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TAB, CNC sale continues to generate buzz in newspapers, blogs
Dan Kennedy's Media Nation has the most interesting report, from an unnamed source: "Purcell told his troops that after paying off the debt he took on to purchase CNC (for a reported $150 million) in 2001, and paying a 35 percent contractural fee to his investors, the remainder of the $225 million CNC sale went to the Herald. Purcell wouldn't say how much that was, but insiders estimate that at roughly $10 million to $20 million. Purcell added that neither he nor his family made any money on the deal, saying that all of it was rolled into the Herald."
The biggest sour grapes come from Private Equity Week, who blast Herald Media owner Pat Purcell's front page letter on yesterday's Herald, announcing the sale of the company's 80+ suburban weeklies and saying "The Herald is Here to Stay":
The biggest sour grapes come from Private Equity Week, who blast Herald Media owner Pat Purcell's front page letter on yesterday's Herald, announcing the sale of the company's 80+ suburban weeklies and saying "The Herald is Here to Stay":
Finally, a bunch of you wrote in to inquire about Saturday’s announcement that Liberty Group Publishing is buying the community newspaper unit of Herald Media, plus some papers owned by Heritage Partners. Jay summed up the correspondence by asking: “Why wasn’t the Boston Herald itself included in the deal?
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I've been reading all the posts. The central focus is around the net gains and losses (financially speaking). But no matter how you add or subtract, if papers are not selling and subscriptions are down, the paper can't survive.
For the local Tab/Press, I imagine that they have taken a substantial hit on subscriptions and I am lead to believe that old adage we use in the technology world "garbage in - garbage out." Our local paper does little to bring home the meaning of community and it began several years ago. The bottom line is that the company moves reporters as quickly as we change clothes, and that potentially includes the editors and their positions as well.
During my tenure as Town Council President, there was only one time that the new editor spoke with me. I can assure you that my interaction with him was anything but a pleasant experience. Never once during our conversation did he ask about Watertown and those who have called it home for years. Despite my attempts to shed a positive light about our home town during the multitude of phone conversations with the reporter of the Tab/Press, there was a hunger for rift and dirt. If either of these men took the time to learn about the people who live and thrive in Watertown, they would have recognized that a sharp decline of interest might have attributed to the sale - even if on a local level. I'm wondering how many other community papers' profit margins have suffered because of the concept that sensationalism sells papers. It might be true for a Metropolitan area, but locally in small towns, people are generally interested in reading about others in a positive sense.
I'm not saying that this is the absolute factor in a paper being sold - I'm just offering that if a product is bad - so are the profits.
Pat Purcell reportedly sold the community newspapers for over 100 million in profit. That seems to be the reason for the sale. The Herald is losing money and they needed the cash. We'll have to see what impact an out of state owner will have on our local paper.
According to what an insider told Dan Kennedy here, what Purcell got was $10-20M out of that $100M. The rest went to the private equity investors -- Audax Capital, Halyard, Weston Capital, and Presidio Capital. So the estimated $100-120M was split between them. Purcell may have made less than 10%; from what I know about private equity, it's almost certainly less than 15% of whatever profits came from selling CNC.
However, in order to make that profit, they had to make the group attractive to a new owner, and they did that in large part by cutting staff. You're right that it's motivated by profit, but it's profit by strip-mining -- they extract all the value from a company and then dump it. Notably, the new chain is just financed by yet another private equity firm, who presumably will want their money back in 3-5 years. So it might be yet another round of cuts so they can get their $X million. All the while the reporters, editors, and you and me and all the other communities get bupkis.
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