Park Put In Play p. 9

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By: George Garneau

Five months after the death of its founder,
Park Communications is put up for sale sp.

FIVE MONTHS AFTER his death, Roy Park Sr.’s media empire is for sale.
The executor of his estate and the board of his namesake company have agreed to seek a buyer for Park Communications Inc., the Ithaca, N.Y.-based company he founded in 1962.
Park’s widow, Dorothy, is executor of his estate. She succeeded him as chairman of the company after his death in October at age 83.
The company’s board voted March 25 to put the company up for sale after the estate decided to sell its 89.6% stake. No investment banker had been chosen as of March 31.
Park, whose fortune was estimated by Forbes magazine at $550 million and rated the 175th-richest in the nation, willed 51% of his stock to a charitable foundation he established, the Park Foundation, and most of the rest to family members.
That means that 51% of the proceeds from selling his stock is earmarked for the foundation. The rest would go to family members, Ithaca College, North Carolina State University, his church and the local United Way.
Because the Internal Revenue Code prevents a private foundation from owning more than 20% of a company, the foundation faced the prospect of having to sell its bequest sooner or later, said Jerome Libin, a Washington lawyer who represents the estate.
“The estate and the foundation decided that it makes more sense to dispose of it now than at a later time,” he said.
“This lets the foundation do its work and provides funds to the foundation.”
Park’s will, written in 1992, would have required the foundation to sell stock to employees, but a sale would preclude that.
Park Communications reported net income of $18.8 million on revenue of $172 million last year. It owns 30 small daily newspapers, 77 nondailies, and nine TV and 22 radio stations.
The company never paid dividends to shareholders because, as Park took pride in saying, he believed in pumping all profits back into the company, often for acquisitions.
Newspaper analyst John Morton of Lynch, Jones & Ryan in Washington expressed surprise at the decision to sell. “My understanding of Roy’s intention was that this would not happen, that [the company] would go on as before,” he said.
Park’s widow and son, Roy Park Jr., through the company spokesman, declined to comment.
Morton valued the company at $400 million to $450 million. Only 10% of its 20 million shares are publicly traded, on NASDAQ. Its recent stock value, before the market declines last week, was about $470 million.
Analysts suggested that interest might be cool among the large groups that buy most newspapers because Park’s papers are small and therefore have suffered more from economic hard times than larger papers.
“Most big companies are not particularly interested in small-town papers,” Morton said, because “the future of smaller newspaper operations is less sure than larger ones.”
Aggressive acquirers such as Gannett Co. Inc. and Thomson Corp. actually have sold some smaller papers in the past couple of years.
The diversity of its holdings also may make it hard to find a single buyer for the entire company, as it is seeking, said analyst Peter Appert of Alex. Brown & Sons Inc. in New York.
“I think they may end up splitting it up,” he said. “I’m not sure one corporate entity will buy the whole thing because I’m not sure one corporate entity would want it all.”
Libin said, “We expect there will be interest in buying the whole company.” He declined to say whether overtures have been received.
Mentioned as a possible bidder was Conrad Black’s Hollinger Inc., whose American Publishing Co. subsidiary acquired 11 Park dailies and 22 non-dailies in December in a deal that Roy Park Sr. began. He died before the deal was concluded.
The recent addition of the Chicago Sun-Times as its 99th U.S. daily has not diminished Hollinger’s taste for acquisitions, said David Radler, president of Hollinger and chairman of American. “We’re certainly going to look at it,” he said, referring to Park.
Hollinger has no inside bidding position for Park, Radler said, adding that neither would there be any “cultural difference” between Park and American papers.
Because Hollinger is based in Canada, it and its subsidiaries are barred from owning U.S. radio and TV stations. It could, however, acquire Park and then sell its broadcast operations.
Employees had mixed reactions.
“Right now, we’re just taking in the information from Ithaca and waiting to see what happens,” said Dale Cline, managing editor of Park’s Concord (N.C.) Tribune, who expressed no surprise at the announcement.
The news caught Paul Semple, general manager and editor of the Effingham (Ill.) Daily News, off guard because Park acquired the paper only 16 months ago.
While large newspaper chains for years have been gobbling up independent, family-owned newspapers ? which are down to about 350 dailies ? the absorption of Park by a larger group or groups would move that trend to the next level: buyouts of smaller, family-controlled chains.
“It’s long been clear to me that the next target for acquisitions is smaller family groups,” Morton said.
Another example is Stauffer Communications Inc., the Topeka, Kan.-based company that recently announced that it was seeking a buyer.

The late Roy Park Sr.
Park Communications reported net income of $18.8 million on revenue of $172 million last year. It owns 30 small daily newspapers, 77 nondailies, and nine TV and 22 radio stations.

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