The pace of newspaper closures,
mergers and bankruptcies appears to be accelerating as both chains and
independent newspaper owners
face unrelenting economic challenges, and the
largest companies shed underperforming assets.
Since publication of the 2018
report, The Expanding News Desert, UNC researchers have uncovered
an additional 200 shuttered papers. Almost half of those papers
have closed in recent months, according to data compiled by the UNC Center
for Innovation and Sustainability in Local Media. If the trend
holds, the U.S. will have lost more than 2,000 newspapers since 2004, bringing
the total number of surviving newspapers in the country to less than 7,000.
Most of the shuttered
papers this year have been in the Midwest and Northeast. All are weeklies,
except four small dailies under 10,000 circulation in Missouri, Arkansas and
Louisiana, and the 33,000-circulation Youngstown (Ohio) Vindicator, which
announced last week it planned to close at the end of August because the
family-owned paper could not find a buyer.
This new information is based
on UNC’s annual survey of state press associations – with more than three-quarters
of the organizations reporting – as well as extensive tracking of news accounts
and investment reports on sales, mergers and sales.
While closures appear
to be accelerating, the pace of acquisitions has slowed in recent months as
sales prices have dropped to historic lows.
Many newspapers in small and mid-sized markets are being valued at only
two times trailing annual earnings, according to investment bankers, who
predict that the pace of acquisitions will pick up in the fall, as some large
chains, such as such as Community Newspaper Holdings, Inc. (CNHI), begin
exiting the market, and others, such as Gannett and GateHouse, contemplate
backed by the pension fund Retirement Systems of Alabama (RSA), announced in 2018 that it planned to
sell or shutter all of its more than 100 papers, located in mostly rural
communities. However, CNHI is in no rush, given the depressed market. "This is not exactly the market you'd
want to sell anything in because the prices are too low,” David Bronner, CEO of
the RSA, said in an interview earlier this year with the Southern Newspaper
Publishers Association. “(Community newspapers) still make money. And you have
a wealth of real estate assets there. You wouldn't want to give it away at two
times earnings." CNHI did not
return numerous calls, seeking further comment on the status of its papers.
In contrast, GateHouse, the largest newspaper chain with
more than 450 papers, is moving ahead with either sales or closures of several
dozen of its smallest papers. In a recent earnings call, company executives
said they were focusing this year on assimilating the more than 100
acquisitions in recent years, and reshuffling the properties in its portfolio. In
late May, GateHouse announced it would be “consolidating” its 50 remaining
suburban weeklies in the Boston area, leaving only 18 titles. GateHouse has
also continued selling off small individual properties in the Midwest and
South, such as the daily Log Cabin Democrat to Paxton Media, while shuttering
those it cannot sell, including the 150-year-old Bastrop, Louisiana, Daily
Enterprise. According to news reports, GateHouse has also explored merging with
Gannett, the second largest chain with more than 200 papers.
While the large chains can afford to hold out for better
prices – or simply walk away from underperforming properties – some legacy
family-owned newspapers and regional chains, such as Western Communication,
which owns seven papers in the Pacific Northwest, are being forced to declare
bankruptcy and auction off their properties at rock-bottom prices. The 151-year-old Reading Eagle in
Pennsylvania, with a circulation of 40,000, was recently picked up at auction
by Digital First Media, the third largest chain with more than 100 papers in
its portfolio. This came only a couple
of months after Digital First, which is owned by the hedge fund Alden Capital,
made an unsuccessful hostile bid to takeover Gannett, after reportedly
first asking Gannett to buy its newspapers. Meanwhile, according to news accounts, Tribune Publishing is still
looking to either sell its 77 papers, including the Chicago Tribune, or merge
with another chain.
All this sets up an unpredictable second half of the
year. More precise numbers on closures
and sales will be available in fall, when the Center publishes its fourth
annual report, tracking the threat of news deserts.