Who is Media General considering selling its newspapers to?
Media General, owner of the Tampa Tribune and 22 other newspapers, said today it "is exploring the potential sale of newspapers operations," while declining to detail which newspapers might actually be sold or who is interested.
For years, profits for the company's Florida operations have been swallowed by losses at the Tribune, and staffers at the TV station have complained about having their fate linked the the slumping newspaper. Last year, Media General management moved to disentangle the TV station it owns, Tampa NBC affiliate WFLA-Ch. 8, from the Tribune -- laying off 165 people from the print operations.
Today, the company released a statement saying it "has received inquiries from several third parties" regarding possible purchase of its print outlets. But the release doesn't say if the most notable chains the company owns, including the Tribune, The Times Dispatch in Richmond, Va., the Winston Salem Journal and many more.
Newspaper expert John Morton said recent purchases of newspapers, including the New York Times Regional Media Group with several Florida newspapers, have been carried out by companies unknown to much of the publishing world, so it is tough to judge who might be interested in the Media General newspapers. Morton said publicly held newspaper companies have averaged about 10 percent profit margin -- down from 22 percent about seven years ago.
"Assuming the traditional newspaper business can hold onto what it's got, there are some businesses which don't get close to 10 percent in good years," he said. "The question is, how long will that be true."
According to the Associated Press, last year "Media General’s revenue from printed newspapers came to about $300 million, a little less than half of the company’s $616 million in total revenue. The company had previously stated that it would consider asset sales to reduce its $658 million in long-term debt."
Below is Media General's public announcement:
Media General Exploring Potential Sale of Newspapers
RICHMOND, VA. -- Media General, Inc. (NYSE: MEG) today announced that it is exploring the potential sale of newspaper operations. Media General said it has received inquiries from several third parties regarding the potential purchase of certain of its print assets. The company wishes to ensure that any divestiture it may make maximizes shareholder value.
Media General has indicated in recent months that it will consider asset sales at valuations that reflect the strength of its properties as a means of reducing total debt outstanding over time. The company noted that the valuations of local media properties in recent merger and acquisition transactions, including local newspapers, have reflected the strong market positions of the entities being sold. Media General’s newspaper brands are the leading print products in their core markets.
The company said there can be no assurance that any transaction will take place. Media General provided no definitive timetable for the evaluation process to conclude. Additional information will be provided if and when the company enters into a transaction. The investment banking advisory firm Peter J. Solomon Company is assisting Media General with the strategic evaluation process.