Times Media Group’s bankruptcy proceedings.
As a lifelong Chicagoan, Tyree said he wanted to keep the city a two-newspaper town.