Tale of 3 Newspaper Sales Highlights Market Strategies

As one deadline passes, and the Tribune prudently takes a little more time to juice up the billionaire bingo match-up between Sam Zell and Ron Burkle, it's worth paying attention to two smaller recent sales. Those sales look like a publishers' board game of Monopoly, but they tell us a lot about who's buying, who's selling and why.

The most recent purchase is that of the Danbury News Times by Dean Singleton's MediaNews Group, Inc.. Announced Friday, MediaNews bought it from Community Newspaper Holdings Inc., which just bought it in the fall from Ottaway Newspapers. Ottaway is the community newspaper division of Dow Jones and it unloaded a half-dozen titles last year to raise cash, pay off its Factiva purchase and otherwise invest in digital. Singleton paid more than $75 million for the paper, which sits close to his other properties in southern Connecticut. What makes it work for him can be summed up in a single-word: clustering. He's used the strategy well around the country. The idea is that if you can own several properties in one region, you can wring out lots of efficiencies.

What kind of efficiencies? Consolidated and centralized operations ranging from circulation to advertising sales to news-gathering and to printing. MediaNews just bought the Santa Cruz Sentinel from Community Newspaper Holdings Inc. (also out of the Ottaway sell-off) and one of the efficiencies coming soon there -- printing of the paper at the MediaNews-owned San Jose Mercury News plant.

Of course, that means very early deadlines of 10:30 or so (for late sports and city council meetings), but the money saved can be dramatic, especially as revenues flatten and decline.

Another parallel sale is Tribune's own sale of the Stamford and Greenwich dailies to Gannett for $73 million last month. Said Scott Smith, president of Tribune Publishing:

"The Advocate and Greenwich Time are excellent papers, but do not fit our strategic focus on larger publishing and interactive businesses."

Though a court has held up (probably temporarily) the sale, when it finalizes it will give Gannett the kinds of markets it loves -- smaller community, non-metro ones.

If you look at both the circulation and advertising slides of the last two years, it's clear that community dailies -- while largely flat -- are absorbing Internet-fueled change better.

Meanwhile, metros -- like the Tribune Company's Chicago Tribune, the Hartford Courant, the Baltimore Sun, the Fort Lauderdale Sun-Sentinel and Orlando Sentinel -- are taking it on the chin. Circulation drops at metros have run 3-8 points each six-month report and advertising is now seeing double-digit drops, especially in classifieds. So it's not surprising that there's not a single newspaper company even came close to bidding on the Tribune. Wide-eyed moneymen, largely using OPM (other people's money) are the only ones in contention. Meanwhile the smarter money sees the virtue of smaller markets.

Comments

[Sramana Mitra]

You may want to read my article, Newspapers: Industry in Turmoil for an overview of the strategic manueverings going on, and more importantly, should be going on. Regards, Sramana