More Than 100 Daily Newspapers Sold in 2005
SANTA FE, NM, January 4, 2006 - The newspaper industry experienced one of its most active years during 2005, as several large transactions drove deal volume above $3 billion for only the fifth time in history.
A total of 111 daily newspapers changed hands in 23 transactions totaling $3.09 billion, according to Dirks, Van Essen & Murray, the nation’s leading newspaper merger-and-acquisition firm. That total was well ahead of 2004, when just 44 dailies got new owners in deals totaling $918.1 million.
Dirks, Van Essen & Murray was involved in the sale of 76 of the daily newspapers sold in 2005.
“Although traditional media is somewhat out of favor on Wall Street, those buying newspapers in the private marketplace continue to see significant value in the industry’s strong hold on local news and information at the community level,” said Phil Murray, senior vice president of Dirks, Van Essen & Murray.
The past year was marked by several large transactions that accounted for a significant portion of the dollar volume. Lee Enterprises set the pace early in 2005 with the $1.46 billion acquisition of Pulitzer Inc. and its flagship St. Louis Post-Dispatch. In mid-year, Fortress Investment Group LLC bought Liberty Group Publishing, which included 66 daily newspapers.
Later, Community Newspaper Holdings Inc. bought a large publishing cluster in New England anchored by the Lawrence (MA) Eagle-Tribune. Gannett and Knight Ridder struck two deals that moved several large newspapers between the two companies.
With substantial liquidity in the acquisition market and a relatively low-interest rate environment, purchase prices expressed as multiples of cash flow remain at or near the peak levels of the late 1990s, said James Oldershaw, vice president at Dirks, Van Essen & Murray.
“Strategic acquirers see real synergies in adding pieces to clusters of publishing operations,” said Oldershaw. “In addition, private equity has made significant investments in newspapers in recent years, aided by relatively high lending ratios. This has allowed the equity firms to pay market prices and still achieve their returns.”
The newspaper industry routinely saw deal activity reach the $2 billion to $3 billion level in the late 1990s, peaking in a record year in 2000 at $14.25 billion. Volume declined dramatically as the nation’s economy slipped into recession in 2001 and has been building back to the levels of the late 1990s ever since.
Dirks, Van Essen & Murray expects activity to remain robust in 2006. The firm foresees no immediate changes in the positive factors driving the current market.