By: Mark Fitzgerald
WITH A MARKET for weekly newspapers completely changed from only a few years ago, owners must start thinking of alternatives to an outright cash sale, broker Dane Claussen says.
Sadly, however, too few weekly paper owners are aware that the value of their paper has changed utterly, adds Claussen, president of American Newspaper Consultants in Athens, Ga.
“I talk to weekly newspaper owners who still think their newspaper will be easy to sell regardless of its location. And I talk to weekly newspaper owners who think they can sell their paper for gross revenues regardless of profitability,” Claussen said at the recent National Newspaper Association convention in Nashville.
Both beliefs are untrue, Claussen says, and many characteristics of the new weekly newspaper market are working against the owner who wants to cash out now. Among them:
u Chains are no longer in the market for independently owned weeklies. Instead, they are buying weeklies from other chains.
u Dailies continue to buy weeklies ? but only certain kinds.
u Fewer second- and third-generation family members want to take over the business.
u There has been “a significant decrease in middle-aged, middle-income [journalists] from urban metros who want to become rural publishers.”
u U.S. savings rates have declined, reducing the number of potential buyers. “Twenty years ago,” Claussen said, “you had lots of 35-year-old couples who had saved $40,000 as a down payment for your newspaper. You don’t find that now.”
“People who want to sell their paper are increasingly unable to get the price they want for it,” he said.As a result, Claussen argues, weekly owners should consider alternate strategies for “ownership transition.”
One example is an employee stock ownership plan quite different from the typical ESOP, which Claussen says “just sort of rewards people for hanging around.” Under his plan, managers or other motivated employees would get stock as a bonus and begin steps toward majority ownership. Money for the stock could go from the company treasury into a tax-deferred retirement plan for the owner.
Another option is to sell less than 100% of the paper or sell only some assets. “Some type of sale is better than no sale,” Claussen said.
Owners might also consider putting the paper up for auction, going public, donating or selling the paper to a nonprofit organization, and expanding the search for a buyer beyond traditional boundaries.