William Dean Singleton Bought At A Premium Four McClatchy “Orphans” From Its Knight-Ridder Purchase, Putting His Money Where His Mouth Is In Saying Newspapers Have A Rich Long Future

As he sees it, newspapers are currently going through a “cyclical downturn” but when major US companies like General Motors and Ford come out of their sales slump in the next three or four years then newspapers are poised to take advantage.

And to demonstrate how much he believes in newspapers, Singleton pointed out that his company is currently investing $500 million in new printing presses. “If we believe in spending half a billion dollars on presses that are going to last 40 years, we really believe that print has a long future,” Singleton told the annual meeting of the American Society of Newspaper Editors.

He made those comments a couple of days prior to the announcement that his company was buying four newspapers that McClatchy didn’t want from its Knight-Ridder purchase. The price was $1 billion in cash for The San Jose Mercury-News, The Contra Costa Times, The Monterey County Herald, and the St. Paul Pioneer Press – the latter two in a complicated equity swap that sees Hearst take a small minority piece of MediaNews.

That $1 billion represents a multiple of 11.5 times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) whereas McClatchy paid about 9.5 times EBITDA for Knight-Ridder. So either Singleton paid a hefty premium for those properties, or McClatchy got a great deal for Knight-Ridder, or the remaining Knight-Ridder properties McClatchy wants to sell are real dogs in terms of earning potential. The suspicion at the end of the day is that McClatchy is actually going to do quite well on selling the remaining eight Knight-Ridder newspapers its doesn’t want, thus lowering its expected debt for those it keeps.

Whatever, $1 billion is $1 billion, so when Singleton, who is also spending on newspaper infrastructure in a big way, comments on how he sees the health of newspapers these days its worth taking note of what he says.

“The whole story is local. National, international, have become commoditized,’ he told the editors, but where newspaper reign supreme is in their local coverage. “It’s fun to send people to Iraq, but it’s not nearly as important as covering social injustice in the local community, or covering immigration in the local community,” That’s our game,” he said.

Emphasizing that the newspaper product needs to change to fit into the new environment, Singleton warned, “Once and for all, we’re going to have to quit writing and editing for each other and write and edit for that consumer out there.”

Singleton told the editors that the biggest problem facing newspapers today is how to make money off content that they now put on the Internet for free.

ftm background

East Europe Is Still The Prime Battlefield For European Publishers With Axel Springer Launching In Poland An Upscale Daily, Dziennik, Just Six Weeks After Agora dropped its Upscale Nowy Dzien.
No sooner does Poland’s Agora drop its three-month-old up market Nowy Dzien (New Day) because shareholders were up in arms over its losses, then along comes Axel Springer saying it is launching its own upscale broadsheet in Warsaw on April 18, with the paper said to be modeled on Springer’s successful Die Welt brand in Germany.

With European and US newspapers Continuing to Show Sharp Advertising and Circulation Declines Has The Time Come To Ask Whether They Should Be Put Into “Care and Maintenance” And Future Investments Should Be Aimed Solely At the Web?
On both sides of the Atlantic the financial performance of newspapers continues to decline, yet web sites continue growing from strength to another in both views and advertising revenue. So should a newspaper publisher just throw in the towel, consider newspapers a non-growth business, and rush as much investment as possible instead into web activities?

The UK National Newspaper Market Is In Turmoil -- Circulation Is Down, The Daily Express Cuts Its Cover Price, Others Raise Theirs to Help Finance Disappointing Relaunches, The Financial Times Starts a Giveaway, And To Top It Off Americans Are Investing in Trinity-Mirror
FTM really should have known better than to have declared recently that the UK Newspaper price wars were over because no publisher could afford them any more. Along comes Richard Desmond, publisher of the Daily Express, cutting its cover price from 40 pence to 30 pence while maintaining newsagent commissions payable on 40p. It is all said to cost him some £500.000 a week.

The Very Rich (Bankers and Industrialists) Come to the Aid of the Very Poor (French National Newspapers). But Is It In Time?
Despite extremely generous state subsidies for the written press estimated at some €278 million for 2005 alone, running a national newspaper in France is synonymous with burning money. And who better situated to do that than the country’s richest industrialists and bankers. And they’re lining up to do exactly that.

Ringier Reports Most Successful Year Ever, Leaving a Bitter Swiss Pill for Closed Hungarian Newspaper
Ringier CEO Martin Werfell told a Zurich media conference that 2004 may be the company’s most successful. Just three weeks earlier Ringier closed down the well-respected, but heavily loss-making 36-year-old Hungarian newspaper, Magyar Hirlap.

“We have to get paid for it,” he said. “We either have to come together as an industry or partner with Google or Yahoo or whomever. If we don’t get paid for it, we aren’t going to be able to produce it,” he told the editors.

Singleton’s company owns 50 newspapers, including the flagship Denver Post where in April early retirements and buyouts were offered to reduce editorial staff by 25 full-time positions.

Singleton – nicknamed ‘Lean Dean’ for his reputation of running very tight ships -- has not been shy in closing down properties that don’t perform (Dallas Times-Herald sold to competitor Belo (Dallas Morning News) that closed it down the next day, and the Houston Post). But his reputation in the past few years has moved up a few notches as he has seemed to move in the direction that good and ample journalism can make for good profits and its not all about cost cutting.

Indeed a few days after speaking at the editors convention Singleton visited the newsroom of the San Jose Mercury News where staff were fearful that Singleton’s tightfistedness would hard-hit their newsroom, but he told them there would be no layoffs, pay cuts or reductions in health benefits.

And in a visit to the St. Paul Pioneer Press he answered staff questions that specifically delved into his business philosophy -- important in St. Paul since the newspaper has only about a 10% profit margin – well below the industry’s average 20%.

"Margin is something that our company has never paid attention to, because you don't pay your bills with margin, you pay them with dollars. And as long as we can create a growing business with a growing profit, the margin is not really that important," Singleton told staff who said they were relieved at his response.

But just to make sure there was no misunderstanding -- "We make sure our newspapers live within their means. And we make sure they're viable businesses. And sometimes that means that you've got to be very efficient.