2006 Ranks Second in Newspaper Deal Activity
SANTA FE, NM, January 2, 2007 - With nearly $10 billion in announced sales, 2006 ranked as the second-most active deal year in the newspaper industry's history, according to Dirks, Van Essen & Murray.
The nation's leading newspaper merger-and-acquisition firm said a total 76 daily newspapers changed hands last year in 25 separate transactions totaling $9.96 billion in transaction value.
The McClatchy Co. was the big story during the year, accounting for more than 90% of deal value on both the buy and sell sides. Early in the year McClatchy bought Knight Ridder, the second largest newspaper company in the U.S., for $6.5 billion (including debt).
Subsequently it sold a number of former Knight Ridder papers for $2.1 billion and the Minneapolis Star Tribune for $530 million.
Most of the sellers were public companies, representing 60 of the dailies sold. Private companies were buyers. The one exception was GateHouse Media Inc., which went public in October and was one of the year’s top acquiring companies.
“Privately held companies continue to see value in community newspapers,” said Owen Van Essen, president of Dirks, Van Essen & Murray, based in Santa Fe, New Mexico. “Prices in the private marketplace remain strong despite lower valuations for the public companies.” A number of private companies were active acquirers in 2006. These included Community Newspaper Holdings Inc., which bought seven dailies from Dow Jones; Forum Communications in Fargo, North Dakota; Schurz Communications in South Bend, Indiana; Dean Singleton’s MediaNews Group; and David Black’s Black Press Ltd., based in Victoria, British Columbia.
In addition, private equity firms made new investments in the industry. Avista Capital Partners bought the Minneapolis Star Tribune, and local private equity interests bought the Philadelphia Inquirer and Daily News. Private equity firm HM Capital Partners backed the purchase of the Wilkes-Barre (PA) Times Leader.
For 2007 DV&M expects a continuation of the high level of M&A activity in the industry. Van Essen said more private equity firms likely will buy newspapers this year, thanks to relatively low interest rates and favorable lending environment.
Van Essen looks for values in the private marketplace to hold in 2007, as buyers focus on the strength of the local news franchises and growth in online revenue at the community level.