GateHouse Media to Buy Austin American-Statesman for $47.5M in Cash
The sale is expected to close this spring.
Last week New Media Investment Group, Inc. (NYSE: NEWM), parent company of GateHouse Media, agreed to buy the Austin American-Statesman for $47.5 million in cash. GateHouse is one of the largest publishers of local newspapers in the United States. At year end, GateHouse published 142 daily newspapers, more than 466 community papers and more than 569 local market websites, reaching more than 22 million people each week in 38 states and 565 markets.
Owned by Cox Media Group for the last 40 years, the Austin American-Statesman, a daily newspaper serving the central Texas market for more than 140 years, has daily circulation of 85,000 and its websites average more than 13 million page views monthly. The newspaper also publishes Austin360, an entertainment source and several weekly niche community publications. Cox Media Group announced last October that it was putting the newspaper and related assets up for sale.
‘After careful consideration, we have made the difficult but strategic decision to put our newspapers in Palm Beach and Austin up for sale,’ said Cox Media Group president Kim Guthrie. ‘We have made the decision that we will be better equipped to operate our newspapers in Atlanta and Ohio, where we have the integrated opportunity with our TV and radio operations.’
‘New Media is very excited to add the Austin American-Statesman and its associated publications to our portfolio of local media assets,’ said Michael E. Reed, New Media President and CEO, in a news release.
‘In addition to being known for its strong and trusted journalism and having high digital engagement, the city of Austin is a very attractive market for our growing business offerings such as UpCurve and GateHouse Live. We look forward to working with Austin employees to further build upon their partnerships and carry on the strong local journalism they do in Austin,’ Reed added.
GateHouse Media’s UpCurve provides marketing, digital solutions and cloud services to small- and mid-sized businesses. The company’s Center for News & Design is based in Austin, Texas and employs more than 270 staff and serves 89 daily newspapers. GateHouse Live is the company’s events division, which was launched in 2015. In 2017, GateHouse Live had grown to 235 events.
Other recent acquisitions by GateHouse include the Morris Publishing Group (Augusta, Georgia), which includes 79 publications and related assets, and the E.A. Sherman Publishing Company (Newport, Rhode Island) in the fourth quarter of last year, and the Register-Guard (Eugene, Oregon) and MA Landmark Corp. (Holden, Massachusetts) deals which are expected to close in the first quarter. GateHouse purchased Register-Guard for $14.25 million and MA Landmark Corp. for $1.2 million.
The announcement comes just two weeks after New Media Investment Group posted its fourth quarter and full year 2017 financials. Here are some fourth quarter highlights from that report:
- Total revenues were $394.4 million, an 18.2 percent increase year-over-year.
- Digital revenue was $41.7 million, a 28.6 percent increase.
- UpCurve generated $20.8 million in revenue, a 31.7 percent increase.
- The company reported net income of $26.4 million, and declared a cash dividend of $0.37 per common share for Q4.
- The Morris Publishing Group deal closed on October 2, 2017 for $120 million.
- The E. A. Sherman Publishing Company deal closed on October 27, 2017 for $1.3 million.
Full year 2017 highlights include:
- Total revenues were $1.342 billion, a 6.9 percent increase year-over-year.
- Digital revenue was $143.4 million, a 15.7 percent increase year-over-year.
- The company reported a net loss of $0.9 million.
- For the year, UpCurve generated $71.3 million in revenue, a 34.5 percent increase compared to 2016.
‘We are pleased with our strong results in the fourth quarter, especially the continued improvement to our organic same store revenue trend, which improved 80bps sequentially from our third quarter performance,’ said Reed in a news release. ‘This was a result of strong performance from our stable and growing revenue areas led by UpCurve, GateHouse Live, and circulation revenue.’
‘With the strong close to 2017, we are optimistic in our ability to continue to deliver solid returns for shareholders in 2018. We believe with the continued growth of our new business initiatives and pipeline of attractive acquisition opportunities, we are well positioned to deliver returns for our shareholders,’ Reed said.
Investors didn’t seem to have a strong reaction to the company’s financials. On February 28, the day financials were announced, New Media Investment Group stock was valued at $17.25 per share. As of yesterday at 4:02 p.m. EST, stock was valued at $17.43 per share.
GateHouse Media grows its local and national reach with this acquisition, which includes the Spanish-language weekly newspaper Ahora Si, along with the Austin Community Newspapers group, reports MediaPost. Acquiring locally-focused newspaper groups with digital assets seems to be GateHouse Media’s strategy for the near-term. We’ll be curious to see who they try to acquire next.