Analyst: Local Dow papers likely to draw bidders
NEW YORK -- Gannett Co., Lee Enterprises Inc., and GateHouse Media Inc. may be the most likely buyers for the 22 local newspapers News Corp. chairman Rupert Murdoch plans to sell after completing his purchase of Dow Jones & Co. this year.
Potential bidders may pay up to $660 million, according to Larry Grimes, who buys and sells newspapers for media investment bank W.B. Grimes & Co., and Edward Atorino, an industry analyst at Benchmark Co. in New York. Atorino said Hearst Corp. and Advance Publications Inc., both closely held, might also bid for the assets.
"The size and breadth of these properties would be tantalizing," said Grimes, based in Gaithersburg, Md. "These are well run newspapers that are the number one media buy in each of their markets."
Dow Jones's Ottaway Community newspapers include the Cape Cod Times and the Standard-Times in New Bedford in Massachusetts, as well as six other daily and 14 weekly publications in New York, California, and four other states. Murdoch, who is buying Dow Jones to gain control of The Wall Street Journal, said this week he planned to sell the local newspapers "fairly quickly" once his $5.2 billion purchase is completed in the fourth quarter.
Gannett, the largest US newspaper publisher, "will look at anything," spokeswoman Tara Connell said when asked about the newspapers. The company is based in McLean, Va. Dan Hayes, a spokesman for Davenport, Iowa-based Lee Enterprises, declined to comment. Michael Reed, chief executive of Fairport, N.Y.-based GateHouse, also declined to comment. The Patriot Ledger in Quincy and the Brockton Enterprise are among 124 suburban weekly and daily newspapers around Boston that Gatehouse acquired last year.
The migration of advertisers to the Internet has hurt revenue less at newspapers in small and rural markets than at publications in major metropolitan areas, Grimes said. Dow Jones's Ottaway newspapers are likely to sell for 10 to 12 times their annual cash flow of about $55 million, said Grimes and Atorino. Small papers have recently sold at that level while those in large metro markets have fetched nine to 10 times cash flow, Atorino said. 