Tuesday, June 19, 2018
Business

Tampa Tribune sold to Revolution Capital Group

TAMPA — A Los Angeles-based private equity investment group has bought the Tampa Tribune from longtime parent Media General for $9.5 million, promising to improve the daily newspaper as it took control Monday morning.

Revolution Capital Group, a 3-year-old firm, is making its first foray into newspapers. The move marks a new chapter in the long-standing newspaper war between the Tribune and its larger rival, the Tampa Bay Times.

The acquisition, meanwhile, ends Media General's 150-plus-year involvement in the newspaper business.

"It's a bittersweet day for Media General to complete the sale of its last remaining newspaper group," Marshall N. Morton, company president and chief executive officer, said in a prepared statement. "The Tampa Tribune was our largest and second oldest newspaper. Many Tribune employees have decades of service.''

Revolution Capital Group works with corporate sellers to buy their smaller, noncore assets that often have not been able to attract buyers, according to the company's website. So far, it has bought businesses in telecommunications, manufacturing and software.

Under the deal, the Tribune, its affiliated newspapers and website, tbo.com, will be operated by the Tampa Media Group, a locally based company created by Revolution Capital.

Revolution did not directly address whether there would be layoffs among the 618 employees of the new Tampa Media Group.

"Today is a big day; it's a celebration. We have new owners," Tribune publisher William Barker said in introducing top Revolution Capital executives to Tribune staffers Monday morning. Video of the announcement quickly surfaced on YouTube.

Revolution founder and managing partner Robert Loring and co-founding partner Cyrus Nikou said they wanted to grow the business and promised to support the staff. "You guys are really the experts and know the business better than anyone else," Nikou said.

Asked by a staffer whether they would add employees, Revolution managing director Aman Bajaj said: "It's not always that hiring more people is the best way to grow a newspaper. … We are in the process of analyzing that."

Added Loring: "We just walked in here a couple hours ago. Give us a little time."

Barker told the group that he would stay on as publisher, and benefits would remain the same through the end of the year.

"I think the newspaper just got a lifeline," Tampa Mayor Bob Buckhorn said. "Based on what they told me, this group is in for the long run. They're not inclined just to shed assets."

Representatives of Revolution Capital did not respond to interview requests from the Times, and Media General spokeswoman Lou Anne Nabhan declined to comment beyond the news release.

The sales price of $9.5 million, after adjusting for working capital and other items, would yield net proceeds before expenses of about $2 million, Media General said. The company did not elaborate on what was included in the $7.5 million taken out of proceeds.

Gil Thelen, former publisher and president of the Tampa Tribune, said he was "stunned" by the low purchase price of the newspaper.

"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."

Media watchers said it was clear the paper was priced to sell.

"It's a fire sale," said John Morton, president of a consulting company that analyzes newspapers.

"Two million is not a lot of money. It's not a costly gamble," added media analyst Edward Atorino of the Benchmark Co.

Atorino said the low investment frees up Revolution Capital to experiment.

"They could go mostly online. They could go to a couple days a week. They could basically rewrite the script," he said.

Morton said he wasn't surprised that the paper was sold to a private equity firm instead of another newspaper chain.

"Most newspaper companies which are reasonably sophisticated about what's for sale wouldn't be interested in the Tampa Tribune because of its relatively weak competitive position with (the Tampa Bay Times)," Morton said.

Equity firms figure "it has a brand name … and probably through a variety of cost-cutting (they) can get a profit established and flip it in four or five years."

Revolution Capital faces a "risky proposition" to make the paper profitable in the long-term, Morton said.

"Unfortunately, I'm not painting a very pretty picture for the newspaper or the people who work there," he said.

Morton suggested two likely scenarios: the investment group cuts expenses to resell the paper or it uses the newspaper as a political mouthpiece.

Loring told a Tribune reporter that Revolution Capital was not going to inject itself into politics, and there was no plan to cut costs and resell the paper.

"We are definitely in this for the long haul," Loring said. "We don't flip businesses."

The stage was set for Monday's developments in July, when Media General sold 63 of its newspapers and publications in Virginia, North Carolina, South Carolina and Alabama to Warren Buffett's Berkshire Hathaway Inc.

The $142 million deal left Media General with 18 television stations — including WFLA-TV in Tampa — and digital media operations.

The sole major newspaper that Buffett did not buy was the Tampa Tribune.

Daily publication of the Tampa Tribune started in 1895 when Wallace Stovall upgraded printing from once a week.

In 1966, the Tampa Tribune, along with WFLA TV and radio stations, was bought by Richmond Newspapers, which evolved into Media General in 1969.

For decades, the Tribune and the Richmond Times-Dispatch operated as the flagship newspapers under the Media General banner.

But the company soured on newspapers in the digital age. Burdened by long-term debt and unprofitable newspapers, publicly traded Media General decided in February to seek buyers for all its print holdings.

"It's a sad day in some ways and a hopeful day in some others," said Leland Hawes, a retired Tribune reporter and local historian.

The Tribune has a history of being highly engaged in its community — whether writing about Tampa's bolita rackets in the 1930s and '40s or advocating for bringing an NFL franchise to Tampa through the columns of Tom McEwen in the late 1960s and early '70s.

"Historically, it was a major influence on the west coast of Florida," Hawes said. "Unfortunately, when Media General started cutting back and Nelson Poynter started investing in the Times, the combination of things eventually tipped the balance."

Operating in one of the few remaining metro areas with two rival daily newspapers, the Tampa Tribune had hinged its future in part on the strength of its longtime partner TV station, WFLA-Ch. 8. Media General converged its three local operations — the Tribune, WFLA and Tampa Bay Online — in a $40 million News Center that it built immediately to the north of the newspaper building on the Hillsborough River in downtown Tampa.

Its attempt to merge TV, print and online, however, has been increasingly dismantled.

This month, in a precursor to shedding the Tribune, Media General asked the city of Tampa about splitting its two downtown offices: the News Center and an older building at 202 S Parker St. that contains the former offices of the Tribune.

In recent years, the Tribune's circulation and readership numbers have shrunk as it fought both competition with the Times and shrinking ad revenues plaguing the newspaper industry overall.

Based on the latest snapshot of circulation figures in May, the Times has widened its lead over the Tribune as the dominant newspaper in the region.

Sunday circulation at the Tribune was virtually unchanged at 262,369, while daily circulation fell 20,000 copies, or 12 percent, to 144,510.

By contrast, the Times' average Sunday circulation rose about 1 percent to 432,202 while average daily circulation rose just more than 2 percent to 299,497 in the six-month period ended March 31.

"The terms for the sale of the Tampa Tribune reflect the Times' dominance in the Tampa Bay marketplace," Times chairman and CEO Paul Tash said. "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."

Times staff writers Richard Danielson, Eric Deggans, Susan Thurston and Marissa Lang contributed to this report. Contact Jeff Harrington at (727) 893-8242 or [email protected]

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