12-31-03 | Printable Version

4th Quarter 2003

Nearly Half of 2003 Deals Occur during 4th Quarter

In the span of a few weeks, the year in acquisitions went from ho-hum to hot.

With six of the year’s 13 deals involving dailies being announced in the final quarter -- most of them in December -- the year ended on a very busy note.

The sale of one of the largest direct-mail Pennysaver operations in the country and other strategic acquisitions highlighted an active end of the year. Private equity firms also made significant acquisitions.

The McClatchy Co. and Ogden Newspapers made important synergistic acquisitions, as did the owner of Tribune-Review Publishing Co., who added the 700,000-distribution Pittsburgh Pennysaver to his western Pennsylvania cluster.

In the Valley

McClatchy augmented its stable of newspapers in California’s Central Valley with the purchase of the Merced (CA) Sun-Star, which has circulation of 17,400 on weekdays and 21,500 on Saturday. The acquisition price of $40.5 million, which included five nearby non-dailies, made it one of the largest transactions of the year.

Merced, home to the campus of the latest university in the California state system, is a fast-growing market 40 miles south of McClatchy’s Modesto Bee, and 60 miles north of its Fresno Bee.

McClatchy reported that the Merced newspaper group had revenue in the fiscal year ending March 2003 of $12.6 million, and expects the acquisition to be accretive to earnings in its first year. The Merced daily was part of a group of California newspapers owned by Pacific-Sierra Publishing. Pacific-Sierra’s management team, backed by a private equity firm, acquired most of Pacific-Sierra’s remaining newspapers.

McClatchy CEO Gary Pruitt said the Merced operation met all of the criteria the company uses when evaluating acquisitions: they must be in growth markets; accretive to earnings in the short term; be in a market not dominated by another newspaper; and be able to add value through revenue growth and operational improvements.

Pennysaver Deal

Richard M. Scaife, owner of Tribune-Review Publishing Co., acquired the Pittsburgh Pennysaver, the sixth largest direct-mail operation in the country. The deal, which was done through a newly formed company, also included a group of community weeklies, known as Gateway Star, which serve a number of Pittsburgh-area municipalities.

The weekly publishing group, bought from private-equity backed Trinity Holdings, will give Scaife’s western Pennsylvania cluster additional reach in the Pittsburgh market and substantial weekly penetration as it competes for market share with the Pittsburgh Post-Gazette.

Ralph J. Martin, general manager of Scaife’s Pittsburgh Tribune-Review, was named president and chief operating officer of Westminster Holdings, Inc., which acquired the Pennysaver and Gateway publications. Martin is the former president of Community Newspaper Holdings, Inc.

Scaife, through the Tribune-Review Publishing Co., also publishes the Pittsburgh Tribune-Review, the Tribune-Review of Greensburg, the Valley News Dispatch of Tarentum, the Valley Independent of Monessen, the Leader Times in Kittanning, the Daily Courier in Connellsville, the Herald in Aspinwell and the Blairsville Dispatch. Total daily circulation, all in western Pennsylvania, is in excess of 150,000 and 200,000 on Sundays.

The Pittsburgh Pennysaver, established in 1975, serves a five-county area in western Pennsylvania with 78 zoned editions. The Gateway Star group consists of 18 weekly publications with combined distribution of nearly 100,000 and a commercial printing operation.

Other Trinity Deals

Trinity Holdings sold its only daily newspaper, the Lisbon (OH) Morning Journal, to Ogden Newspapers of Wheeling, West Virginia. The 13,600-circulation Morning Journal, located just over the Pennsylvania state line in eastern Ohio, became the 39th daily newspaper published by Ogden.

Ogden publishes two other daily newspapers in the same county as the Morning Journal -- the Salem News and The Review in East Liverpool. Ogden plans to maintain the editorial independence of all three newspapers. With the addition of the Morning Journal, Ogden now publishes eight dailies in Ohio.

Additionally, Liberty Group Publish-ing augmented its Chicago-area group with the addition of Trinity’s commercial printing operation, Midland Communications, located south of Chicago.

New Owner at MMM

Superior Publishing Corp., an affiliate of investment firm MCG Capital Corp. (NASDAQ:MCGC), acquired all of the equity of Murphy McGinnis Media, Inc. at year-end. Murphy McGinnis publishes a regional network of dailies, paid weeklies, free-distribution products and an Internet concern in the Duluth-area of northeastern Minnesota and northwestern Wisconsin.

One of the selling partners in Murphy McGinnis, Charles Johnson, will be president and CEO and retain an interest in the new company. B. Hagen Saville, MCG’s executive vice president, led the acquisition for his company.

Murphy McGinnis publishes four dailies newspapers in Virginia and Hibbing, Minnesota and Superior and Ashland, Wisconsin. In addition, the company operates 11 paid weekly newspapers and a number of free-distribution weeklies, including the Duluth Budgeteer News and Manney’s Shopper in Duluth.

In total, the group reaches more than 200,000 households in the market. John B. Murphy, Elizabeth Murphy Burns, James M. McGinnis and Johnson formed Murphy McGinnis in 1996 by merging two newspaper groups.

New Company Formed

Veteran newspaper operator Anthony Allegretti, backed by private-equity financing, acquired two daily newspapers and a number of non-daily publications in central and southern California from Pacific-Sierra Publishing.

Allegretti and Steve Staloch, the former publisher of the Merced Sun-Star, started Mainstreet Media Group to buy the Pacific-Sierra newspapers following McClatchy’s acquisition of the Merced daily. Allegretti had been president and chief executive officer of Pacific-Sierra prior to the sale.

Allegretti says they plan to use the newspapers as a platform to build a larger media enterprise. Allegretti and Staloch worked together previously at Indepedent Media Group.

A Family Affair

In a family-to-family transaction, the owners of the Bryan (OH) Times bought the Northwest Signal in neighboring Napoleon. The Cullis family in Bryan now owns two daily newspapers and a shopper network in northwestern Ohio.

The 5,600-circulation Northwest Signal had been printed in Bryan for a decade prior to the sale. The Kuser family acquired the Napoleon daily in 1966 and took an active role in managing the Northwest Signal.

Jim Kuser had recently retired as publisher, and his son Jamie had been serving as general manager. Jamie’s brother John stayed on as circulation manager for the new owners.

Non-Daily Front

The Princeton (NJ) Packet group grew to 12 paid weekly titles with the acquisition of the Weekly Almanac serving Wayne County, Pennsylvania. The Packet group is operated by president and publisher James B. Kilgore.

Pulitzer continues to add non-dailies to its community daily clusters. The company acquired three weekly newspapers and a shopper in the Provo, Utah area, which will augment its Provo daily and seven other weeklies in Utah County.

Two private equity firms entered the publishing field by making acquisitions of shoppers.

Hamilton Robinson, a private equity firm in Stamford, Connecticut, acquired the Pennysaver News and Carrier News serving Long Island with weekly distribution of more than 700,000.

The firm, making the investment through its Cygnet Capital Partners fund, also bought Lifestyle Ventures, a special-interest magazine publisher.

Out West, Tregaron Capital of Palo Alto, managed by JR Matthews, acquired the Tucson Pennysaver, with about 300,000 in weekly distribution. Matthews brought in former Ingersoll executive Jim Gressinger to run the Pennysaver.

Gannett Co. acquired a large direct-mail operation -- Clipper Magazine based in Lancaster, Pennsylvania -- that reaches more than 100 million homes nationwide. Clipper produces a glossy, full-color advertising magazine with 320 editions for individual markets in 23 states. It is produced six times per year and more often in some markets.

The owners of the Sun Journal in Lewiston, Maine, acquired a group of weekly community newspapers in the Portland suburbs. The group, known as The Forecaster, was founded in Falmouth in 1986 and is published in two editions with a total of 42,000 in free distribution.

Shortly after purchasing the group, the owners launched a new Portland city edition.

Journal Register Co. bought the North Attleborough Free Press, a weekly newspaper based in North Attleboro, Massachusetts with distribution of about 13,500. The publication offers synergies with JRC’s daily in Taunton, Massachusetts, as well as dailies in Pawtucket and Woonsocket, Rhode Island.

The Morris Publishing Group, a subsidiary of Morris Communications Co. in Augusta, Georgia, purchased the non-daily Girard (KS) Press. The Press serves a market about 20 miles northwest of Pittsburg, Kansas, where Morris owns the daily Morning Sun.

Larry Perrotto’s Community Media Group acquired the 4,000-circulation weekly Lafayette (IN) Leader, which serves Tippecanoe County in northwest Indiana.

Community Media Group owns several publications in the Midwest, including the nearby daily Rensselaer (IN) Republican. The Lafayette Leader had been owned by Home News Enterprises.