Newspapers Are Hot Properties Again

By: E&P Staff This week's blockbuster acquisition of Pulitzer Inc. by Lee Enterprises only confirms what became apparent during 2004: The market for newspapers has finally come back.

Indeed, according to an analysis by the big newspaper brokerage firm Dirks, Van Essen & Murray, more daily newspapers changed hands in 2004 than in any year since the start of the industry recession four years ago. Industry merger-and-acquisition (M&A) activity in 2004 totaled nearly a billion dollars, the firm said.

Last year, 44 daily newspapers were sold in 23 separate transactions totaling $918.1 million, according to Santa Fe, N.M.-based Dirks, Van Essen.

"This represented the largest number dailies to get new owners since the level of activity peaked in 2000 when 135 daily newspapers were acquired," the firm said.

Dirks, Van Essen noted that M&A activity in 2004 accelerated well ahead of the pace of 2003, when 31 dailies with a total value of $575.7 million changed hands.

"The continued flow of private equity money into newspapers and strong purchase price multiples bode well for improved deal activity in 2005, even though publishers remain cautious about the advertising climate," Dirks, Van Essen Vice President James Oldershaw said in a statement.

Other factors pushing M&A activity: Interest rates remaining at near-historic lows, and aggressive lending to newspaper buyers by banks.

"The relatively modest deal flow in recent years has created a situation where buyers have a lot of excess borrowing capacity," Oldershaw said. "We?re seeing a lot of competition when good newspaper properties come on the market."

Also making a comeback in 2004 were so-called "platform" deals -- buys that create a base for a new chain. "Not since the second half of the 1990s, when Community Newspaper Holdings Inc. (CNHI), Liberty Group Publishing and other familiar names got started, were so many new newspaper companies formed in a single year," the firm said.

Among the new companies were Heartland Publications, which bought 10 dailies and 12 non-dailies from CNHI; HarborPoint Media, which bought a daily in Florida, two dailies in Arkansas and several non-dailies; and Phil Anschutz's Clarity Media Group, which bought the San Francisco Examiner and free-distribution papers in suburban Washington, D.C.