Knight-Ridder Inc. put the Long Beach Press-Telegram on the block last week, creating a new opportunity for a buyer to assemble a regional newspaper group to compete against the Los Angeles Times.
The Press-Telegram is only one of the community papers put in play in recent months. Riverside County’s major daily was sold last week, the Daily News of Los Angeles may soon be on the block, and a large San Gabriel Valley newspaper group was sold last fall.
Some analysts suggest that the climate is ripe for a large newspaper operator perhaps William Dean Singleton’s MediaNews Group to consolidate the smaller dailies into a newspaper group whose combined circulation could challenge the L.A. Times, especially if grouped in an advertising syndicate with the Orange County Register and other regional papers.
The Press-Telegram is one of five underperforming dailies Knight-Ridder is unloading to help pay off nearly $1 billion in debt from the $1.65 billion purchase of four newspapers from Walt Disney Co. this spring.
The same day as that announcement, the Press-Enterprise Co. announced the sale of its 162,000-circulation Riverside Press-Enterprise to Dallas-based A.H. Belo Corp. The terms of that deal were not disclosed.
Setting a value on the Long Beach paper is difficult because Knight-Ridder does not disclose financial figures for its individual newspaper holdings. Tony Ridder, Knight-Ridder’s chairman and chief executive, said in a prepared statement that the Press-Telegram as well as four other newspapers up for sale, including the Post-Tribune in Gary, Ind. and the Boca Raton News in Florida was not performing “according to the profit standards we have set for our newspapers.”
Newspaper analysts say they think the paper is in the black, although it was believed to be losing money in the early 1990s.
John Morton of Morton Research Inc. pegged the likely sale price of the Long Beach Press-Telegram at about $100 million.
Newspapers typically sell based on a formula of 10 to 14 times their operating cash flow, defined as earnings before interest, depreciation, taxes and amortization. Without knowing a paper’s cash flow, though, Morton said it is possible to assess newspaper value based on circulation they typically sell for between $1,000 and $1,500 per subscriber.
“A paper with a marginal financial performance, and that is operating in the shadow of the Los Angeles Times, would probably sell for less than the typical price, though,” Morton said. “I think you’re looking at about $800 to $1,000 per subscriber (for the Press-Telegram).”
The Long Beach paper has a daily circulation of 109,515, with 124,920 on Sundays, according to the Audit Bureau of Circulation.
Potential suitors for the paper include Singleton’s Denver-based MediaNews Group, San Diego-based Copley Press Inc. (owner of the San Diego Union-Tribune, as well as the Santa Monica Outlook and the Torrance Daily Breeze) and Irvine-based Freedom Communications Inc. (owner of the Orange County Register), according to Morton.
Freedom officials, though, are less than enthusiastic about the paper.
“Where is the growth potential for Long Beach? There is none,” said Freedom spokesman Michael Lednovich. “Essentially, what you buy is what you get. We’re interested in properties with good potential for growth.”
Lednovich agreed that the Press-Telegram is unlikely to fetch more than $100 million, a fairly low number for a paper its size. The paper is hemmed in on the north by the Los Angeles Times, and on the south by the Orange County Register, leaving little room for growth, he said.
Copley officials could not be reached for comment last week.
Of the three, analysts consider Singleton the most likely buyer. Last fall he purchased the Thomson L.A. News Group in the San Gabriel Valley from Thomson Corp. for an undisclosed price; the group publishes the San Gabriel Valley Tribune, the Pasadena Star-News and the Whittier Daily News, as well as a group of 10 free community papers.
Morton said the Long Beach paper would fit in nicely with Singleton’s cluster of Southern California newspapers.
Singleton’s name is also frequently mentioned as a suitor for the Daily News, based in Woodland Hills, which is not officially on the sale block although sources close to the paper acknowledge that the heirs of Jack Kent Cooke, the paper’s owner, are strongly considering a sale.
Analysts point out that by acquiring both the Long Beach paper and the Daily News, Singleton would have a Southern California newspaper group with a combined circulation of more than 433,000. Such a large group could attract mass advertisers that otherwise would go to the Los Angeles Times.
In addition, the modern printing press at the Daily News, which now has the capacity to print about 350,000 papers a day, has room for an expansion that could accommodate up to 450,000 papers a day thus the entire group could be printed in one place, saving considerably on expenses, according to sources.
Singleton did not return calls from the Business Journal.
Daily News publisher Larry Beasley is also said to be courting investors to support his own acquisition of the paper. The executors of Cooke’s estate are considering which assets in his sports and media empire to sell, and there are no sale negotiations under way for the Daily News, sources said.
