2nd Quarter 2004Back to News

JRC Jump-Starts Deal Activity – $ Volume Could be Best Since 2000 by Year-End

In the largest deal in two years for the newspaper industry, Journal Register Co. reached an agreement to buy Michigan-based 21st Century Newspapers for $415 million.

The deal, announced just after the end of the second quarter, pushed total newspaper transaction volume for the year to more than $700 million, with 34 dailies changing hands.

Those numbers already are ahead of 2003, and Dirks, Van Essen & Murray believes 2004 will be the busiest year for newspaper acquisition activity since the onset of the recession.

JRC is buying a large cluster of dailies and non-dailies primarily in southeastern Michigan serving suburban and exurban markets in greater Detroit. It is a new geographic expansion for JRC, whose other clusters are located primarily in the Northeast.

The group looks a lot like JRC’s suburban cluster in greater Philadelphia, which it built through a series of acquisitions and has been one of the company’s best-performing units. To further its clustering strategy in the Philadelphia market, JRC in late 2001 completed construction of a state-of-the-art, $35.4 million production facility that handles most of the printing for the six-daily group.


Like the Philadelphia suburbs, the markets served by 21st Century Newspapers include a number of very affluent and growing communities. In fact, Oakland County, Michigan, home of the group’s largest daily, is the nation’s third-wealthiest county for its size.

Wall Street voiced its approval of the deal. JRC’s stock rose more than 1% on the day of the announcement, while the broader market fell.

A Michigan Play

21st Century Newspapers owns four dailies with combined daily circulation of 137,500 and Sunday of 176,000 – all in Michigan. These are The Daily Oakland Press (67,750 daily and 81,500 Sunday circulation), The Macomb Daily (45,500 daily and 67,000 Sunday circulation), The Daily Tribune in Royal Oak (13,000 daily and 15,000 Sunday) and The Morning Sun in Mount Pleasant (11,000 daily and 13,000 Sunday circulation).

The acquisition also includes 87 non-dailies with a total 1.5 million distribution, also all in Michigan.

The 21st Century cluster will become JRC’s second largest cluster based on revenue after the greater Philadelphia cluster. The Oakland Press and Macomb Daily will become JRC’s second and third largest newspapers after its flagship New Haven (CT) Register.


Industry veteran Frank Shepherd, backed by affiliates of private equity firms Kelso & Co. and Goldman Sachs Capital Partners, built the 21st Century group. After completion of the acquisition, Shepherd plans to end his 45-year newspaper career in day-to-day operations. However, he has been retained by JRC for five years under a consulting agreement.

Prices Still Strong

JRC announced that the $415 million purchase price valued 21st Century at about 11.5 times earnings before interest, taxes, depreciation and amortization (EBITDA) for the trailing 12-month period, after adjusting for certain net operating loss carryforwards.

This multiple indicates that the market for newspaper properties remains very healthy despite the lingering effects of the nationwide recession. It is in line with multiples paid at the height of the market in the late 1990s for similar groups of dailies and non-dailies operating in relatively competitive suburban and exurban environments.

Unlike in previous recessions, purchase price multiples have held relatively steady over the past four years.

JRC expects the acquisition will be accretive to its earnings in 2005.

The 21st Century deal is the second largest in the industry since a record transaction year in 2000. In 2002, Lee Enterprises bought Howard Publications’ 16 daily newspapers in a deal valued at $694 million, or 14.1 times prior-year EBITDA.

Rust Expands in TN

Elsewhere, several regional newspaper companies added to their holdings, and owners of metro dailies bought strategic and niche publications during the second quarter.

Rust Communications acquired the family-owned Shelbyville (TN) Times-Gazette in middle Tennessee. The 8,200-circulation daily newspaper, owned by David and Nina Gay Segroves, had been under continuous family ownership for nearly 128 years.

David Segroves said “the quality and integrity” of the buyer was an important consideration in selling to the Rust family.

In addition to the Shelbyville daily, Rust owns the daily Dyersburg State Gazette in western Tennessee, which it acquired in 2001.

Rust, based in Cape Girardeau, Missouri, has grown from four daily newspapers 11 years ago to 50 newspapers in seven states, including 18 dailies. Rust also is part owner of 17 radio stations in Missouri and Illinois.


Brown Nets 2

Brown Publishing Co. bought two daily newspapers and several weeklies in two transactions announced in June. Brown now owns 17 daily newspapers and about 50 non-dailies – all in Ohio.

Brown acquired the 8,500-circulation Delaware Gazette, north of Columbus, the oldest continuously owned independent newspaper in the U.S. With ownership by the Thomson family dating back to 1834, the Delaware Gazette had held the lead over the Church of Jesus Christ of Latter-day Saints, which has owned the Salt Lake City (UT) Deseret News since 1839. (See list above.)

The deal also included the weekly Sunbury News and Mid-Ohio.Net, a regional Internet service provider based at the Gazette.

Separately, Brown acquired the daily London (OH) Madison Press, west of Columbus and several non-dailies from Alabama-based Cleveland Newspapers.

The 6,000-circulation London newspaper is near Brown dailies in Urbana, Xenia, Washington Court House and Circleville. The weeklies serve communities near Urbana and Circleville.

Cleveland Newspapers, owned principally by Lee Walls, Sr. and his family, continues to own seven daily newspapers.

Paxton in NC

Paxton Media Group announced in May that it would acquire the remaining 50% interest in the High Point (NC) Enterprise following the death of President and Publisher Randall B. Terry, Jr. Paxton had owned 50% of the newspaper since 1999, and Terry the rest.

The 28,000-circulation Enterprise will be one of the five largest Paxton dailies (all approximately 30,000 circulation), including the flagship Paducah (KY) Sun. The Enterprise will be the 29th daily owned by Paxton.

Knight Ridder Clusters

Knight Ridder added strategic publications in two of its daily markets, following a similar acquisition earlier in the year in the Fort Worth market.

In northern Minnesota, the company bought the neighboring Daily Telegram in Superior, Wisconsin, three weeklies and shopper zones to augment its daily Duluth News Tribune.

Two of the acquired publications, the Budgeteer News and portions of Manney’s shopper, compete directly with the News Tribune in the Duluth market.

The newspapers were sold by a subsidiary of MCG Capital Corp., which acquired them at the end of 2003 as part of its purchase of the Murphy McGinnis newspaper group. MCG continues to own dailies in Virginia and Hibbing, Minnesota and Ashland, Wisconsin, as well as a number of non-dailies in the region.

Elsewhere, Knight Ridder acquired seven weekly newspapers circulated in the city of Philadelphia.

The group, Star Publications, will be published as part of Broad Street Community Newspapers, a subsidiary of Knight Ridder’s Philadelphia Newspapers, Inc. Broad Street will now have weekly circulation in excess of 1 million.

The Hill Country

Denny Thomas sold two weekly newspapers in Boerne and Bandera, Texas, southwest of Austin, to Hill Country Newspapers. The two weekly newspapers, the Boerne Hill Country Recorder and the Bandera Review have combined paid circulation of 6,500.

Hill Country Newspapers is a subsidiary of Granite Publications, owned principally by Jim Chionsini. The company plans to merge the two weekly newspapers with its own publications, the Boerne Star and Bandera Bulletin.

Chionsini’s company also publishes the 4,900-circulation daily Taylor (TX) Press and 15 additional weekly newspapers in Texas with combined circulation of 85,000.

Hispanic Weekly Deals

The Washington Post and Atlanta Journal-Constitution both added Spanish-language weeklies to their metro clusters.

The Atlanta daily acquired Georgia’s largest Hispanic newspaper, Mundo Hispanico, with circulation of 55,000 in the metro area.

The Washington Post bought El Tiempo Latino, a 34,000-circulation newspaper serving city and suburban communities. El Tiempo Latino is one of about a dozen Spanish-language newspapers serving the growing Hispanic population in the Washington, D.C. area.

Free-dom at Last

Freedom Communications closed its recapitalization in May that leaves the founding Hoiles family in operational control of the company. Following the recapitalization, the company now is 60% owned by the family and 40% by private equity firms Blackstone Communications Partners and Providence Equity Partners.

The deal allowed some family members to sell their shares, while others stayed in the company. Freedom owns 28 daily newspapers, including the Orange County Register, numerous non-daily newspapers and eight television stations.

Off the Block

Hollinger International said it won’t sell the Chicago Sun-Times and its suburban Chicago newspapers – at least not now. The company has struck a deal to sell its assets in the United Kingdom, which include London’s Daily and Sunday Telegraph, to the Barclay brothers.

Sir David and Sir Frederick Barclay, who also own The Business, Scotland on Sunday and The Scotsman, had previously tried to buy a controlling interest in the entire company.

Hollinger has been seeking potential buyers for the company since late last year following a rift between the company’s board and Conrad Black, its chief executive and controlling shareholder.


The Wicks Group of Companies, which in March helped to finance the creation of Heartland Publications through the acquisition of 10 daily newspapers, purchased the Daily Racing Form through a separate company.

The Daily Racing Form provides national and regional coverage of thoroughbred horse racing through 30 editions published daily.

JRC also acquired a group of non-daily newspapers to complement its daily in Oneida, New York.