Divorcing p.

By: George Garneau

Media General agrees to divest its holdings in Garden State
Newspapers but acquires a share of Denver Post parent firm sp.

AFTER BANKROLLING WILLIAM Dean Singleton's company's expansion into the nation's 12th-biggest daily newspaper group, Media General Inc. has agreed to sell its holdings in Garden State Newspapers to Singleton and his partner, Richard Scudder.
The deal calls for publicly traded Media General to sell its 40% of Garden State common stock plus Series A and C preferred stock to Singleton and Scudder for $62.7 million.
At the same time, Media General would trade its Garden State Series B preferred stock for 9% of the preferred shares in Singleton and Scudder's Denver Newspapers Inc., worth $30 million, and an option to buy up to 40% of Denver Newspapers' common stock. Denver Newspapers is publisher of the Denver Post.
The deal, subject to financing and other terms, was expected to close in March.
Media General wrote off its entire Garden State investment in 1991, when it took a $78.3 million after-tax write-off. The bookkeeping move allowed Media General to avoid including closely held Garden State's profits and losses in its earnings statement.
The deal would sever Media General's ties to Garden State and, except for the investment in the Post, end a relationship with Singleton and Scudder that was forged when Garden State was founded in 1985. Both firms said they planned from the outset for one to buy out the other in 1994.
"We made a decision to go our separate ways," Singleton said, refusing to say how he planned to finance the buyout.
"It's a very propitious time for both parties," Media General spokesman Robert Prendergast said. He described affairs between the two firms as "a very comfortable ongoing relationship."
The deal was signed in November, Singleton said, just before Garden State was due Jan. 1 to pay off Series A and C preferred stock held by Media General as part of its investment in Garden State's expansion.
Singleton said Media General invested $35 million in Garden State in 1985 and 1986 and threw in another $30 million toward acquisition of the Post. For its troubles, Media General will get $62.7 million plus Denver Newspapers preferred stock worth $30 million, due in 2002, and a warrant to buy up to 40% of common stock.
"That ain't no loss," he said.
The deal would leave Media General with cash and Garden State in the hands of Singleton and Scudder. The two men own 60%, 30% each, of Garden State, which has 12 daily papers, including the Oakland (Calif.) Tribune; Bristol (Conn.) Press; Ypsilanti (Mich.) Press; North Jersey Herald and News, Passaic, N.J.; Potomac News, Woodbridge, Va.; York (Pa.) Dispatch; and Las Cruces (N.M.) Sun-News.
Garden State papers and those owned separately by companies controlled by Singleton and Scudder, including the Houston Post and Denver Post, are managed on contract by MediaNews Group, a Houston-based firm owned by the duo and operated by Singleton. The pair own a majority interest of all the company's 18 dailies, with combined daily circulation of 1.1 million.
Singleton said the ownership changes would not affect any newspaper operations.