3rd Quarter 2004
Equity Money Continues to Flow into Newspapers
The surge of private equity investments into newspapers shows no signs of abating.
In the largest deal of the third quarter, a New York investment firm acquired a newspaper group with operations in three states that it plans to use as a platform for building a larger publishing enterprise.
The firm, Sandler Capital Management, bought the 30,000-circulation Leesburg (FL) Daily Commercial, two dailies in Arkansas and several non-daily publications in the transaction.
The three dailies were among 10 that were sold in the third quarter, bringing the total for the year to 42 with combined dollar value of nearly $800 million. The third quarter also saw a number of companies make strategic acquisitions of non-dailies to strengthen operations in their markets.
Dirks, Van Essen & Murray expects several more significant transactions to occur before year-end that could make 2004 the most active year since the onset of the recession.
The company formed by Sandler is called HarborPoint Media, and will be run by Michael Redding, a former executive with the Daytona Beach (FL) News-Journal and at various newspapers owned by Liberty Group Publishing.
In addition to the flagship daily in Leesburg, the company owns the thrice-weekly Sebring (FL) News-Sun; Arkansas dailies Hope Star and Arkadelphia Daily Siftings Herald; and the Washington Jewish Week, a paid weekly circulating in suburban Washington, D.C. communities.
The investors said they planned to “expand HarborPoint through selective future acquisitions.” Over the past two years, private equity firms have made investments in newspapers in a number of deals with total value of approximately $2.5 billion, including the recapitalization of Freedom Communications in 2003.
HarborPoint acquired its newspapers from the Better Built Group, operated by Rupert Phillips, who owned the company with his partner Clint Daws.
Phillips, an industry veteran, built the group through acquisitions primarily over the past decade. He acquired Leesburg in 1995, Arkadelphia in 1999 and Sebring in 2000. He had owned the Hope daily much longer.
Journals Change Hands
Separately, Phillips sold his daily newspaper group in suburban Washington, D.C. to Clarity Media Group, owners of the San Francisco Examiner.
The group consists of three editions – The Northern Virginia Journal, the Montgomery (MD) Journal and the Prince George’s (MD) Journal – published Sunday through Friday, with combined daily distribution of 115,000.
Clarity is the print media arm of the Anschutz Company, a privately held diversified investment firm, owning or with major investments in about 100 companies in a variety of fields. Clarity acquired the San Francisco Examiner and Independent newspapers in California earlier this year.
News-Press & Gazette Co., owned by the Bradley family in St. Joseph, Missouri, bought two groups of non-daily newspapers in the Kansas City area to increase the size of its footprint in the region.
In the larger of the two deals, the Bradleys acquired the newspaper division of Townsend Communications – four newspapers with combined distribution of 87,600 serving communities primarily to the north and south of Kansas City. Guy Townsend, the current president of the Suburban Newspaper Association, decided to sell his newspapers to the Bradleys, but kept a commercial printing and niche publishing operation.
Separately the company added three weeklies in Miami County, Kansas, southwest of Kansas City, with total paid circulation of 10,000. The weeklies, primarily serving Paola, Osawatomie and Louisburg, Kansas, were formerly owned by the McLaughlin family. Both deals closed within a month of each other.
In addition to the 39,000-circulation News-Press in St. Joseph, the company owns dailies in Atchison and Hiawatha, Kansas; weeklies in Kearney and Smithville, Missouri; and a twice-monthly farm publication. Its holdings also include cable and broadcast television, radio stations and Internet service providers, primarily in other areas of the country.
Say It Ain’t So, Frank
Frank Wood, one of the industry’s most ardent critics of corporate newspaper ownership, and the Gannett Co. in particular, sold his Wisconsin newspapers to none other than Gannett.
Wood sold his daily Green Bay (WI) News-Chronicle and non-dailies in neighboring Door County and elsewhere to his longtime nemesis, which owns the competing, and much larger Green Bay Press-Gazette.
Wood in 1989 ran a series of articles critical of Gannett written by freelance writer Richard McCord, who later published the anti-Gannett screed as a book called “The Chain Gang.” Wood was widely quoted in the book.
Wood’s group consisted of the Green Bay daily, the thrice-weekly Door County Advocate and numerous community weeklies and shoppers. Wood had said in the past that his non-daily group supported the money-losing News-Chronicle.
Gannett said it would keep publishing all of Wood’s newspapers, including the News-Chronicle, and retained all 150 employees.
With the sale of the News-Chronicle, only nine U.S. cities now have competing (separately owned), non-JOA paid daily newspapers.
Other Daily Sales
Larry Perrotto’s Community Media Group bought the Geneva (NY) Finger Lakes Times from Independent Publications. Independent acquired some non-daily properties in Florida beginning last year and said the sale represented a desire to realign the company geographically.
Perrotto is a longtime newspaper owner and operator whose West Frankfort, Illinois-based company owns dailies and weeklies in several Midwestern states. The Finger Lakes Times, circulation 17,500, is the company’s eighth daily.
A unit of the Omaha World-Herald Co. acquired the 3,000-circulation Boone (IA) News-Republican from local owners. The daily fits nicely with the company’s cluster in central Iowa anchored by the Ames Tribune, which it acquired in 1999.
Rust Communications acquired the 3,000-circulation Fort Scott (KS) Tribune from local owners. Rust owns the daily in Nevada, Missouri, just over the state line.
New Owners at Weeklies
A number of owners augmented daily clusters with non-daily publications.
Andrew Babb, president of Mid-South Management, acquired two newspapers in Thomaston, Georgia through his company, Crescent Media Group.
The two newspapers were the Thomaston Times, published three times per week, and the competing Upson Citizen Weekly, started three years ago.
The two newspapers were combined, with the Times continuing to be published as a paid circulation tri-weekly and the Citizen Weekly as its companion weekly shopper.
The Times was acquired from Heartland Publications, which picked up the paper in a larger deal earlier this year with Community Newspaper Holdings, Inc. It was the only publication owned by Heartland in Georgia.
Mid-South owns or operates 18 newspapers, primarily in the Southeast. Its holdings include the daily in La Grange, where the Thomaston newspapers will be printed, and a non-daily in Phenix City, Alabama nearby.
Journal Register Co. added to its suburban Philadelphia cluster with a non-daily group distributing to 168,000 households.
Based in Boyertown, Berks-Mont Newspapers, Inc., includes three paid weekly newspapers and a number of controlled-distribution publications.
JRC’s Greater Philadelphia cluster consists of seven daily newspapers with total circulation of 185,000 and 124 non-dailies with total distribution in excess of 1.3 million.
Knight Ridder added to its non-daily group around Fort Worth with the purchase of the Flower Mound Messenger, distributed every other week to 28,500 households. Knight Ridder said it would increase the frequency to weekly.
Freedom Communications, in its first acquisition since recapitalizing the company last year, picked up The Shopper based in New Bern, North Carolina and eight other area publications. Freedom owns the daily Sun Journal in New Bern.
In announcing the purchase, Freedom’s newspaper head Jon Segal said it “signals we’re back in business as a growing company.”
Pulitzer bought two weeklies in Santa Barbara County, California, where it owns the dailies in Lompoc and Santa Maria.