BOSTON NEWSPAPER MARKET HEATS UP

By: Lucia Moses Herald's CNC Buy Raises the Stakes





The Boston Herald's parent, in a deal that's expected to lead to heightened competition with The Boston Globe, agreed to buy the Needham-based Community Newspaper Co. (CNC), the Fidelity Investments-owned chain that blankets eastern Massachusetts.



The acquisition would combine the urban strength of the tabloid Herald, weekday circulation 265,695, with CNC's four dailies, 88 weeklies, and shopper and specialty publications, which have a combined distribution of 900,000. It also publishes news on the Web at Town Online (http://www.townonline.com).



Despite the belief in media circles that the chain was only marginally profitable, Fidelity said it

wasn't looking for a buyer when Patrick Purcell, president of Herald Media Inc., parent of the

Herald and several online services, approached the firm in midsummer about a deal.



CNC President Kirk Davis said Fidelity realized it needed scale to gain market share and saw Purcell's offer as a way to do it. The Herald, Davis said, brings "Boston coverage and dominance that really complements our suburban profile. We all recognized his leadership and what he brought to bear was just very attractive."



The transaction is expected to close by Nov. 1. Both buyer and seller are privately held and didn't disclose terms of the deal.



CNC was begun 11 years ago by Fidelity Investment's new-business-development and venture-capital arm, Fidelity Capital, when Bill Elfers, a venture capitalist there and the now-retired chairman and CEO of CNC, convinced Fidelity that community journalism would be the strongest news franchise.



The chain employs about 1,200 people and expects revenue to top $110 million this year. Fidelity doesn't reveal financial data, but said the group is profitable. "We are very happy with the way the newspapers have been running," said Fidelity spokeswoman Eileen Newman.



For Purcell, the deal presents a chance to become a serious contender in Boston's suburbs. He bought the Herald in 1994 from Rupert Murdoch's News Corp., taking it to independent ownership just after its chief competitor, the Globe, was bought by the New York Times Co. Purcell didn't respond to an interview request.



Last year, the Times Co. paid $295 million for the Worcester Telegram & Gazette, upping its reach in the region while increasing its threat to CNC's empire.



Both Boston dailies have had trouble with circulation. Over the past decade, the Herald's weekday circulation fell from 358,925 to 265,695, while the Globe is down from 521,354 to 477,074. The Herald has particularly struggled with its Sunday edition, whose circulation stands at 170,042 to the Globe's 722,729.



A key battleground will likely be Boston's affluent western suburbs. It's home to CNC's biggest daily, the MetroWest Daily News, weekday circulation 57,023, but the Globe has stepped up its presence there by launching a semiweekly news section, "Globe West."



Assimilating CNC won't be simple for Purcell. The chain has faced low morale and high turnover among staff and reader criticism stemming from moves to grow revenue and trim costs. It has closed five bureaus in the past couple of years, rolled papers into regional editions, and given editors oversight of multiple papers. To facilitate cross-selling of advertising, it converted its remaining tabloids to the broadsheet format last fall, irking some readers. In January, the company cut 11.5% of its full-time positions, mostly back-office and production people, citing a need to reduce overlap.



Bill Wasserman, who owned several weeklies in Boston's north suburbs that are now part of CNC, thinks having editors put out more than one paper apiece has hurt editorial quality. "They have done a distressingly poor job of running community newspapers," he lamented. He said he's glad the new owner has a newspaper background, but notes that publishing community papers is much different from putting out a city tabloid with a broadsheet competitor.



While Purcell has spent to improve the Herald and claims the paper is profitable, the Boston Phoenix's Dan Kennedy said the CNC papers also will require investment. "I don't think there are many newspapers in CNC he would be proud to put out," he said. "How do you make them better without spending money?"



That's a question for Purcell. But he's not talking yet, saying he needs time to evaluate the papers.





Lucia Moses (lmoses@editorandpublisher.com) is an associate editor covering business for E&P.





Copyright 2000, Editor & Publisher.