By: Lucia Moses
granddaddy of alternative newsweeklies, and its six sister papers, put up for sale by Stern Publishing.
Observers say the group of free weeklies, industry leaders and popular with the 25- to 35-year-old set advertisers adore, could fetch at least $150 million, or about twice annual revenues. Stern plans to sell the papers and companion Web sites as a group. An asset sale is expected to close by January.
Mainstream media and Internet companies, investment groups, and foreign players are likely to be calling.
For Internet companies, the alternatives’ appeal is their young audience and online local news and entertainment listings, Stern President David Schneiderman said.
For private equity firms, Stern’s management team and wide geographic range would make it attractive, said Kevin Lavalla, managing director for Veronis, Suhler.
Alternatives have gained clout in recent years, cutting deeper into dailies’ national ad revenues. The appeal to younger readers and their free-distribution model make the Stern papers more valuable than mainstream dailies, Schneiderman argued.
To this point, mainstream newspaper companies have only dabbled in the alternative business, usually in specific markets for strategic reasons.
“This might be the time that someone major jumps in and says, ‘This is something I want to get into,'” said John Morrison, sales director for the Alternative Weekly Network, a national ad rep firm whose clients include the Stern papers.
That concerns some in the industry, who worry that mainstream ownership would compromise the character of the irreverent and liberal weeklies.
Speculation is that New Times Inc., the other alternative weekly chain with seven major-market titles, might want to buy the group. New Times partner Jim Larkin wouldn’t comment.
And don’t rule out more eccentric characters. The Voice, an industry icon, could be an ego buy for someone wanting part the New York media market. Even Barbra Streisand’s name has been mentioned.
The Stern weeklies have a combined distribution of more than 890,000, employ more than 500 people, and produce annual revenues of more $80 million. Schneiderman said the group is profitable but won’t give figures.
Other potential suitors include The New York Times Co., Times-Mirror and Canadian publisher Conrad Black, whose proposed deal to buy the weekly New York Observer fell through over the summer.
In addition to the Voice and its Long Island, N.Y., counterpart, the group includes LA Weekly, and papers in Cleveland, Minneapolis-St. Paul, Seattle, and Orange County, Calif.
Leonard Stern, 61, bought the Voice from Rupert Murdoch 14 years ago for $55 million and has been approached by interested buyers over the years. He decided to put the company up for sale after consulting with his three children, who said they didn’t want to run the weekly group.
The nation’s first alternative, the Voice was founded in 1955 by Norman Mailer and colleagues Ed Fancher and Dan Wolf. The Voice has won two Pulitzer Prizes and been a finalist five times in the past decade.
Three years ago, Stern took the Voice to mostly free distribution from paid circulation, bringing the Voice’s distribution to about 250,000 today, twice the pre-switch level.
(Editor & Publisher WebSite:http:www.mediainfo.com) [Caption]
(copyright: Editor & Publisher September 25, 1999) [Caption]