12-31-18 | Printable Version

Year-End 2018

Year in Review: Transaction volume increases for fourth straight year

The number of deals involving daily newspapers continued its upward trajectory in 2018, with 36 separate transactions closed by year end.

It was the largest number of daily newspaper deals since 2000, and the fourth straight year of higher transaction volume.

The two key drivers of this activity were largely unchanged from the prior year: owners of clusters of publications seeking to build larger regional footprints, and the difficulties faced by small operators lacking the scale needed to manage expenses.

The vast majority of the 2018 deals were the sales of individual daily newspapers. The largest number of dailies conveyed in a single transaction was the sale of Cooke Communications, which involved just four daily newspapers.

While many of the most active buyers in recent years made acquisitions in 2018, the pool of acquirers was remarkably diverse. There were 21 different buyers in the 36 total transactions.

In addition, 2018 generally saw larger newspapers change hands than in prior years. The median weekday circulation of newspapers sold in 2018 was 10,400, compared with just 4,850 in 2017.

Looking into 2019, we expect the deal flow to continue at a similar pace at least through the first half of the year. The number of transactions and number of dailies sold are likely to remain at the current robust levels. Valuations should remain steady and consistent with those over the past 12 months.

By the Numbers
In total, 45 daily newspapers changed hands in 2018 in 36 transactions worth $857.42 million.

The dollar volume was the highest since 2008, but it was pushed well above normal levels by Tribune Publishing’s sale of the Los Angeles Times and San Diego Union-Tribune to health care magnate Patrick Soon-Shiong, who was an investor and a former board member at Tribune.

By comparison, broadcast television deal dollar volume was $8.05 billion in 2018, driven principally by two large transactions – Nexstar Media Group’s $3.51 billion deal to buy Tribune Media Group and Gray Television’s $3.44 billion acquisition of Raycom Media’s broadcast assets.

Radio acquisitions totaled an estimated $821 million in 2018, roughly comparable to the newspaper industry, but well off its 2017 deal volume of $3.2 billion.

The number of daily newspaper transactions in 2018 was the most since 2000, when 53 transactions involving dailies occurred.

While the transaction volume rose, the number of dailies involved in 2018 was one of the lowest in recent years due to a lack of large group deals. In 2017, some 80 daily newspapers were sold, which included 30 dailies sold by Civitas Media in nine separate transactions.

Strategic Buying
In roughly two-thirds of the transactions in 2018, the buyer had operations close enough to the acquisition to be considered strategic.

These strategic acquirers ran the gamut from large group owners to independent owners who saw a need to grow beyond their existing holdings.

New Media Investment Group led the field, adding eight dailies in seven transactions. The publicly traded company had obvious strategic interest in newspapers such as the Akron (OH) Beacon Journal, but also added large stand-alone operations such as the Eugene (OR) Register-Guard.

Privately held Adams Publishing Group was a close second, with seven new daily newspapers in four deals. Paxton Media Group and Ogden Newspapers each acquired four dailies.

However, a fair amount of the activity can be attributed to smaller newspaper owners who took advantage of opportunities to grow.

M. Roberts Media, owner of daily newspapers in Victoria, Longview and Marshall, Texas, bought the Tyler (TX) Morning Telegraph to cement its hold on the northeastern part of the state.

HD Media, which owned the Herald-Dispatch in Huntington, West Virginia, acquired the state capital newspaper in Charleston about an hour away.

Shaw Media expanded its northern Illinois group with the addition of the Ottawa (IL) Times.

Diverse Buyer Group
One of the most under-appreciated aspects of 2018 was the number of separate buyers that added to their holdings. This was also true in the prior year.

Dirks, Van Essen, Murray & April was involved in 24 transactions in 2018 with 14 different buyers. In 2017, DVM&A was involved in 19 transactions with 16 different buyers.

In some instances, newspapers returned to local ownership. On the large end, the Los Angeles Times was sold to an area billionaire. On the other end of the scale, the Trinidad (CO) Chronicle-News was acquired by four residents of the market.