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Longtime Columbia Daily Tribune readers should not have been surprised by the recent purchase of the newspaper and its associated printing plant by GateHouse Media Inc., of Fairport, New York.
GateHouse has been vacuuming up newspaper properties over the past few years with the backing of the Fortress Investment Group, a private equity firm based in New York City. With more than 100 daily newspapers, the company’s quiver also includes hundreds of weekly and shopper-type publications. The significance of this acquisition is that it markedly enlarges the company’s position in Missouri by capturing the well-equipped Tribune Publishing Co. printing plant at the northeast corner of Fourth and Walnut.
Some might term GateHouse’s latest acquisition a “just in time” rescue effort, because it is hard to imagine that this afternoon daily in a very competitive media market has been profitable in recent years. Many of us have noticed the reduced volume of display and classified advertising, reductions in staff through several waves of layoffs, and the paper’s own admission that circulation, currently around 17,000, is about where it was in 1969.
According to Bloomberg News, GateHouse Media paid $18 million for the newspaper and the associated printing plant. Who is to know what these properties might have sold for, say, five or 10 years ago. Of course, the sellers were a closely-held private corporation, and they are under no obligation to reveal anything. But they obviously missed the return-on-investment “sweet spot” because legacies and pride of ownership were more important to them than what they could have sold the properties for when offers and prices paid were considerably higher.
In the cold, hard world of finance, valuation and the price realized is about cash flow and whatever the applicable multiple is, based on EBITDA (earnings before income, taxes, depreciation, and amortization). Another consideration is the federal and state capital gains tax, which has gone up from what it was a few years ago.
Titles and legacies aside, what GateHouse Media was really after — and what constituted the bulk of the $18 million purchase price — was the printing facility.
With long-term job contracts already in hand to print the New York Times, Rural Missouri, and other papers, as well as the Tribune, GateHouse Media can now consolidate much of its Missouri publishing operation here under one roof, printing some of the other dailies it owns, including the Hannibal Courier-Post, Kirksville Daily Express, Mexico Ledger, Moberly Monitor-Index, and the Boonville Daily News. This means shuttering press operations in those places, resulting in significantly reduced printing costs and the termination of dozens of printers. In this eventual scenario, the out-of-town papers are all printed here on a staggered schedule and a fleet of trucks carts them off to their respective destinations.
But consolidation doesn’t stop there. In 2014, after a year-long trial at the Rockford Register-Star in Illinois, GateHouse launched its Media Center for News and Design, in Austin, which, according to one source, employs more than 200 designers as part of a consolidated effort to produce the pages for the company’s fleet of newspapers and websites. After the elimination of the production staff here and the resulting reduction in payroll expense, Tribune reporters and photographers will send their material to the Austin media center, where the pages are made up and sent back to the publishing facility at Fourth and Walnut, where plates are cast for inclusion on one of the company’s high-speed web offset presses.
The Columbia Daily Tribune has been a wonderful exemplar of the newspaper as a public trust. That the Waters family stuck with it as long as they did is a tribute to their perseverance, and it also has to do with the wisdom of investing in the state-of-the-art publishing facility in what another publisher, years ago, called the “hen house.”
Perhaps in the earlier “hen house” scenario, involving the channel eight TV license the university aced the newspaper out of in 1953, the profits from television would have solidified the newspaper’s long-term position. Equally frustrating was the 1970 lock-out involving cable television, where the city council was dead-set against the newspaper’s involvement.
Historical piffle. We have enjoyed and will continue to read whatever print product is put in front of us. At the same time, we realize that the systems of delivery will continue to evolve. As providers of information and entertainment in print and online, we vow to continue to adapt and not resist change.
Al Germond is the host of the Columbia Business Times Sunday Morning Roundtable at 8:15 a.m. Sundays on KFRU. He can be reached at email@example.com.