Newspaper Publishers Enter the Eye of the Storm - August 2015 M&A Activity
The future is becoming increasingly cloudy and uncertain for regional and community newspaper publishers; readers are drifting away from the printed form of news, and advertising revenues decline in lock step. Transactional activity over the past several years indicates that publishers of newspapers, from small community weeklies to major metro dailies, are seeking shelter from the storm by adopting several strategies that they hope will restore the clear sailing that many newspaper-owning families enjoyed for generations.
The strategies we see repeated across the country include: centralizing and/or outsourcing print operations in new highly efficient facilities, adding services traditionally offered by advertising agencies including internet-based services, adopting pay-to-read technologies to break away from free online content models, and finally simply selling out to one of several industry consolidators. With the exception of those exiting the newspaper publishing business completely, what lies on the other side may be just as daunting as the journey of the past several years.
Dix Communications, a family-owned fifth generation publisher of 23 community newspapers and related magazines and guides, and also owner of several radio stations, has announced its intention to divest its newspaper properties in western Ohio and central Kentucky, as well as four radio stations in Maryland. The company will focus on its remaining papers in eastern Ohio which are printed at and delivered from its centralized production facility in Wooster, Ohio.
Prior to the development of online advertising, community and regional newspapers were in the enviable position of being absolutely the most effective vehicle for advertisers to reach local audiences. With the addition of acquired radio stations, the newspaper publishers had a unique relationship with the people in the communities they served. This relationship often spanned several generations, and in the case of Dix Communications, extends back 120 years. As the winds of internet-enabled change swept away the value of this unique relationship, publishers are heading upwind into marketing services where advertising agencies rule the seas. Dix Communications is applying this strategy and now owns an ad agency, and is actively seeking additional acquisitions in related marketing services.