The UK newspaper sector is falling into the slough of despondency after last week’s surprisingly weak half-year figures and profit downgrade (for its papers) from Daily Mail and General Trust, but in America — where realism has been a fact of life for several years — the sector is heading for a second year of mergers and acquisitions activity at levels not seen for eight years.
In 2015 we saw the largest number of deals for the largest amount of money since the 2008 financial crisis, with 70 daily newspapers being sold for a combined US$827 million, according to mergers-and-acquisitions adviser San Diego law firm Dirks, Van Essen & Murray.
Now in 2016, Gannett is back with one deal whose value exceeds the value of those 70 deals in 2015. It wants to buy the Tribune Publishing company for US$864 million. Other deals so far this year include New Media Investment Group Inc buying Journal Multimedia for US$18.0 million in early May and Freedom selling the Orange County Register and Riverside Press-Enterprise for US$49.8 million in a court-approved sale to Digital First Media, owner of the Los Angeles Daily News. These three and several smaller transactions have boosted the figure so far this year to close to US$1 billion.
Many of these sales are final transactions; the next buyer could be closing it. But in little reported comments last week, the owner of 32 dailies and 47 weeklies was unusually optimistic about print. Warren Buffett told a USA Today columnist that “It’s almost unnatural how much I love newspapers … We would never sell a newspaper. I want to be the last guy standing.” But Buffett also makes sure he buys papers with local monopolies, with very little competition from other media as well (radio and TV). In the 15 months to March 2013, Buffett’s company paid a total of US$344 million for 28 daily newspapers of varying sizes.
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