'Unprecedented' deal pushes 2019 to a record

Last year's merger of Gannett and New Media Investment Group made 2019 USA's biggest year for newspaper deals since the recession.

So says newspaper merger-and-acquisition firm Dirks, Van Essen, Murray & April, which estimates new Gannett now owns 20.4 per cent of all US daily newspapers, 26.3 per cent of all daily print circulation, and 24.8 per cent of all Sunday print circulation.

"Previously, the largest mergers of industry titans were much smaller as measured by the percentage of US newspapers and circulation for the combined companies," says DVM&A executive Sara April.

Newspaper deal activity broke through the $1 billion barrier for the first time since 2007, with 154 daily newspapers changing hands for US$1.33 billion in 30 separate transactions.

The Gannett/New Media deal accounted for more than 70 per cent of all dailies sold and nearly 90 per cent of the dollar volume.

Most of the remaining deals - more than three-quarters of the 30 transactions - were the sale of operations with only one daily newspaper. April says buyer interest continues to be driven primarily by strategic interests.

"In 20 of the transactions (or two-thirds), the buyer owned newspaper operations in the same region as the acquired publications," she said. "However, the buyer pool remained remarkably diverse in 2019.

"There were 21 different buyers in the 30 deals involving daily newspapers."

The Gannett/New Media merger represented the first time in the history of the newspaper industry that the top two companies - ranked by both daily print circulation and number of dailies owned - had merged. Although the value of the deal was not among the largest seen by the newspaper industry before 2008, it dwarfed other mega-mergers in terms of different industry metrics.

The five largest previous newspaper company mergers, according to DVM&A statistics, are shown above. Data show the industry rank by circulation of each company before the deal and the percentage of daily newspapers owned and combined daily circulation post-transaction as a percentage of the US newspaper industry totals at the time.

Knight Ridder (Rank 2) acquired Disney/Cap Cities (Rank 23) in 1997. Combined daily newspapers owned was 2.5% of all dailies; combined daily circulation was 7.3% of all daily circulation.

Gannett (Rank 1) acquired Central Newspapers (Rank 20) in 2000. Combined daily newspapers owned was 5.5% of all dailies; combined daily circulation was 12.1% of all daily circulation.

Tribune Co. (Rank 11) acquired Times Mirror (Rank 4) also in 2000. Combined daily newspapers owned was 0.9% of all dailies; combined daily circulation was 6.5% of all daily circulation.

Lee Enterprises (Rank 11) acquired Pulitzer (Rank 22) in 2005. Combined daily newspapers owned was 4.1% of all dailies; combined daily circulation was 3.3% of all daily circulation.

McClatchy Co. (Rank 10) acquired Knight Ridder (Rank 2) in 2007. Combined daily newspapers owned was 3.3% of all dailies; combined daily circulation was 9.9% of all daily circulation.

Transaction dollar volume in 2019 was the highest since 2008, April said. It was the fourth straight year of higher dollar volume, although the number of transactions was somewhat lower than the prior year. In 2018, annual transaction volume totaled $857.4 million.

New Media, which was the acquiring company in the Gannett merger, also completed one of the few other deals in 2019 involving more than one daily newspaper when it bought Schurz Communications' ten daily newspapers earlier in the year.

Other active buyers in 2019 included Adams Publishing Group, Ogden Newspapers, Paxton Media Group and affiliates of Horizon Publications.

April said sellers were principally independent owners, although there were a few sales by group owners. Among the largest independently or family-owned dailies sold in 2019 were the Reading (PA) Eagle, Rochester (MN) Post Bulletin, Champaign (IL) News-Gazette, Bend (OR) Bulletin and the Bakersfield (CA) Californian.

In a handful of situations, new independent owners emerged to take over. In addition, some independent and smaller family owners added to their regional holdings. These included the owners of EO Media in Oregon, who acquired the Bend Bulletin; John Georges in Baton Rouge, who bought the Times Picayune in New Orleans; and the owners of the Schenectady (NY) Daily Gazette, who folded in the neighbouring daily in Amsterdam.

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