Donrey Media Sold p.

By: Tony Case Donrey Media Sold p.
AN ARKANSAS INVESTMENT group is acquiring a controlling interest in Donrey Media Group, one of the nation's biggest newspaper companies.
The deal was announced last week by the heads of Donrey and Stephens Group Inc., parent of Stephens Inc., which bills itself as the largest investment and brokerage firm off Wall Street and has held other media interests.
Las Vegas, Nev.-based Donrey owns 53 daily newspapers and 71 non-dailies as well as broadcast and cable-television operations and outdoor-advertising companies. It ranks as the 17th largest newspaper company, based on combined daily circulation over 790,000. Forbes magazine has estimated Donrey to be worth $950 million.
Dick Smith of the Maryland-based newspaper-brokerage company W. B. Grimes valued a controlling interest in Donrey at $500 million. He said the company's Fort Smith, Ark.-based Southwest Times Record alone has been appraisal at $60 million to $70 million.
Smith, who has followed the newspaper industry for 50 years, said he was shocked to learn of the acquisition-and he was not alone. ""People who have been with the company 30 or 40 years who have had the close confidence of Mr. Reynolds were as surprised as I was,"" he related.
Others expected that Donrey might be sold after founder Donald W. Reynolds died in April.
Details of the agreement between the privately held companies have been scarce. Stephens referred calls to a Donrey representative who declined comment.
Even executives at Donrey's own properties were given few details. Several publishers and editors said all they knew about the deal was what they had read in a news release Donrey issued last week that did not say when the deal would take place or divulge terms.
Donrey instructed editors to publish only the information in the release, according to an editor in the release, according to an editor at one paper. He said he and his colleagues were rebuffed when they sought more facts.
Donrey chairman, president and chief executive officer Fred W. Smith said ""there has been a longtime association"" between Reynolds and Stephens chairman Jackson Stephens.
"I am certain that the future of Donrey and its employees will be well served by this association,"" he said in a statement.
Stephens, who will become Donrey and its employees will be well served by this association, "" he said in a statement.
Stephens, who will become Donrey's chairman, said he has ""admired"" Donrey for years. He anticipated no personnel or management changes as result of the acquisition.
Reynolds' will instructed that proceeds from Donrey's sale go to the Donald W. Reynolds Foundation. He provided each of his three children with a $50,000 annuity as long as they did not contest the will. If they challenge it and lose, they get $1 each.
"They won't get as much as they think they're entitled to,"" Reynolds told Forbes. ""Children are, to me, most ungrateful.""
There has been much speculation about just why Stephens is interested in Donrey.
The Stephens family is politically influential in Arkansas and has contributed generously to political campaigns over the years, including the successful presidential bid of former Gov. Bill Clinton. Observers question whether Stephens might want Donrey's as a vehicle for his political views. Others think Stephens will take Donrey public as it did a few years ago when
it acquired Beverly Enterprise, the nation's largest nursing home operator.
"It makes a lot of sense that Stephens would take the company public,"" said broker Smith. ""I feel sure about, but I'm not positive about it. They've always said they've the biggest broker in the United States not located on Wall Street. That's the kind of business they're in.""
Smith said he does not think Stephens will hold Donrey long enough to get involved in editorial matters.
Charles Berry, publisher of Donrey's Pine Bluff (Ark.) Commercial, said he and colleagues at other papers see the deal as positive.
"The Stephens Group and Donrey are Arkansas-based companies. I'm proud to be a part of Donrey, and Stephens, as far as I know, is a good company also,"" he said.
Donrey's Arkansas connection precede the Stephens deal. Its financial headquarters are in Fort Smith and it owns five newspapers in the state.
Donrey is the latest in a line of Stephens media investments. The company has a minority interest in companies controlled by Rupert Phillips, who publishes the Honolulu Star-Bulletin and Journal Newspapers of Springfield, Va. Stephens once was part owner of Phillips Media Inc., a publisher of papers in the South and Midwest, and was involved in retail and magazine-publishing ventures in Arkansas. *E&P