ATLANTA (Jan. 30, 2012) - Investors want newspapers, despite their well-reported financial troubles. But it's not newspapers' flat-at-best advertising revenue or falling circulation investors are after. It's their online platforms and commercial real estate holdings.
In 2011, investors picked up 71 daily newspapers for a total of nearly $800 million, according to a story in today's New York Times. The numbers come from Owen Van Essen, president of Dirks, Van Essen and Murray, a leading newspaper merger-and-acquisition firm.
In the past six months, investors bought newspapers in major cities across the country, the Times reports. They include The San Francisco Examiner, The Chicago Sun-Times, The Omaha World-Herald and The San Diego Union-Tribune, whose headquarters is shown at left in photo from Voice of San Diego.
The investors are partly seeking the buildings and land holdings of newspapers, which typically are located in the cores of the cities they cover. Almost by default, newspapers are sitting on valuable property, even in this down commercial real estate cycle.
"Newspapers have big buildings," news industry analyst Ken Doctor told the Times. "They are usually in a somewhat valuable location."
(In Atlanta, Cox Enterprises donated the former Atlanta Journal-Constitution property at 72 Marietta St. to the city of Atlanta. While Cox did not sell the building, I bet the company got a nice tax writeoff on the property valued at $50 million at the time of the donation.)
The best example of investors acquiring papers as real estate plays comes from San Diego, where Manchester Financial Group acquired the Union-Tribune last fall for more than $110 million. When the deal closed, the Times headline read, "San Diego Union-Tribune Sold to Hotelier for more than $110 Million."
Soon after, Manchester Chairman Douglas Manchester wrote a Page One editorial in the paper - now called U-T San Diego - in which he called for the city's downtown waterfront to be developed. Better yet, Manchester told the Voice of San Diego, it is his wish to redevelop "the prime Mission Valley parcel on which the paper's headquarters sit."
Let's hope this trend continues. Newspapers can leverage their property holdings, enter into sale-leaseback agreements and enjoy a cash infusion. Brokers can handle the transactions and earn good commissions. Everyone's happy.
The traders are partially searching for the structures and land holdings of magazines, which generally are located in the cores of the places they cover. Almost by standard, magazines are seated on useful property, even in this down property pattern.
Posted by: Financial Planner Jacksonville | April 12, 2012 at 05:01 AM