By: Jennifer Saba
Gannett isn’t commenting on Pulitzer Inc.’s announcement that it may put itself up for sale, but the nation’s biggest newspaper chain was quickly targeted by analysts as the most likely buyer.
“I think there will be multiple bidders starting with Gannett, given that they own the other half of the Tucson [joint operating agency] and have a TV station in St. Louis,” said Merrill Lynch analyst Lauren Fine.
Fine estimated the sprawling Pulitzer chain of 14 dailies, including the flagship St. Louis Post-Dispatch, and more than 65 weeklies, shoppers, and niche publications could fetch as much as $67 a share, which would value the deal at about $1.5 billion.
Gannett was also rated the front-runner by Steven Barlow of Prudential Financial, who put only a slightly less expensive price tag of $65 a share, a premium of about 18.6% over its close last Friday of $54.81. Indeed, in early trading Monday, Pulitzer stock shot up 18%, and closed at $64.50, a gain of 17.22%.
Newspaper analyst John Morton said the speculation about Gannett is understandable because it is already publishing with Pulitzer in Tucson, where it owns the Tucson Citizen and Pulitzer the much bigger Arizona Daily Star. At the same time, he said, the JOA could be a stumbling block. “Something would have to be done about [the JOA],” Morton said. “There would have to be some kind of arrangement for the Pulitzers to sell it. … I would be surprised if the Justice Department let Gannett buy Pulitzer” without taking care of the JOA.
In an e-mail, spokesperson Tara Connell said Monday Gannett has no comment on a possible Pulitzer sale or speculation about Gannett’s interest.
Morton said the Pulitzer family – – which controls the company through an 88% voting stake — may lean towards the New York Times Co., which has a similar history and family-controlled corporate structure.
Like the sale of the Chandler family-controlled Times Mirror Co. to Tribune Co. in 2000, Pulitzer’s announcement that it was “exploring strategic alternatives” shows that strong family ownership does not mean immunity from the winds of change in the newspaper industry. “When a family has almost all of its assets in one industry, and there’s concern within the family about the future of that industry … it might be the prudent thing to cash out. That was partly the case with the Chandler family, [and] that could be going through the minds of the Pulitzers,” Morton said.
Indeed, the possible sale of Pulitzer is the strongest signal yet that deal-making is back in the newspaper industry.
That’s why even those who peg Gannett as the most fervent bidder have a pretty substantial list of alternatives, too.
Merrill Lynch’s Fine noted, for instance, that Tribune Co., with its interest in the cross-ownership of broadcast and newspapers, likes major markets like St. Louis and already has a television station in the city. Similarly, she said, Belo has stations in both St. Louis and Tucson.
Simply because of its size, Knight Ridder has to be considered a player, and the family-owned McClatchy chain would also find the St. Louis Post-Dispatch and the Pulitzer Newspapers clusters a good fit with its properties.
One wild card could be Hearst, which in 1999 bought Pulitzer’s nine television stations and five radio stations when the chain made the strategic decision to be a newspaper pure play.
A Hearst spokesperson did not immediately respond to an e-mail message seeking comment.