The top headline on
the sale of the San Diego Union-Tribune this afternoon was that it was sold at all. On the auction block for eight months, it seemed in danger of becoming yet another American newspaper no one wants to own given the industry's challenges.
Union-Tribune Editor Karin Winner told staff gathered that news of the sale was terrific. "This is a company that really wants to see journalism continue. ... This to me is the first 'up' piece of news," she said, "the first positive piece of news" for an industry in transition.
Copley Press found a buyer with serious bona fides. Platinum Equity will not be a household name to journalists, but it is a successful and fast-growing merger, acquisitions and operating firm. The Beverly Hills-based company employs more than 100 and
founder and CEO Tom Gores (one of three investment banking brothers) is
Forbes 400 material with an estimated net worth of $2.5 billion.
For Platinum, this is almost certainly a straight business deal, not an exercise in community-spirited rescue. The company's Web site says it specializes in out-of-favor companies facing big transitional challenges. Typically it operates them for a period of time, making major changes, often including dealing off assets, then sells at a higher price.
Usually, but not always, a private equity strategy is to cut more deeply than previous owners could stomach. So the sale could bring big staff reductions, outsourcing functions as significant as printing, selling real estate or perhaps hastening a transition to an online-dominant product mix. However, the operating plan could involve instead an entirely different strategy and some reinvestment.
No sale price was specified, nor is it clear whether the Union-Tribune was profitable in 2008 (it probably was) or is operating at a profit this year (more problematic).
In the boiler-plate sales announcement, Copley disclosed the nugget that Canadian publisher David H. Black (no relation to the disgraced Conrad Black) would be involved in Platinum's operating team in an unspecified way.
His company, Black Press, is a very successful operator, mostly of smaller papers and weeklies in Vancouver and northern Washington state.
It bought the Honolulu Star-Bulletin early this decade and the Akron Beacon Journal, when McClatchy sold some of its Knight Ridder acquisitions in early 2006. Black has a reputation for operating leanly but with some imagination and business flair.
I sat at the same table as Black during the luncheon where Hillary Clinton spoke at last year's Newspaper Association of America convention, awkwardly overhearing a business conversation with a colleague before I realized who he was. The talk confirmed what I had heard secondhand -- that Black was an optimist about the business and a potential buyer when many were bailing out. I introduced myself and said that. He said, yes, and we left it at that.
Private equity groups have not shown much of an interest in the many newspapers for sale over the last year (though several are among the finalists in bidding for the
Austin American-Statesman).
Avista Capital Partners overpaid in acquiring the
Star Tribune of Minneapolis from McClatchy in December 2006, and
the paper filed for bankruptcy early this year. That was hardly an encouraging precedent, and the consensus has been that smart private equity professionals are as baffled as anyone else about how to turn around newspaper properties in the short time frame of a year or two.
Copley has been a company in some decline
since the death of matriarch Helen Copley in 2004. It had earlier sold seven papers in Illinois and Ohio and the
Daily Breeze in nearby Torrance with the announced intent of focusing on its home base in San Diego. But last July it decided to try to cash out of the
Union-Tribune as well. The paper has a comparatively modest circulation (Daily 270,000, Sunday 342,000) for the enormous San Diego County area (population 3.1 million). The
Union-Tribune was Copley's last asset of any size.
Lots of detail to follow, but chalk up the sale as evidence that some serious money people still see hope for the battered metro business.
CLARIFICATION: The original version of this story referred imprecisely to the Copley papers sold earlier this decade.
See http://www.gores.com/ Gores has been buying distressed companies for over...
