Clustering Philosophy p. 16

By: MARK FITZGERALD MEDIA GENERAL followed up its $710 million cash acquisition of the former Park Communications newspaper and TV empire with a series of sales and swaps that focuses the Richmond, Va.-based publisher squarely on the southeastern United States.
As it closed the Park sale, Media General immediately signed agreements to shed 18 of the 28 former Park daily papers that are located north of the Mason-Dixon line.
At the same time, Media General announced agreements totaling more than $52 million to acquire two more Southeastern dailies and their companion weeklies: the 30,300-circulation Potomac News in Woodbridge, Va., and the 6,600-circulation Reidsville (N.C.) Review.
The publisher of the flagship Richmond Times-Dispatch said all the transactions are set up in "a tax-advantaged manner" so that "upon the completion of these transactions, [Media General] would have a significant remaining cash balance available for early reinvestment in other Southeastern media acquisitions."
"The focus of this company is the Southeast," said J. Stewart Bryan III, Media General's chairman and chief executive officer. "We believe in our Southeastern clustering philosophy and we wanted to dispose of the Park properties outside of our region as quickly as possible to maintain our focus. We have done exactly that. I am pleased to announce that as of (Jan. 7), we have signed agreements in principle to exchange or sell all but one of our non-Southeast Park properties. This . . . is the next installment of our corporate mission to be a leading provider of news, information and entertainment in the Southeast," Bryan added.
The remaining non-Southeastern property is a television station in Utica, N.Y.
With the completion of the transactions, Media General will operate 20 daily newspapers and numerous nondailies and specialty publications in the Southeast.
"We are enthusiastic about these transactions which allow us to exit the Northeastern and Midwestern markets and strengthen our presence in Virginia and North Carolina, and offer further possibilities in our core Southeastern marketplace," Bryan said.
Among the Northeastern and Midwestern newspapers Media General is shedding from its acquisition of Park, once headquartered in the upstate New York town of Ithaca:
u Sold to Community Newspaper Holdings Inc. of Lexington, Ky., in a deal valued at about $107 million: 43 papers, including the 12,800-circulation Effingham (Ill.) Daily News; 7,400-circulation Macomb (Ill.) Journal; 17,200-circulation Union-Sun & Journal in Lockport, N.Y.; and the Robesonian, a 13,800-circulation evening daily in Lumberton, N.C.
u Sold to Forum Communications Inc., publisher of the Forum in Fargo, N.D., for approximately $10.65 million: the 8,350 Bemidji (N.D.) Daily Pioneer.
u Sold to Johnson Newspaper Corp. of Watertown, N.Y., for approximately $8.85 million: four New York dailies and several weeklies, including the 6,700-circulation Hudson, N.Y., Register-Star and the Courier-Observer, a 5,300-circulation morning paper in Ogdensburg, N.Y.
u Sold to Community Newspapers Inc. for about $8.1 million: the 8,500-circulation Richmond County Daily Journal in Rockingham, N.C.
u Sold to the Wicks Group of Companies Inc. for approximately $4 million: the 6,300-circulation Daily Reporter in Coldwater, Mich. Wicks Group is a New York-based private investment firm that describes itself as specializing in media transactions in South Carolina, Tennessee, New York, Oregon and Texas.
Media General is also trading a Richmond television station acquired in the Park deal for two network-affiliated stations in Georgia and Hattiesburg, Miss. ? a swap Bryan made clear the company was making reluctantly.
"We would have preferred to continue to own WTVR," Bryan said, "but a condition of the Federal Communications Commission's approval of the transfer of the Park television stations to us was that we divest WTVR within a year because of our ownership of the Richmond Times-Dispatch. We carefully have considered our options and believe that the prudent decision is to divest WTVR within the time period established by the commission."
Media General is making the trade with Ellis Communications Inc. Media General also said it is in "near agreement" to sell its only TV station outside the Southeast, WUTR-TV in Utica.
Despite losing the Richmond station, when the transactions are complete, Media General will operate 13 broadcast TV stations in the Southeast serving some 22% of the region's television homes. "We have spent nearly $1 billion in the last 15 months on manageable, carefully considered acquisitions," Bryan said. "The sum total here is that our branded products now will reach approximately one in four homes in the Southeast, the fastest-growing market in the nation."
Media General said its $710 million acquisition cost for the common stock of Park Acquisitions Inc. ? the investment firm that bought Park Communications in 1994 ? included cash paid Jan. 7 plus the redemption in February of $476 million of high yield Park bonds bearing interest rates ranging from 11.88% to 13.75%. In December, the company said, it completed a new seven-year credit facility syndicated among 33 banks ? and arranged by the lead banks NationsBank, Toronto Dominion and First Union ? that provides committed funding of $1.2 billion.
"We are using swap agreements to fix the borrowing rate over a period of four to seven years, and based on current market conditions, the all-in average fixed rate achieved of approximately 7% is very attractive," said Marshall N. Morton, senior vice president and chief financial officer.
# Editor & Publisher n January 18, 1997