New Media Investment Group Inc – the entity that owns 300 Gatehouse publications in Delaware and elsewhere – has purchased the remainder of the company that owned the Newark Post, Cecil Whig and Star Democrat, Easton, Md.
The company paid $15.3 million 18, dailies, weeklies and shoppers in Texas, Oklahoma and Kansas from American Consolidated Media. The purchase price includes a separate deal for a daily paper and related publications in Petersburg, Va.
In the spring of this year, a large chunk of American Consolidated, including the Delaware and Maryland papers, were sold by APG Media, a Minneapolis company controlled by a family with interests in wineries, magazines, recreational vehicle services and billboards.
New Media Investment emerged out of “pre-packaged Chapter 11 Bankruptcy proceedings in Delaware as the controlling entity for Gatehouse papers as well as former small dailies operated by Dow Jones.
Both Gatehouse and American Consolidated were the result of media “roll ups” operating with the strategy of aggressively buying newspapers for top dollar in smaller markets with the belief that those areas would not be hit as hard by the rise of the Worldwide Web.
The purchases included the Dover Post Co., which operates the paper of the same name as well the Middletown Transcript, and the Hockessin Community News.
The strategy unraveled when advertising revenues fell sharply and circulation also under went a decline. Staffs have since been cut and other steps have been taken to bring costs in line.
American Consolidated ended up under the ownership of its lenders prior to the sale of its assets.
New Media, a longtime investor in Gatehouse , is a part of Fortress Investment Management, a hedge fund.
The company reported a net loss of $6.7 million on revenue of $142 million, but maintained positive cash flow.
New Media CEO Michael E. Reed, said, “Today’s announced acquisitions highlight our continued success at purchasing high-quality, local media assets that fit within our operating and financial metrics.”To date we have purchased $105.3 million of local media assets. We look forward to the second half of the year as we continue to execute on our strategy and believe we have a great opportunity to create shareholder value.”
American Consolidated worked to increase revenue from websites and other digital entities, a strategy New Media says it continues to pursue.
