Tuesday, August 13, 2013

The 'surprising boomlet' in newspaper M&A deals

Not counting the $250 million sale of The Washington Post and $70 million disposition of the The Boston Globe, there were 40 newspaper transactions involving 101 daily publications between January 2012 and the end of last month, reports industry watcher Alan Mutter.

That merger-and-acquisition activity over the last 19 months is a considerable improvement over the combined 21 transactions involving 84 dailies in the full years of 2010 and 2011.

"The boomlet," Mutter says, "has been fueled by an improving economy, the growing desire of many long-time family owners to exit the publishing business and the arrival of a variety of well-heeled newcomers who believe there is continuing value in the venerable local publishing model -- so long as you buy into the business at today’s historically low prices."

Where the market's really crackling: the boonies. "The buyer pool is much larger for standalone mid- and small- market newspapers today than it was a year ago, and that is what is making the difference,” broker John Cribb said in a recent newsletter.

Historically, Corporate always says it'll entertain an offer. But Wall Street was recently more focused on a spinoff of the 82-daily community newspaper division, which includes a handful of big metros -- such as The Arizona Republic -- but many more small titles. Asked about that possibility last month, CEO Gracia Martore didn't completely rule it out.

1 comment:

  1. There are a few inherent problems with this strategy.
    First, it'd be difficult to spin off a division where the revenue keeps dropping every quarter and management has eviscerated the product in many markets so as to make it virtually useless for the average reader and, more important, advertiser.
    If Gannett was somehow able to find a company that would take the entire community newspaper division lock, stock and smoking barrel, I doubt it would be a Jeff Bezos-type. You would more likely have someone looking to cash in on the prime properties who might then look to flip the weaklings in a fire sale or downsize them to a three-day-a-week operation or make them digital only. Far-fetched? Not when you look at the circulation numbers, as I have here in Westchester.
    Gannett has gone to great lengths to make most of their print properties as unattractive as possible to even the most earnest of buyers. What are the chances of Warren Buffett kicking the tires. Even if he is more willing to settle for lower margins than the avaricious Gannett board, he's still in the game to make money. A newspaper is hardly a bargain if it's bleeding red ink and several of his newfound properties have seen layoffs and other cutbacks. With the case of the paper in Manassas, Virginia, it shut down altogether.
    The upside of a Buffett or Bezos type is that maybe they'll invest in some properties worth saving or who could make a comeback with proper resources. Jackson comes to mind. Could the major metros win back readers with a better product? Or has Gannett swung the pendulum too far in the other direction that any Hail Mary is doomed to fail?
    I don't have all the answers, but what I do know is that a parting of the ways between Gannett and its newspapers could be viewed as a good thing to the extent that the papers would be rid of a company that has given up on print. But the mess it will have left may be too difficult for even the most deep-pocketed and committed out there to clean up.


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