2nd Quarter 2003
Two Deals Mark Second Quarter
12 Dailies Change Hands
Two substantial deals highlighted the second quarter of 2003 -- one involved the largest daily newspaper to change hands by itself in nearly three years, the other was one of the largest group deals since the beginning of the recession.
Ottaway Newspapers, about a year after selling seven non-strategic daily newspapers, moved quickly to redeploy the proceeds of those sales by acquiring The Record of Stockton, California.
The Record, with circulation of nearly 60,000 daily and 73,000 on Sundays, represented the largest daily newspaper to be acquired outside of a group transaction since the Salt Lake (UT) Tribune at the end of 2000.
Meanwhile, Horizon Publications acquired 10 daily newspapers and seven non-dailies in five states from Community Newspaper Holdings, Inc. The deal boosts Horizon’s holdings to 23 dailies.
It was the largest group transaction in terms of number of dailies since the acquisition of Howard Publications by Lee Enterprises in 2002.
In 2002 Ottaway made a decision to divest four daily newspapers in the Midwest and three dailies published as a group north of Boston.
At the time, Dow Jones said it planned to rebuild its Ottaway unit through acquisitions in higher growth markets.
The Record, serving one of California’s fastest-growing markets, was an ideal acquisition.
The newspaper is located in California’s Central Valley about two hours from Ottaway’s daily in Santa Cruz, and it generates enough revenue and cash flow to replace more than half of that sold in 2002.
Moreover, Ottaway was able to buy a single, larger newspaper in a high-growth market at approximately the same multiple at which it sold its Midwest newspapers. The company reported that it paid $144 million for The Record, with pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of $12 million, after synergies and adjustments.
Ottaway sold the four Midwest dailies to CNHI for $182 million and the three Boston-area dailies for $70 million.
The Omaha World-Herald Co., which had acquired The Record from Gannett in 1994, said it made the decision to sell the newspaper in order to focus on its newspaper properties in the Midwest.
The acquisition comes as a new management team takes the reins at Ottaway. Danforth W. Austin, former vice president and general manager of The Wall Street Journal, became chairman and chief executive officer of Ottaway on April 1.
Also on the senior management team are John Wilcox, president and chief operating officer, who moved to the corporate office from the company’s Cape Cod (MA) Times; John Kenney, senior vice president and previously publisher of Ottaway’s Essex County Newspapers north of Boston; Bill Zurilla, Ottaway’s longtime chief financial officer; and Andrew Langhoff, who joined as vice president and general counsel in January after working in other industries.
The new executives were promoted largely from within Dow Jones and Ottaway following the retirements of chairman James H. Ottaway, Jr. and president Joe Richter. Ottaway continues to serve as senior vice president of Dow Jones and a member of the board.
On the Horizon
Chicago-based Horizon Publications, which was founded in 1999, expanded its geographic footprint as it continues to build a platform company of community dailies. The 10 daily newspapers acquired from CNHI included four in western Pennsylvania, three in west Texas, two in Oklahoma, and one in Indiana. In addition, Horizon acquired non-dailies in Nebraska and Oklahoma.
Horizon’s holdings now stretch from Florida, North Carolina, and Vermont in the east to Idaho in the west.
The divestiture is a continuation of CNHI’s plan to exit smaller, non-strategic markets as it focuses on daily newspapers with circulation of 20,000 or more. The Birmingham, Alabama-based company still publishes 96 dailies with more than 1 million circulation and a number of non-dailies in 20 states.
Rust on the Move
Rust Communications acquired the daily Evening World in Bloomfield, Indiana and a weekly newspaper from family owners.
The Bloomfield operation extends Rust’s cluster in Greencastle, Brazil, and Linton. Cape Girardeau, Missouri-based Rust now publishes 17 daily newspapers in six states.
Heritage Enters Field
Boston-based private equity firm Heritage Partners acquired a stake in Enterprise NewsMedia, which owns the Quincy (MA) Patriot Ledger and Brockton (MA) Enterprise dailies as well as a weekly group based in Plymouth, all south of Boston.
Heritage said it plans to use Enterprise NewsMedia as a platform company for additional acquisitions in the newspaper industry. It is the firm’s first investment in the industry.
The owners of the two daily newspapers in Fort Wayne, Indiana, agreed to extend their joint operating agreement (JOA) to 2050. As part of the deal, Knight Ridder, owner of the afternoon News-Sentinel, will increase its share of the agency that operates the two newspapers from 55% to 75%.
The Inskeep family, owners of the larger morning and Sunday Journal Gazette, will retain 25% of the agency.
Journal Gazette Publisher Julie Inskeep, the third in her family to hold that title, said the agreement assures continued local ownership of the Journal Gazette and that its “news and editorial voice will remain strong and independent.”
With the new agreement in place, the two companies are planning major capital improvements, beginning with a new editorial system to be completed in 2004.
Singleton Wastes No Time
Shortly after the Federal Communications Commission lifted the ban on ownership of daily newspapers and broadcast television in the same market, MediaNews Group became the first company to take advantage.
MediaNews Group exercised its option to buy an NBC affiliate in Fairbanks, Alaska, from Clear Channel Communications. MediaNews Group also owns the daily Fairbanks News-Miner.
W. Dean Singleton, chief executive officer of MediaNews Group, said the acquisition made sense because the daily and television station have similar coverage areas.
Independent in Florida
Independent Publications of Bryn Mawr, Pennsylvania purchased a group of seven non-daily newspapers and a commercial printing operation based in Bradenton, Florida. The Florida Sun group had been owned by Montreal-based Sun Media.
The group includes the Osceola News-Gazette, the Sarasota Weekly, the South Orange News, the Venice Weekly, and shoppers in Bradenton, Osceola and Sebring.
This is Independent Publications’ first publishing acquisition in Florida. The group also owns dailies in Nashua, New Hampshire; Geneva, New York; and DuBois, Pennsylvania.
Pulitzer Newspapers, Inc., a subsidiary of Pulitzer, Inc., purchased two weeklies near its daily Napa Valley Register in California. The St. Helena Star and the Weekly Calistogan, with combined circulation of 6,300, serve communities in the northern portion of the Napa Valley.
Landmark Community Newspapers, Inc., acquired the 15,700-circulation Brunswick Beacon in Shallotte, North Carolina from Edward and Carolyn Sweatt. The Kentucky-based unit of Landmark Communications is targeting non-dailies as part of its growth strategy.
Herald Media, owner of the Boston Herald and a large group of suburban Boston newspapers, added the Harvard Post and Bolton Common. Herald Media publishes newspapers in nearby Littleton, Boxborough, Stow and Hudson.
The News Publishing Co., Inc. of Mount Horeb, Wisconsin added the weekly Reedsburg (WI) Independent and Advantage Advertiser to its stable of properties in southwest Wisconsin and Iowa.
The Times Publishing Co. of Erie, Pennsylvania became the majority investor in the Cleveland Free Times, an alternative weekly newspaper. The publication, formerly owned by Village Voice Media, had been closed for six months. The former management team at the alternative paper is operating it again.
Gannett acquired a series of tourist magazines in Hawaii titled “101 Things to Do.” The free publications distribute 150,000 copies per month.