By: Lucia Moses
In a deal that will nearly double its daily circulation and extend its geographic footprint to the South, Cincinnati’s Brown Publishing Co. agreed to buy 11 dailies and 12 weeklies from Community Newspaper Holdings Inc. (CNHI).
The agreed-on sale marks the first large industry acquisition of the year, one expected to keep brokers busy if media cross-ownership restrictions are eased. No purchase price was disclosed, but John T. Cribb, a broker who was not involved in the deal, said that given the high profitability of CNHI’s papers, the buyer probably paid a multiple of nine to 10 times cash flow, the low end of the price range for papers that size.
Roy Brown, the acquiring company’s third-generation family owner who ran unsuccessfully for Congress last year, said he hopes the CNHI dailies will bring his company regional ad-selling opportunities and newsprint-buying efficiencies. The papers stretch over six states from Ohio to Georgia and have a combined circulation of about 90,000. The largest paper involved is The Portsmouth (Ohio) Daily Times, circulation 14,880.
Brown Publishing, which used bank debt to finance the deal, has been an active buyer in recent years, adding the Troy (Ohio) Daily News from Pulitzer Inc. in 2001 and the Amos Press Inc.’s Ohio newspaper group in 2000.
The deal also alters the profile of CNHI, which spent the first two years of its 5-year-old existence buying papers at break-neck speed. It has since shed about 80 of its smallest ones to focus on those in the 15,000- to 50,000-circulation range. CNHI also has begun diversifying into TV, which it sees as a hedge against softness in newspaper revenue.
“When you have 200 newspapers, it makes it extremely difficult to pay attention to all of them,” said Mike Reed, CEO of the Birmingham, Ala.-based company.
CNHI contacted Dirks, Van Essen & Murray, the Sante Fe, N.M.-based newspaper brokerage, late last fall and started talking to Brown in November.
The Brown deal will leave CNHI with 95 dailies with about 1 million circulation.
“For years, it looked like we were buying everything,” said Reed, who became CEO three years ago, after the company’s rapid expansion. “We bought some things we shouldn’t have bought, we paid prices for some things we shouldn’t have paid.” Today’s mantra is, he said, “Now we’re going to run a business.”
Newspapers Purchased by Brown from CNHI
The Portsmouth (Ohio) Daily Times – 14,880 circulation
Point Pleasant (W.Va.) Register – 14,805*
The Robesonian, Lumberton, N.C. – 12,877
The Sampson Independent, Clinton, N.C. – 8,216
The Harlan (Ky.) Daily Enterprise – 6,904*
The Middlesboro (Ky.) Daily News – 6,454*
Gallipolis (Ohio) Daily Tribune – 4,927*
Clayton News/Daily, Jonesboro, Ga. – 4,765*
The Daily Sentinel, Pomeroy, Ohio – 4,044
The Daily Southerner, Tarboro, N.C. – 3,898*
Daily Herald, McDonough, Ga. – NA
* indicates circulation figures are from the 2002 E&P International Year Book; all other figures from the Audit Bureau of Circulations FAS-FAX for six months ended Sept. 30, 2002.