81 daily newspapers changed hands in 2020

Feb 1, 2021

SARA APRIL
Dirks, Van Essen & April

While newspaper deal activity slowed in 2020, quelled by the COVID-19 pandemic, 81 daily or thrice-weekly newspapers still changed hands in 19 separate transactions. Deal volume totaled $460 million.

The majority of the dailies sold were accounted for in two large transactions, the sale of McClatchy Co. to Chatham Asset Management and BH Media to Lee Enterprises.

As a comparison, in 2019, 154 daily newspapers changed hands in 30 separate transactions worth $1.33 billion; however, the Gannett/New Media GateHouse deal accounted for large portions of the dailies sold and the dollar volume. Excluding that transaction, the totals would have been 44 dailies sold in deals worth approximately $134.0 million.

WHO WAS BUYING AND SELLING?

Continuing a trend seen in 2019, the buyer pool remained remarkably diverse in 2020. There were 17 different buyers in the 19 transactions involving daily or thrice-weekly newspapers.

Sellers included eight families, six group owners and three public companies. The largest independently or family owned daily sold in 2020 was the Lake Charles (Louisiana) American Press, which was sold to Carpenter Newsmedia (a division of Boone Newspapers). Other family-owned papers sold included the Jasper (Indiana) Herald, Madison (Indiana) Courier and Centralia (Washington) Chronicle. On average, these operations had been owned for 100 years by the same family. The Madison paper had been owned by members of the Garber family for 171 years.

Buyer interest continued to be driven primarily by strategic interests, but a new buyer group gaining strength emerged — local independent/small group owners.

One such new owner was the Taylor family, who acquired the Centralia Chronicle in December. Chad and Coralee Taylor live in the market and have long owned and operated a local marketing and advertising agency. Chad has also served as a city councilor since 2002.

Another example was the sale of the San Francisco Examiner to Clint Reilly Communications, owned by Clint and Janet Reilly. The Reillys also own the Nob Hill Gazette and Gentry Magazine and have significant real estate holdings, including the landmark Merchants Exchange Building. Clint also has a successful political consulting business, which has worked with Nancy Pelosi, Dianne Feinstein and former Los Angeles Mayor Richard Riordan, among many others.

Other local owners to step in included Hank and Kelly Vander Veen in the Central Valley of California. The Vander Veens acquired a group of papers Hank had been running for Morris Multimedia Inc. for years.

In addition, several independent/small group owners focused on weekly newspapers expanded their holdings, as well. These included O’Rourke Media Group, led by veteran publisher Jim O’Rourke, which closed five transactions, and Better Newspapers, run by the Hoskins family, which acquired two titles in Illinois in two deals.

Larger group owners that made strategic add-ons during 2020 included Paxton Media Group, WEHCO Newspapers and Sample News Group. Paxton acquired dailies in Jasper and Madison, Indiana, markets close to their Owensboro (Kentucky) Messenger-Inquirer operation, as well as the West Memphis (Arkansas) Evening Times. Paxton also made several strategic weekly acquisitions during the year.

Walter Hussman’s WEHCO Newspapers Inc. acquired the daily Pine Bluff (Arkansas) Commercial from Gannett, adding to its stable of newspapers in the state. The Pine Bluff Commercial is now included in the Arkansas Democrat-Gazette’s Arkansas section in their digital replica edition seven days a week and in the print edition delivered to subscribers of the Pine Bluff Commercial on Sundays.

Sample News Group, which owns more than 75 publications in Pennsylvania, New York, New Jersey, Vermont, Maine and New Hampshire, acquired The Indiana (Pennsylvania) Gazette from the Donnelly family. The company’s 11 other newspapers in Pennsylvania include The Bedford Gazette, The Huntingdon Daily News, The Gettysburg Times, The News Item in Shamokin, The Review in Towanda and The Latrobe Bulletin.

2020’s LARGEST DEALS

It was announced in late January that Lee Enterprises was acquiring BH Media Group (BHMG) in a deal financed by BHMG parent Berkshire Hathaway. Lee Enterprises, which has publishing operations in 50 markets, acquired BHMG’s publications and The Buffalo (New York) News for $140 million in cash.

BHMG was operating newspapers in 10 states, including 30 dailies and more than 49 paid weekly publications. The Buffalo (New York) News was separately owned by Berkshire Hathaway. Lee Enterprises had already been managing the BHMG newspapers under a management agreement since July 2018.

Berkshire Hathaway provided $576 million in long-term financing to Lee at a 9% annual rate and without any performance covenants. The financing paid for the acquisition, refinancing of Lee’s approximately $400 million of existing debt, and provided enough cash to allow for the termination of Lee’s revolving credit facility. When the deal closed in March, Berkshire Hathaway became Lee’s only lender. BHMG’s real estate and cash were excluded from the acquisition, and Lee entered into a 10-year lease on the buildings.

McClatchy filed for Chapter 11 bankruptcy in February 2020, citing the burden of debt taken on with its purchase of Knight Ridder as well as legacy pension obligations. New Jersey hedge fund Chatham Asset Management acquired the company for $312 million; $263 million of the purchase price was a credit bid of the company’s first-lien debt, plus $49 million in cash and the assumption of additional liabilities.

Chatham first invested in McClatchy in 2009. Chatham is also majority owner of Canada’s largest news chain, Ottawa-based Postmedia Network Canada Corp., and owns American Media, publisher of the National Enquirer (which has been for sale for some time).

Dirks, Van Essen & April is the leading merger and acquisition firm in the U.S. newspaper industry.