Chronicle sells The Pantagraph

By: Lucia Moses pulitzer to pay $180 Million in all

The Chronicle Publishing Co. of San Francisco sold off another daily newspaper, while the sale of another media jewel appears imminent.
Cash-rich Pulitzer Inc. announced Oct. 5 it would pay $180 million for the 50,000-circulation Pantagraph and seven community papers in central Illinois ? and talks are going fast and furious in Worcester, Mass., for the 107,405-circulation Telegram & Gazette, with the New York Times Co. rumored to be the buyer.
Taking advantage of a seller's market, the family members who control Chronicle Publishing announced earlier this year their intentions to get out of the business. They have since sold the flagship San Francisco Chronicle, circulation 482,268, and the Web site SF Gate to the Hearst Corp., pending regulatory approval.
The Pantagraph serves the cities of Bloomington and Normal, and will have 1999 revenues of about $29 million. Pulitzer said the paper reaches 62.5% of the market's households, the sixth-highest penetration rate in the nation, and has a growing Web site.
Observers said the paper drew interest from half a dozen newspaper companies, among them Copley Press Inc. and Lee Enterprises Inc.
"It's certainly a natural fit for Pulitzer, and they're loaded with cash," said Larry Perrotto, who started Community Media Group in West Frankfort, Ill., with 42 small papers. "It's a great franchise. Illinois is vibrant."
Founded in 1837, The Pantagraph was family-owned until 1980, when it was bought by Chronicle Publishing.
The purchase is Pulitzer's first since it became an independent public company in March following its spinoff from Pulitzer Publishing Co.
The Pantagraph will become Pulitzer's third-largest property after the St. Louis Post-Dispatch and The Arizona Daily Star in Tucson. President and ceo Robert C. Woodworth said the newspaper fits Pulitzer's strategy of targeting papers in growth markets and with strong management.
The paper will join Pulitzer's 11-member community newspaper group, headed by Mark G. Contreras.
The sale includes a group of seven weeklies in central Illinois with a combined distribution of about 50,000, and is expected to close in January, pending regulatory approval.
Pulitzer said it will realize up to $70 million in tax benefits from the deal. The purchase is expected to cut into 2000 earnings by 5% to 7%, or 10 cents to 14 cents per share, but boost earnings after four years, said Ron Ridgway, Pulitzer's senior vice president/finance.
In Worcester, about seven initial bidders for the Telegram & Gazette reportedly were whittled down to three: the New York Times Co., the Journal Register Co., and William Dean Singleton's MediaNews Group Inc., all of which already have a strong New England presence.
Publisher Bruce Bennett had expected a sale announcement by Oct. 8, but had no news as of E&P's deadline that morning.
"I continue to get questions, so that tells me they're still working on it," Bennett said.
He didn't confirm reports that the Times Co., owner of The Boston Globe, will be the buyer and pay close to a whopping $300 million for the paper.
"We are consistently hearing it," said Kathleen Shaw, a reporter and head of the T&G's guild, of the Times Co. reports.
Located in a college town one hour west of Boston, the T&G is the market's dominant paper. It was family-owned until Chronicle Publishing bought it in 1986, and has since enjoyed hands-off management. That may change. The guild, which has been collecting background on the Times Co., considers it the best of the three contenders, despite its reputation for shaking up management after acquiring newspapers.
Bids are expected in the coming weeks for Chronicle Publishing's other assets: nbc affiliate kron-tv in San Francisco and abc affiliates wowt in Omaha, Neb., and kake in Wichita, Kan.; Chronicle Books in San Francisco; and mbi (Motorbooks International) in Osceola, Wis.

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(copyright: Editor & Publisher October 9, 1999) [Caption]