July 9, 2019

In the 10 days since the planned closing of The Vindicator in Youngstown, Ohio, was announced, the consensus view (articulated by The Washington Post and Neiman Lab) seems to be that this will be the first of many such liquidations in mid-sized cities.

Yes, times are tough, and they certainly wear down the family owners of a single paper or a small chain, but the Youngstown story may be an extreme and atypical case. Family newspapers are still being sold every month, sometimes several in one week.

After speaking to Vindicator general manager Mark Brown and several outside observers of the market for such titles, I think there are special circumstances worth noting.

For one, the family ownership consisted of just Brown and his mother. A next generation has interest in the Browns’ TV station, WFMJ, but not the paper. Fatigue and lack of succession alternatives are often the tipping point between hanging on and letting go for family owners.

That said, Brown told me, “Maybe I should have seen five years ago that it was going to end ugly. I was afraid of the cuts (a chain owner) would make … We thought we had cut to the bone, but maybe not compared to the current standards.

“I’m not sure whether I did the right thing … but we never imagined we wouldn’t be able to sell.”

Another thing: While still bound by non-disclosure agreements, Brown blamed bad timing for potential buyers as a big factor in the non-sale. That appeared to refer to New Media Investment/GateHouse Media, a voracious consolidator with acquisitions of more than $1 billion in recent years, which hit the pause button on more of the same about nine months ago.

CEO Mike Reed said in the company’s most recent earnings call (as also noted in a Wall Street Journal story last week) that the company was taking time to digest papers in West Palm Beach, Florida, and Austin, Texas, that it bought in spring of 2018 and the Indiana-based Schurz chain it bought late last year.

Earlier, Reed had indicated that the company’s shopping list was beginning to focus on somewhat larger papers and chains. Adams Publishing, which has bought dozens of papers and groups from family owners, prefers markets smaller than Youngstown.

One more factor: Independent owners are at a disadvantage in modernizing their technology and navigating digital transition issues. Brown said that his decision to buy a new press in 2010, hoping to pick up printing clients, was a strategy that backfired.

Julie Bergman, who oversees newspaper deals for the brokerage Grimes, McGovern and Associates, told me that 2019 is actually proving “a very busy year, lots going on.” Yes, valuations are down, she continued. And baby-boomer owners and their professional managers of the same age “may not have the energy level to embrace new technology” and the financial challenges.

But not many of the properties offered for sale end up wallflowers.

“Just last week I closed a deal for a couple in South Dakota that was ready to retire,” concerned about who succeeded them, she said. “We connected with a young buyer from another state. That was exactly who they wanted to continue what they had built.”

The Inland Press Association has long held twice yearly conferences for family owners. Executive Director Tom Slaughter said that attendance numbers have dwindled some, but the meetings still draw 40 to 60 participants in the spring and 30 or so in the fall.

“They find talking to other people with the same set of issues valuable,” Slaughter said. Like Bergman, he sees those with a spouse or children, who want to stick with the business, finding ways to continue even in the face of vanishing profits. He also concedes that “some operators would rather wind it down than sell” as played out in Youngstown.

The shutdown there is scheduled for the end of August but even that situation may not be completely hopeless. When Journal-Register (a forerunner of the Digital First chain) posted closing notices at small papers in Bristol and New Britain, Connecticut, in 2008, a last minute-buyer came forward.

Brown said that he has had nibbles since the widespread reports of the closing but nothing he considered the makings of a serious offer.

“We don’t have a billionaire in Youngstown,” Brown added, but there are wealthy people who might take an interest in keeping local news alive in their hometown.

Another scenario: Ogden Newspapers, a substantial chain that has been a buyer in recent years, owns the paper 19 miles up the road in Warren. If they moved into the Youngstown vacuum, they would likely buy and fulfill the Vindicator’s subscriber list.

Even if nothing materializes, Brown has handled the misfortune with a lot of class. He published a 150th-anniversary issue just a week before announcing the closing. And he has been accessible to reporters and his community in circumstances where others might drop a press release.

The result has been some consciousness-raising about what goes missing from civic life when a newspaper and its accountability reporting disappear.

I haven’t suddenly become Mr. Sunshine on the prospects of regional papers. The publicly traded chains are taking a hammering from Wall Street so far this year, and their soon-to-be-released second-quarter earnings will provide fresh evidence of why a title in deep trouble like the Vindicator could not find a buyer.

But my experience has been that change comes slowly to the roster of dailies. Drastic downsizing or a sale upstream remains far more common than going out of business. I would look for a few more Vindicators over the next year but not a cascade.

I will give the last word to that noted media analyst Aristotle (reversing his seasonal reference): “One swallow does not a summer make.” Winter may not be coming just yet.

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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