Newspaper M&A Activity Is Up This Year

By: Lucia Moses

After being held back by the recession last year, sales of newspaper properties have popped like a champagne cork in the new year. “Clearly, it’s a constructive sign,” said Robert J. Broadwater, managing director of the New York-based media merchant bank Veronis Suhler Stevenson. “I definitely see a more active media M&A [mergers-and-acquisitions] business.”

Deals for 25 daily newspapers, valued at almost $1 billion, were announced in the first quarter — representing nearly five times the dollar volume of the sales announced for the entire year before, according to the Santa Fe, N.M.-based broker Dirks, Van Essen & Murray.

By contrast, only $209.3 million in sales, involving 22 dailies, were reported in all of 2001.

Most of the first-quarter M&A volume came from two big transactions that were in the works last year: Lee Enterprises Inc.’s announced purchase of the 16 Howard Publications dailies and Community Newspaper Holdings Inc.’s agreement to buy four Ottaway Newspapers Inc. dailies.

The remainder of this year could feature more activity involving Ottaway Newspapers, which is looking to unload three Boston-area papers, and Morris Communications Corp., which has yet to sell four papers that it put on the block last year.

Newspapers, with their relatively predictable performances, are attracting renewed attention from private equity firms, whose interest in the industry has waned in recent years. But Broadwater doesn’t see financial buyers making significant daily newspaper purchases because of the high multiples asked for dailies. As a result, he said, “You’d be outbid by the people in the industry,” who are willing to pay more for less risk.

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