|
 Previous
| Next
| Home
Intro | Content Analysis | Audience | Economics | Ownership | News Investment | Public Attitudes | Conclusion | Charts & Tables
| Guest
Essay
Ownership
By the Project for Excellence in
Journalism and Rick Edmonds of The Poynter Institute
For a fourth consecutive year, ownership changes in 2004
were infrequent and mostly involved smaller dailies or clusters
of weeklies.
This slowdown in conglomeration marks a break with two huge
trends of the final third of the last century that transformed
the look of newspaper ownership. Starting with Dow Jones in
1967 and in gradual succession through the mid-1990s, more
than a dozen newspaper companies went from private to public
ownership. In turn, they used much of their Wall Street proceeds
to finance a tidal wave of acquisitions and mergers. (They
did not, it should be noted, use the bulk of that money for
innovating their product, reaching out to new audiences, or
trying to increase readership.)
Lately this concentration has slowed to a crawl. As for going
public, Journal Communications, which owns the Milwaukee Journal-Sentinel
along with television stations and weeklies, took the step
in late 2003, but that's it. When it comes to acquisitions,
recent takeovers include smaller properties like the papers
in Merced and Stockton, California (by McClatchy and Dow Jones,
respectively) in late 2003. Freedom Communications and its
flagship Orange County Register drew a lot of interest and
a high bid from Gannett and MediaNews, but ultimately members
of the Hays family, with the backing of private bankers, were
allowed to buy the shares of other, dissatisfied family members
who wanted out.
In early 2005, Lee Enterprises announced it had acquired
Pulitzer Inc.'s 14 daily papers, which include, most notably,
The St. Louis Post-Dispatch and the Arizona Daily Star. The
acquisiton was priced at $1.46 billion. Also, at the end of
2004, the E.T. Rollins family sold the Durham Herald-Sun to
Paxton Media, which dismissed nearly a quarter of the staff
the day it took possession.
While there are hundreds of newspaper owners, about two dozen
continue to dominate both in terms of the numbers of newspapers
they own as well as their percentage of the total daily and
Sunday circulations.
While there has been very little change in the concentration
of the number of daily newspapers and daily circulation among
the largest newspaper groups, Sunday circulation among the
largest newspaper groups declined two percent in 2003.
Circulation concentration is even greater for the ten companies
with the highest total circulation. These chains own roughly
half (51%) of all daily circulation and a slightly higher
percentage (57%) of Sunday circulation. These numbers are
virtually the same as a year earlier.
It is premature to declare the march of consolidation over,
but might the current hiatus morph into a much slower pace
of ownership changes through the decade? On the one hand,
the lull of recent years gives plenty of companies available
cash and borrowing power for acquisitions. In the Freedom
auction, the Pulitzer offering, and smaller sale opportunities,
consortiums of investment banks have also shown interest in
becoming buyers. Also, there has been speculation that an
eventual easing of FCC regulations would prompt a wave of
acquisitions or swaps of both newspapers and local TV stations.
All this argues that over time, with shifting market conditions,
the spigot may reopen. Big newspaper companies have lots of
free cash flow. Buying other newspapers may seem as good a
use for it as any. So the logic for further consolidation
remains strong. The industry - compared to other categories
like autos or consumer goods - is not among the most concentrated.
On the other hand, it is hard to escape the feeling that
the action of the 1970s, 80s and 90s has left the field of
prospects for acquisitions at least comparatively picked over.
Gannett, the leading consolidator of the period, may be a
bellwether. Its CEO, Doug McCorkindale, has frequently complained
in conversations with analysts about the "funny money"
multiples now being asked for newspapers and TV stations.
Gannett hasn't bought anything big since Central Newspapers
in 2000. Instead it has made a series of purchases to assemble
Newsquest, a Gannett-like chain of regional newspapers in
England, and dramatically improved their financial performance.
In 2003, Gannett bought Captivate, a small company that places
advertising in elevators and other public places.
On the other hand, 2005 finds Gannett back in action with
an acquisition of a chain of Home Town Communications Netwrok,
a chain of 63 non-dailies in the Ohio, Michigan and Kentucky.
Nor can mergers of big public companies like Tribune's 1999
purchase of Times-Mirror be ruled out.
At independent newspapers, smaller private chains, and even
the smaller public companies protected by a special family-controlled
class of stock, both financial and generational factors bear
on the decision about whether to sell or continue. If younger
family members lose interest in newspapering or think management
is under-performing, that can prompt a sale. But by now many
of the surviving independents could be characterized as rugged,
determined, and even stubborn. Eased inheritance laws also
make a transfer of control from one generation to the next
less punishing than it used to be.
Two other ownership possibilities remain mostly theoretical.
Except for the four or five largest public companies, others
could go private, getting out from under Wall Street demands,
should they choose to. None have to date. Also, extremely
wealthy individuals could become owners of individual papers,
just as many own sports franchises. Wendy McCaw used some
of the proceeds of her divorce from the telecommunications
billionaire Craig McCaw to buy the Santa Barbara News-Press
in 2000. Forbes 400 regular Phillip Anschutz, acquired the
battered San Francisco Examiner franchise in 2004, later bought
several suburban weeklies outside Washington D.C., and has
announced plans to publish free papers under the Examiner
name in other cities.
Cross-Ownership Rule Changes to Remain on Hold Until
2005
A ruling by the Third U.S. Circuit Court of Appeals in 2004
halted changes made by the Federal Communications Commission
in the laws governing media ownership. The rule changes would
have made it legal for newspaper companies to buy local television
stations in many markets. The companies were pushing for the
changes in order to expand into local television and to bring
about convergence between the paper, the television channel,
and in many instances, the paper's online property. The judges,
whose decision was upheld by the full court on appeal, required
that the FCC produce better evidence in support of the rule
changes. The battle over the rules was expected to stretch
into 2005. (click here
for more information on local televison FCC developments)
Private Companies
Revenues, earnings and profit margins are generally not available
for private newspaper companies. But they are among the biggest
chain owners in the industry - by circulation, four of the
top 12, 9 of the top 20. The largest (with circulation rank)
are:
*Advance (4). The company, controlled by the Newhouse family,
operates 26 dailies, including The Star-Ledger of Newark,
The Plain Dealer of Cleveland and The Oregonian of Portland.
Advance has a reputation for relatively generous news spending
and markedly improving most of its properties over the last
20 years. Business-side operations are relatively informal,
relying more on periodic visits from headquarters than rigid
budgeting. A separate Newhouse company publishes The New Yorker
and Vanity Fair.
*Hearst (7). Has 12 dailies, and some big-city presence -
the Houston Chronicle, the San Francisco Chronicle and the
San Antonio Express-News. Drove under its competitors in those
three cities and is hanging on in Seattle (where its Post-Intelligencer
is enmeshed in a legal fight with its joint-operating partner,
The Seattle Times). Also a successful operator of magazines.
*MediaNews Group (8). A large empire built of 45 papers over
a period of 30 years by William Dean Singleton. Runs many
distressed franchises no one else wanted, with bare-bones
staffs. Singleton has compared himself to a surgeon who takes
radical steps with very sick patients. He was a surprising
proponent of news investment during his recent tenure as president
of the Newspaper Association of America (2002-2003), and has
a stated ambition to build the flagship Denver Post into a
great regional paper. Because of its volume of semi-public
debt, MediaNews reports most results as a public company would.
*Cox Newspapers (11): Atlanta-based, and The Atlanta Journal-Constitution
is the flagship among its 17 papers. Others include the Austin
American-Statesman, The Palm Beach Post and the Dayton Daily
News. Like Advance, has a reputation for above-average news
investment and quality.
*Freedom Communications (13): Consists of The Orange County
Register and 27 smaller papers. As discussed above, the company
was up for auction in 2003, but the upshot was that members
of the Hays family who wanted to continue, with the backing
of investment bankers, bought out family members who were
dissatisfied and had pushed for a sale.
*Community Newspaper Holdings Inc. (14): Based in Alabama
and owned by the state employees' pension fund, the company
owns 96 small newspapers.
*Daily News, New York (18): A one-newspaper company but a
big one, it is owned by Mort Zuckerman and also owns U.S.
News & World Report.
*Morris Communications (19): A chain of 27 mid-sized and
small papers, mostly in the South, known for tight operations
and high profit margins. Reports financial results. Its Savannah
Morning News is credited with having greatly improved in recent
years, and the company is a relatively active explorer of
advanced online applications.
*Copley Press (20): Consists of The San Diego Union-Tribune
and eight smaller papers.
Click
here to view footnotes for this section.
Previous
| Next
| Home
Intro | Content Analysis | Audience | Economics | Ownership | News Investment | Public Attitudes | Conclusion | Charts & Tables
| Guest
Essay
|
Go to Journalism.org | View 2004 Edition 
Print
this page