3 papers catch eye of media company
Posted on Saturday, May 17, 2008
The Arkansas Democrat-Gazette’s parent company has expressed interest in The Virginian-Pilot in Norfolk, Va., and two other newspapers owned by Landmark Communications, Inc.
No formal bids to buy the papers have been made, Paul Smith, vice president of WEHCO Media, Inc., the Democrat-Gazette’s parent, said Friday. Smith added that he was unsure whether WEHCO would even be part of an official bidding process.
Smith said Landmark asked several companies if they would be interested in receiving more information. WEHCO said it was and has received information on Landmark’s largest papers: The Pilot, the Roanoke Times in Roanoke, Va., and the News & Record in Greensboro, N. C.
“We operate a lot alike,” Smith said. “They produce really good newspapers. They’re good newspapers in good markets, and I’m sure there’s many, many companies interested in them.” Over the past several years, officials at both companies have visited each other to trade ideas, Smith said.
The Virginian-Pilot has an average weekday circulation of 175, 005, and Sunday circulation is 200, 012, according to an article from the Richmond Times-Dispatch.
“We haven’t been to any of these newspapers or looked at the markets or anything like that,” Smith said. “It’s very pre- liminary.” John Morton, a Marylandbased newspaper analyst who has done consulting work for Walter Hussman, WEHCO’s chief executive officer, said the papers could represent an interesting opportunity for WEHCO “and of course now is a good time to buy because the prices are down.” “Landmark has generally run decent newspapers, so you don’t have to fix a lot of things when you go in there, which is not true of some other companies I could name,” Morton said.
WEHCO’s newspaper arm announced in March that it was acquiring Missouri papers Jefferson City News Tribune, the Fulton Sun and the weekly California Democrat in a package deal.
The company also owns the Benton County Daily Record, the Northwest Arkansas Times, the Chattanooga (Tenn. ) Times Free Press, the Texarkana Gazette, The (Hot Springs ) Sentinel-Record, the El Dorado News-Times, the Camden News and the Banner News in Magnolia.
Morton said that the most likely buyers for newspapers are typically companies with nearby operations, because that offers opportunities to consolidate back-office functions and sales efforts.
For the Landmark papers, such companies could be Gannett or Media General, which owns the Richmond, Va., newspaper, although Morton said he didn’t know whether they were in a buying mode.
A common way to measure the value of a newspaper, he said, is to multiply average daily circulation by $ 1, 000 to $ 1, 500, Morton said.
In the past, he said, papers were valued at multiples of earnings before interest, taxes, depreciation and amortization. Five years ago, it wasn’t unusual for a sale to be 13 to 14 times such earnings.
“Recently that has gone down dramatically,” Morton said. “We’re not sure by how much.” Morton thinks the fact that WEHCO is looking at the papers means they are confident in the newspaper business.
“The newspaper business besides all that you hear is still a highly profitable one,” he said. “In most markets the newspaper remains the dominant advertising vehicle.
How good a deal a paper is depends on how much it’s sold for, though.
“ It happens to be true that these days you can get by with paying a lot less than used to be the case,” Morton said. “You don’t have as much [debt ] to carry and interest to pay and you get a bigger return on your investment.” Information for this article was provided by Laura Stevens of the Arkansas Democrat-Gazette.
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