Strategic purchases push US business sales to new high

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More daily newspaper businesses were sold in the US last year than at any time since 2000.

Merger and acquisition specialist Dirks, Van Essen, Murray & April says 36 separate deals were closed - involving 45 dailies and worth a total of $857.42 million - continuing an upward trajectory for the fourth straight year.

The dollar volume was the highest since 2008, but it was pushed well above normal levels by Tribune Publishing's sale of the Los Angeles Times and San Diego Union-Tribune to health care magnate Patrick Soon-Shiong, who was an investor and a former board member at Tribune.

The firm's Phil Murray says the key drivers are much the same as before, with owners of clusters of publications seeking to build larger regional footprints, and the difficulties faced by small operators lacking the scale needed to manage expenses.

Most deals were the sales of individual daily newspapers, with fout being the largest number of dailies conveyed in a single transaction. "While many of the most active buyers in recent years made acquisitions in 2018, the pool of acquirers remains remarkably diverse," he said.

DVM&A was involved in 24 of the 36 daily newspaper transactions in 2018 with 14 different buyers, compared to 2017, when they were involved in 19 daily newspaper transactions with 16 different buyers.

In addition, 2018 generally saw larger newspaper change hands than in prior years. The median weekday circulation of newspapers sold in 2018 was 10,400, compared with just 4,850 in 2017.

Murray expects the deal flow to continue at a similar pace at least through the first half of 2019, with the number of transactions and number of dailies sold likely to remain "at the current robust levels". Valuations should remain steady and consistent with those over the past 12 months.

The number of daily newspaper transactions in 2018 was the most since 2000, when 53 transactions involving dailies occurred. While the transaction volume rose, the number of dailies involved in 2018 was one of the lowest in recent years due to a lack of large group deals. In 2017 some 80 daily newspapers were sold, which included 30 dailies sold by Civitas Media in nine separate transactions. In roughly two-thirds of the transactions in 2018, the buyer had operations close enough to the acquisition to be considered strategic. These strategic acquirers ran the gamut from large group owners to independent owners who saw a need to grow beyond their existing holdings.

New Media Investment Group led the field, adding eight dailies in seven transactions. The publicly traded company had obvious strategic interest in newspapers such as the Akron (OH) Beacon Journal, but also added large stand-alone operations such as the Eugene (OR) Register-Guard. Privately held Adams Publishing Group was a close second with seven new daily newspapers in four deals. Paxton Media Group and Ogden Newspapers each acquired four dailies.

However, a fair amount of the activity can be attributed to smaller newspaper owners who took advantage of opportunities to grow. M. Roberts Media, owner of daily newspapers in Victoria, Longview and Marshall, Texas, bought the Tyler Morning Telegraph to cement its hold on the northeastern part of the state. HD Media, which owned the Herald-Dispatch in Huntington, West Virginia, acquired the state capital newspaper in Charleston about an hour away.

Shaw Media expanded its northern Illinois group with the addition of the Ottawa Times.

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