Tampa Tribune sold to Revolution Capital Group for $9.5 million
Tampa Tribune owner Media General has announced it has completed sale of the newspaper, its affiliated print products and website TBO.com to a Los Angeles based, privately-funded investment firm for $9.5 million.
The company, Revolution Capital Group, does not seem to own any other media products; instead, its website lists a medical apparel company, a software firm and a ribbon/bow tie manufacturer among its other properties. The private equity firm also says it has offices in New York and London.
The sale's closing had been long anticipated following assurances from Richmond, Va.-based Media General that several potential buyers were interested in the newspaper, first purchased by the company which would become Media General in 1966.
Revolution Capital, which calls itself a "privately funded, global investment firm focused on acquiring and operating companies for long term growth and value creation in the lower middle market" formed a new company, Tampa Media Group, to run the newspaper.
According to a story in the Tampa Tribune, the new Tampa Media Group will have 618 employees, will continue to publish smaller newspapers such as Hernando Today and the Spanish language CENTRO newspaper while also keeping up its news partnership with former corporate sibling and Tampa NBC affiliate WFLA-Ch. 8, which Media General still owns.
Gil Thelen, now the Clendenin professor in the school of Mass Communications at the University of South Florida in Tampa and former publisher and president of the Tampa Tribune, said he was "stunned" by the low purchase price of the newspaper, which he noted still placed the value of the newspaper in line with the 63 other Media General newspapers sold to Warren Buffett's Berkshire Hathway investment group for $142 million earlier this year.
"It's a bargain for these guys...they obviously see this as something which could be leveraged into a profitable business," Thelen added. "It shows the Tribune's strategy of being a small 't' Tampa paper (focused on the city's news) has value."
Thelen also noted something other analysts have said; the Tribune's new owners may have to invest in creating new systems so the newspaper can stand alone. The ex-Tribune publisher noted the newspaper would need a human resources department free from WFLA; others have noted that some of the newspaper's copy editing has been done at other Media General newspapers and the publication's Information Technology needs have been shared with WFLA.
"There were joint operations in advertising and marketing; there's some significant housekeeping stuff they'll have to take care of," Thelen said, noting that the newspaper remains challenged to compete with the Tampa Bay Times at a time when Florida's media economy still hasn't recovered from recession. "Their biggest challenge will be to keep the wolf from the door."
Currently, WFLA, TBO.com and the Tribune's content creators all sit inside the same News Center headquarters at 200 South Parker St., overlooking the Hillsborough River. The newspaper and online staff are expected to move back into the building where the Tribune's presses are located and where the publication was once housed, just across a courtyard in the same complex at 202 S. Parker St.
Though the newspaper was once known for its merged or "converged" operations with WFLA and TBO.com, executives at Media General have spent the past year, disentangling those connections. The TV station's WFLA.com website is already active and there are few employees who work equally for both television and print.
Industry analysts say the Tribune's challenge is simple: At a time when few locales the size of the Tampa Bay area can support two newspapers, how does the second-largest newspaper stay in the game?
"Large metro newspapers are worth basically a dollar," said Ken Doctor, a former managing editor at the St. Paul Pioneer Press who now serves as a news industry analyst and author. "You go back 10 years, and a newspaper (like the Tribune) would have gone for 10 times cash flow...$300 million to $500 million. Media General is saying (to buyers) thank you for taking it off our hands and best of luck with it."
Before founding Revolution Capital, managing partner Robert Loring served as Vice President of Mergers and Acquisitions for Platinum Equity LLC in Beverly Hills, CA, a private equity fund which bought the San Diego Union Tribune for less than $35 million in 2009 and sold it in 2011 for about $110 million. Doctor said Platinum modernized the newspapers website, stabilized its newsroom, hired lower cost staffers and sold the paper to a local businessman who valued the newspaper's standing locally.
"It was a matter of bringing modern management to a newspaper which had been very old fashioned," Doctor added. "Maybe they're thinking 'We can do the same thing in (Tampa).'"
In a video posted to YouTube of Loring and other Revolution executives meeting the staff, (update: it has since been taken down), Tribune management told staffers that salaries and benefits will stay the same until the year's end as they work out the details of transition. Big questions -- who assumes the company's pension liability and did the deal include the land beneath the newspaper? -- were not disclosed. Officials from WFLA and Media General did not return calls for comment.
Paul Tash, chairman and CEO of the Tampa Bay Times and Times Publishing Group, said in a statement: "The terms for the sale of the Tampa Tribune reflect the Times' dominance in the Tampa Bay marketplace. We will rely on our strong local roots and competitive strengths to continue to gain market share. We look forward to learning more about the new owners and their plans for the Tribune."
Sunday circulation at the Tribune is 262,369; daily circulation is 144,510. The Tampa Bay Times’ average Sunday circulation is 432,202; average daily circulation is 299,497 in the six-month period ended March 31.
The press release announcing the sale is below; Times staffer Jeff Harrington and Times researcher Carolyn Edds contributed to this report. I'll post more information as it surfaces.
Media General, Inc. Has Sold The Tampa Tribune to Tampa Media Group, Inc.
RICHMOND, Va. – Media General, Inc. (NYSE: MEG), a local broadcast television and digital media company, announced today that it has sold The Tampa Tribune and its associated print and digital products to Tampa Media Group, Inc., a new company formed by Revolution Capital Group. The sale closed today. The sale price was $9.5 million, subject to adjustments for working capital and other items, yielding net proceeds before expenses of approximately $2 million.
“It’s a bittersweet day for Media General to complete the sale of its last remaining newspaper group,” said Marshall N. Morton, president and chief executive officer. “The Tampa Tribune was our largest and second oldest newspaper. Many Tribune employees have decades of service. The Tribune staff has been extraordinarily dedicated to providing their readers with excellent journalism, creating value for their advertisers and supporting the local community. We are pleased that they will have the opportunity for continued future success serving the Tampa community with excellent local content. We will miss our colleagues at The Tribune and its associated print and digital platforms, and we wish them the very best,” said Mr. Morton.
Robert Loring, founder and managing partner of Revolution Capital Group, said, “We are delighted to be the new owner of The Tampa Tribune, a newspaper with strong brand equity and a long history of serving its readers, advertisers and community exceedingly well. We believe strongly in the value of local content.”
Cyrus Nikou, founding partner of Revolution Capital Group, said, “The prospects for future success are strong for The Tampa Tribune and its associated print and digital platforms. We will lead an orderly transition, focused on the needs of our customers, and we look forward to working with The Tribune management team to position the business for future growth.”
Media General’s Transformation to Pure-Play Broadcaster Now Complete
Mr. Morton said, “With this transaction, we complete the transformation of Media General’s business model to one focused on broadcast television and digital media. We believe our future prospects are strong, based on operating 18 top-ranked local television stations in growing and important markets, mostly in the Southeast. In addition, our financial position was greatly strengthened this year as a result of our new financing arrangement with Berkshire Hathaway.
“We have an attractive economic model, fueled by revenue growth, including Political, Retransmission and Digital revenues. For example, Political advertisers prefer top-ranked stations like ours. In the third quarter of 2012, Media General generated Political revenues of nearly $20 million, which brings our year-to-date total to more than $33 million. Media General has stations in four of the key battleground states for the presidential election: Ohio, Florida, Virginia and North Carolina. Our Virginia, Rhode Island and Ohio stations are also benefiting from hotly contested Senate races. We have increased our outlook for Political revenues for the full year 2012 to $57-58 million,” said Mr. Morton.
“Plans are underway to increase Broadcast cash flow and EBITDA margins. At the market level, we are focused on ratings and share increases as well as expense management. As we’ve said previously, corporate expense will decrease from $32 million to $20 million, a run rate we are already close to achieving. Since June, our corporate staffing has been reduced in half, including employees who went to work for World Media Enterprises, the Berkshire Hathaway company that bought our newspapers in June, and a staffing reduction we implemented in the third quarter that affected 75 employees. Increasing cash flow will support and accelerate our deleveraging plan and we have good incentive to do so. Our new financing provides a step-down in the interest rate from 10.5 percent to 9 percent if leverage were to reach 3.50x,” Mr. Morton said.
Media General will report third-quarter 2012 results on October 17, 2012 before the market opens, as previously announced.