2003 Newspaper M&A: ‘A Yawner’

By: Lucia Moses

Over the past 18 months, Mike Reed has been wining and dining his fellow publishers with more frequency. When he attends industry functions, he’s networking whenever possible.

Since brokers aren’t banging down his door these days, the CEO of the Community Newspaper Holdings Inc. chain based in Birmingham, Ala., figures he has to work extra hard if he’s going to add to his empire, and broaden his geographical criteria for potential acquisitions.

“There are fewer and fewer family-owned and individual papers,” said Reed, who’s looking for dailies in the 20,000- to 75,000-circulation range while pruning some of his smaller properties. “Bigger papers that own a larger amount of them aren’t selling. You have to be aggressive in building relationships for areas of the country and newspapers you would like to have in your portfolio some day.”

Would-be sellers seem to still be waiting for the economy to get better, judging from recent sale activity. In the first half of the year, just three sales involving one dozen dailies were announced.

With those deals totaling less than $200 million, versus $1.2 billion in daily sales all last year, the period was “kind of a yawner,” said Owen Van Essen, president of the Santa Fe, N.M.-based Dirks, Van Essen & Murray, which handled most of those deals.

One of them involved the sale of The Record, a 62,366-circulation daily in Stockton, Calif., to Dow Jones & Co. unit Ottaway Newspapers Inc. Ottaway has been looking to add more papers, but CEO Dan Austin recognized that chances are slim another property the size of the Record would come his way anytime soon.

“My sense is, there are not going to be a lot of [good-sized deals] coming down the pike,” Austin said. “Even in boom times, there aren’t a lot of these.”

Brokers expect deal activity to pick up in the second half, propelled by a hoped-for improvement in ad spending and the possible sale of Freedom Communications Inc.’s 28 dailies later this summer, which also could have a domino effect on deal-making. Analysts also believe the possible elimination of the newspaper-broadcast cross-ownership ban in most markets also could lead indirectly to newspaper chains buying more newspapers.

“These kinds of things just run in cycles,” said Van Essen, who has some transactions in progress. “We expect to see more activity by the end of the next quarter.”

E&P print-online subscribers may access a complete list of the daily newspaper sales for the first half (password required).

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