Expansionary Halifax Media looks beyond its Southeast base for next buy
The Worcester (Mass.) Telegram & Gazette, long up for sale, reported Thursday that an executive team from Halifax Media Group had been in the building for several days of talks with management -- a signal that the company is a likely buyer.
Halifax who? The Florida-based company, barely four years old, now has 35 dailies. With a billionaire backer, Warren Stephens of Arkansas, Halifax is pushing to the front of the line as mid-sized and smaller papers come up for sale. It bought the 16-paper New York Times Regional group for $143 million in December 2011 and 19 Florida and North Carolina dailies and weeklies from Freedom Communications six months later.
Halifax is little-known by design. Except for the occasional letter to readers, CEO Michael Redding typically does not do interviews (and I got no response to an email request that he discuss the company's growth). But Halifax is exemplary of an acquisition boom in recent years. While billionaire hometown buyers like The Boston Globe's John Henry or the Star Tribune's Glen Turner get the ink, the consolidators are scooping up smaller papers by the dozen.
A landmark event for the sector occurred last September. GateHouse Media simultaneously went through a prearranged Chapter 11 bankruptcy, purchased the Dow Jones local media group (formerly the Ottaway chain) and re-emerged as publicly-traded New Media Investment Group. The reorganized company, backed by Fortress Investment Group, has indicated it has enough capital to make further acquisitions and will.
Sellers who want out and the prevailing bargain-level prices are driving this opportunistic group of buyers. Halifax was formed in 2010 to buy the Daytona Beach News-Journal from court receivership for just $20 million. The paper had been the subject of a long court battle between minority shareholder Cox Enterprises and the Davidson family owners, losing most of its value as the suits dragged on.
The Worcester paper, for that matter, was purchased by The New York Times for $296 million in 2000 but was assigned a value of only $7 million as part of the sale of The Boston Globe to Henry last August.
Halifax's way of operating remains mysterious but appears typically to involve newsroom layoffs and a booster-ish editorial tone. Shortly after the purchase, Redding announced the pro-business stance in an open letter to Daytona Beach readers, breaking with the liberal-leaning former owners.
Kevin Drake, newly installed as publisher of the Lakeland Ledger, struck a similar note in another Open Letter to Readers 10 days ago:
Our editorials will advocate for our community and the potential we have here. We will support free enterprise and the benefits that come with a stronger economy. A thriving business environment elevates a community. We will point out positive opportunities for our city, county and state.
The Sarasota Herald Tribune -- the largest in the Halifax group -- was a Pulitzer finalist in 2010 and a winner in investigative reporting in 2011. Though publisher Diane McFarlin and editor Mike Connelly have left for other jobs, I am told the Herald Tribune retains at least some of its enterprise reporting bite.
Several other of the acquiring firms like GateHouse and Warren Buffett's BH Media Group also have tended to be aggressive in downsizing newsrooms and consolidating editing and layout functions at centralized hubs.
Those two, along with Digital First Media and long-established CNHI (Community Newspaper Holdings), have a national footprint. Until now, Halifax has operated only in Florida and four other Southeastern states. It sold the Santa Rosa Democrat in California wine country, which had come as part of The New York Times group deal.
Acquiring Worcester would move Halifax further afield into New England, once a center of thriving, editorially ambitious smaller newspapers, but for the last decade a center of ownership changes, consolidation and downsizing.
It is noteworthy that Stephens, the lead among the three private investment firms that control Hallifax, has a media group of 11 Western dailies of its own, with the Las Vegas News-Review its flagship. It is possible the two groups could be combined at a future date.
Warren Stephens, nearly as sparing as Redding with public comment, did discuss acquiring The New York Times group, as part of a long interview with Steve Forbes in 2012. Echoing Warren Buffett's comments on the durability of local franchises, he said:
I don’t think the news gathering aspects of magazines or newspapers are going to go away. I think at some point in time there’s going to be a realization that the professionalism of the reporters, the editors, the people that determine what’s going to make it into a publication and what’s not going to make it into a publication is actually worth something.
In newspapers' particular case, I just don’t think there’s any way you’re ever going to get local news, sports, politics from any other source but your local newspaper. The purchase of the New York Times group – most of those papers are pretty small newspapers by most standards. We’re very optimistic that we can improve their operations, but also that in the long run those are going to be great, long-term assets for us.
It remains an open question whether firms like Halifax will be the wave of the future, dominating the management of small and mid-sized papers. No dispute though, they are a huge ownership force right now.