What’s Happening in Newspaper Ownership: January-March 2018
This is one of a series of quarterly updates about changes in newspaper ownership, based on the research conducted by Knight Chair in Journalism and Digital Media Economics Penelope Muse Abernathy and the UNC Center for Innovation & Sustainability in Local Media.
When the 172-year-old Boston Herald filed for bankruptcy last year to pursue a sale, two of the country’s largest newspaper companies duked it out for control.
GateHouse Media, the largest newspaper chain in the country with nearly 450 papers in the U.S. and 120 in Massachusetts, first bid nearly $5 million for the paper. Revolution Capital, which bought the Tampa Tribune in 2012 before selling it to the Tampa Bay Times four years later in a move that led to its closure, also made a bid. But, Digital First Media clinched the deal in the three-way investment entity bidding contest with a last-minute $12 million offer.
Digital First Media owns more than 170 papers nationwide, including nearly 10 papers in the Boston suburb of Middlesex county. Like other newspapers owned and operated by investment entities such as hedge funds and private equity firms, Digital First is known for aggressive cost-cutting, leading to mergers and closures of the papers it owns. A recent lawsuit alleges its parent—Alden Global Capital—siphoned money from its newspaper division to fund investments unrelated to the company’s core business, including a pharmacy chain in Canada and purchase of Greek debt.
In recent months, Digital First has slashed staff across newspapers. The company cut one-third of the newsroom positions at the Denver Post earlier this month and announced in January significant layoffs for many of its California papers.
“The question comes down to: ‘Is it better to have half a (Boston) Herald than no Herald at all?’” Boston University journalism professor John Carroll said in an interview with The Boston Globe.
The purchase of the Boston Herald isn’t Digital First’s only recent acquisition of a metro paper filing for bankruptcy. In 2016 the U.S. Department of Justice, citing antitrust concerns, stopped tronc/Tribune from purchasing Freedom Communications and Digital First swooped in with a bid of $52.3 million to acquire the company.
In addition to the Boston Herald, the Los Angeles Times made news this quarter. After a year of internal wrangling, the seventh largest newspaper chain tronc agreed to sell the paper—along with several other California publications—to former tronc board member and health care mogul Dr. Patrick Soon-Shiong for $500 million. News of the sale of the Los Angeles Times has prompted rumors that tronc—which controls nearly 100 papers nationwide—may soon be on the market.
Gannett—the second largest newspaper chain with more than 220 newspapers—attempted to purchase tronc in 2016, but abandoned the six-month effort after the company’s lenders withdrew support for the deal. The new Los Angeles Times owner, Soon-Shiong, injected nearly $71 million into tronc that same year to help fend off Gannett’s offer. Tronc will reportedly use the proceeds made from the recent Los Angeles Times sale to pay down debt, potentially making a reassessed deal for the remainder of tronc’s portfolio easier to close without Soon-Shiong on the board.
While GateHouse did not place the winning bid for The Boston Herald, it has continued to buy more markets throughout the beginning of 2018 in small and mid-sized markets.
The company in January acquired the daily Register-Guard in Eugene, Oregon, from family-owned RG Media Company. Then, in March, GateHouse also acquired the daily Austin American Statesman from Cox Media Group. GateHouse now owns nearly 15 papers in Texas, with the Austin American Statesman will be the company’s largest in that state.
Privately-held companies such as Ogden Newspapers and Paxton were also active acquirers of newspapers during the first quarter.
In Virginia, Ogden Newspapers acquired six newspapers from Byrd Newspapers, which had been managed by the same family for five generations. Ogden also made a bid for the bankrupt Charleston Gazette-Mail in Charleston, West Virginia, but was outbid by regional company HD Media—owner of only five papers, all in West Virginia papers, including four purchased last year from the recently sold and liquidated Civitas Media, which was formed by private-equity firm Versa Capital Management in 2012.
Since 2015, Charleston, the capital of West Virginia, has gone from having two daily papers to one with the merger of the Charleston Gazette and Charleston Daily Mail to form the Charleston Gazette-Mail. HD Media, which publishes the nearby Huntington Herald-Dispatch, has hinted at increased “synergies” between the two papers.
“I think this represents a new chapter and a new day of coordinating between Huntington and Charleston, in general,” Doug Reynolds, managing partner of HD Media, said in a Gazette-Mail interview.
HD Media told The Associated Press that it is retaining most of the Charleston Gazette-Mail employees following the buyout, but 11 employees who filled out applications did not receive job offers and 29 other positions will not be filled. HD Media says these positions were either vacant or involved employees who did not apply for jobs with HD following the purchase.
Kentucky-based Paxton Media Group—which owns nearly 60 papers nationwide—added The Daily Herald in Roanoke Rapids, North Carolina, to its portfolio after purchasing the paper from Wick Communications. Paxton now owns 10 papers in North Carolina and is among the five largest owners in the state.