'Honolulu Advertiser' Reports it Sold for $125 Million

The Honolulu Advertiser will cost David Black half of what seller Gannett Co. paid for the newspaper in 1992, according to a report on the paper's website on June 6, the same day it published its last edition. The deal also includes that Website, as well as the Advertiser's nondailies and its $82 million production plant, completed a few years ago in Kapolei.

Citing an unnamed person familiar with the sale and able to confirm the price for the first time, Advertiser staff writer Rick Daysog said Honolulu Star-Bulletin owner David Black is paying $125 million for the paper, with which he is creating the merged Star-Advertiser.

Toronto-based Fairfax Financial Holdings contributed $40 million of the purchase price, according to the same source, who insisted on anonymity. Another $40 million was supplied by Gannett to finance the plant purchase, according to Daysog.

Neither Black's Oahu Publications nor Gannett would comment, citing their confidentiality agreement.

Though substantially below Gannett's cost, Daysog reports the price "is well above the steep discounts that newspapers on the mainland have been selling for in recent years." He quotes University of Hawaii Journalism Professor Gerald Kato explaining that the premium reflects "the value of having a monopoly in Honolulu."

In what was described as "one of the largest mass layoffs in Hawaii in recent years," the Star-Advertiser kept for its staff of 265 only 56 Advertiser employees -- of whom half came from an editorial staff of 120. Those numbers reflect the loss of more than 400 jobs.

In the meantime, laid-off employees have yet to receive severance, with the companies awaiting the outcome of a grievance filed by a half-dozen unions on behalf of members whose contract entitles them to at least five weeks' salary (E&P Online, May 28).

With about a third the circulation of the barely profitable Advertiser, the Star-Bulletin had lost approximately $10 million annually, according to Black, who, according to Star-Bulletin Publisher (and former Advertiser executive) Dennis Francis, approached Gannett about the sale. The island location precluded the kind of clustering that has brought Gannett efficiencies in recent years, and for that reason, Daysog notes, Gannett President and COO Gracia Martore told media and entertainment analysts earlier this year that the "sale fits very well into our overall strategy."