New Media Investment Group Inc., a New York-based chain of 130 daily newspapers in mostly small-city and suburban U.S. markets, says it has agreed to buy three Philadelphia-area daily newspapers and a fourth near Pittsburgh from family-owned Calkins Media for $17.5 million.
The buyer says the price is about four times Calkins' profit from the newspapers over the last year, not counting financial costs (earnings before interest, taxes, depreciation, and amortization). Shares of New Media Investment rose 0.18, or 1.33 percent, to close at $13.70 Monday on the New York Stock Exchange.
The sale includes the Bucks County Courier Times (23,000 weekday circulation, 35,000 Sunday) and the Doylestown Intelligencer (19,000 weekday, 27,000 Sunday) in Philadelphia's northeastern suburbs; the Burlington County Times (15,000 weekday, 22,000 Sunday) in South Jersey; and the Beaver County Times (18,000 weekday, 24,000 Sunday) in Western Pennsylvania, plus their presses and websites.
Calkins has also agreed to sell the Uniontown Herald-Standard and other news properties in the former coal country south of Pittsburgh to Ogden Newspapers, a West Virginia-based chain run by Robert Nutting, who also owns the Pittsburgh Pirates baseball team.
The sale decisions followed "extensive deliberation by the Calkins family and the knowledge that our businesses could best thrive in a company with broader resources and reach," Mark Contreras, Calkins' chief executive officer, said in a statement posted by the Courier Times.
The suburban papers will form part of New Media's GateHouse division. The parent company also used the GateHouse name before its 2013 bankruptcy and reorganization by debt investor Fortress Investment Group (now owned by Japan-based Softbank). New Media has continued GateHouse's policy of buying local papers in noncompetitive markets and using them to sell digital marketing services, and public events, under chief executive Michael E. Reed.
In an April conference call, Reed told investors that he expects his company's cash flow will turn positive this year.
Despite declining print circulation and advertising, New Media says it has recently boosted sales at its business marketing consulting and public events divisions, and has shut down production plants and consolidated regional operations.
Calkins heirs told the Courier Times that it was a painful decision to sell the papers after 80 years of family ownership. "It became clear" that the group could not afford to continue its strategy for "adjusting to the changing patterns of news consumers," Calkins board member and former Burlington County Times publisher Stan Ellis told the Courier Times. "Our family identity was wrapped around our commitment to the First Amendment and operating quality community newspapers."
"My mother always said, `Newspaper people are the best people in the world,' " Sandra Hardy, a Calkins director and daughter of founder S.W. Calkins, said in the Courier Times. "I'm confident, under GateHouse, they will continue to deliver products that make our communities better places to live."
Other daily-newspaper-based media groups in suburban Philadelphia are owned by Digital First Media, which has sought buyers for its operations in Montgomery, Chester, and Delaware Counties in Pennsylvania and Mercer County in New Jersey; Advance Publications (Newhouse), which has consolidated its dailies in Gloucester, Cumberland, and Salem Counties into the Times, based in Mullica Hill (corrected); Gannett, which operates newspapers in Wilmington and Cherry Hill; and the Atlantic City Press, owned by billionaire Warren Buffett's Berkshire Hathaway Inc.