The Target Report: Paper-Based Journalism is Melting Away—January 2024 M&A Activity

The churn in newspaper ownership continues unabated. While some newspapers simply close up, there remains a robust market as local publications are scooped up by new players. As it has always been, newspaper ownership confers a certain position of power and influence on the owners. The allure of being the next William Randolph Hearst is still present, wielding sway over politics, art, and social norms. Billionaires and multi-millionaires are drawn to the newspaper business, despite the risk of financial failure and diminishment of their fortunes.

However, one overriding trend is clear, and that is that eventually time-sensitive news will not be printed. In each and every instance, the new owners understand and articulate the need to transition news from a print-based delivery mechanism to a digital online channel. They are buying printed newspapers as the vehicles to the future of news.

Print & Digital News Compete in Baltimore

The citizens of Baltimore are not yet sure what to make of the latest change at their beloved metro newspaper, The Baltimore Sun. Ownership of the paper’s parent company, Baltimore Sun Media, has flipped again, this time to local businessman David D. Smith. The new owner is the family scion and executive chairman of the Sinclair Broadcast Group, the second-largest owner of television stations in the United States, measured by number of stations owned. The Sinclair Broadcast Group issued a statement that Smith purchased the paper personally, and that the television and entertainment giant was not involved in the transaction to acquire the newspaper. Nonetheless, Smith suggested that future partnership opportunities and synergies between the TV stations and the newspapers were possible.

The ownership of the Baltimore Sun has bounced around for years, and for nearly four decades has not been owned locally. Smith’s purchase changes that. Not only will Baltimore’s newspaper now have local ownership, other Maryland papers, including those serving Annapolis and Towson, were included in the transaction.

Smith partnered with conservative commentator Armstrong Williams to purchase the company. Williams is an author of several books on race relations in America, is a syndicated columnist and hosts a nationally syndicated television program. Williams and Smith have worked together since 2013 on the purchase and sale of multiple television stations, and for a while Williams was principal owner of the largest African-American-owned group of televisions stations in the US. With headquarters in nearby Washington DC, Williams adds to the aura of local ownership conferred in the transaction.

Smith grew up in Baltimore, graduated from Baltimore City College, and has a track record of funding local good government measures aimed at corruption in Baltimore City. Despite his well-known interest in and support of conservative politics, Smith promised that they “have one job, to tell the truth, present the facts, period. That’s our job.” Co-owner Williams noted that “We just want to get back to journalism. We want to show that newspapers can work if you have the right partnership.” The paper’s publisher and editor-in-chief chimed in and expressed his hope that the new ownership will continue the Sun’s tradition of holding city government officials accountable via its investigative journalism, for which the paper has received multiple Pulitzer Prizes.

For those of us in the printing and paper-based industries, the most important aspect of the transaction may rest on Smith’s assertion that he plans to grow subscriptions and advertising for The Sun and the other publications by focusing on local and community news and by “boosting the use of video and social media and integrating technology in ways that other print media companies have been unable to do.” Backroom functions will continue to be provided by Alden’s Tribune Publishing company. No intent to acquire printing assets was mentioned.

Wealthy hotelier and Democratic politician, Stewart Bainum Jr., had previously attempted a conversion of The Baltimore Sun to the nonprofit model. Despite the commitment of $200 million of his own money, the effort failed. In response, he founded The Baltimore Banner, named after the famous star-spangled banner, the flag that flew over Baltimore’s Fort McHenry during the War of 1812 and which gave its name to our national anthem. The Baltimore Banner launched in 2022 with 42 journalists, with plans to eventually employ 100 full-time journalists. The Banner has hired some former Baltimore Sun journalists, as well as a former president of The Economist magazine. The Baltimore Banner is an all-digital publication, no printing or paper required.

Technology Company Acquires Print-Based Businesses

CherryRoad Media acquired the assets of Page 1 Printers*, a combination coldset web and full-color sheetfed printing company located in Slayton, Minnesota. The acquired company served the local newspaper, publication and general commercial print and mail markets. CherryRoad Media, based in Parsippany, New Jersey, was founded in 2020 with the mission to acquire, start-up, and build local news organizations with resident journalists in the communities it serves. Building its network of newspaper via acquisitions by the summer of 2023 to over 80 publications in 17 states, CherryRoad was primed to begin printing its own papers and acquired its first print operations with the purchase of Gannett’s printing operation in Hutchinson, Kansas. The acquisition of Page 1 Printers is the company’s second purchase of an existing print operation and supports CherryRoad’s interest in providing more print products, including color publications, to its network of newspapers.

CherryRoad Media is the newly-formed newspaper publishing division of the much larger CherryRoad Technologies. Founded in 1983 as an information technology company, CherryRoad Technologies is primarily focused on providing cloud-based information and communication services to local governments, public sector services including first responders, K-12 schools and higher education institutions, transportation systems, healthcare networks, as well as select private sector companies.

While certainly not eschewing print, as evidenced by the investment in two printing operations, the CherryRoad Media division clearly envisions that its added-value expertise in delivering digital technology to local organizations will be the connective tissue between the technology parent and the delivery of local news. As stated on its website, the company’s goal “is to bring secure, easily accessible, and affordable digital innovations to the communities where we work, live, and play.” Printed newspapers are the vehicle, digital transformation is the destination.

Alternative Ownership Models Link Print to Digital

Alternative models of ownership of local newspapers have emerged in tandem with the decline in revenues as advertising migrates to digital forms of communication. The Daily Iowan, the independent student newspaper owned by the University of Iowa, purchased two weekly local newspapers from Woodward Communications. The two papers, the Mount Vernon-Lisbon Sun and the Solon Economist, will now be operated under the auspices of the university’s School of Journalism and Mass Communication. With a combined total staff of only seven full-time employees, the acquired papers will get an assist from the more than 100 student journalists that work on The Daily Iowan serving the university’s student population.

Notably, the curriculum at the University of Iowa’s School of Journalism and Mass Communication is replete with courses about the business of media, ethical considerations in journalism, digital and gaming culture, video production, audio production, photography, newscast production, and narrative sports journalism, among other topics. But no courses are listed that focus on the delivery of news via the print medium. The two purchased local newspapers will continue to print weekly editions, and presumably will provide a link to the tradition of ink-on-paper as the next generation of journalists inexorably transition local news to digital media.

In addition to university ownership and partnerships, there are other trials underway in the effort to transform and save the integrity of local news reporting. Some are experiments at big-city papers, such as the switch to nonprofit status at The Salt Lake Tribune. Another alternate model is a sale to the National Trust for Local News, founded specifically to save local newspapers. (For more, see The Target Report: 116 Laps Around Fenway Park, Barefoot—July 2023.) In one model that has gained traction, local public broadcasting stations have acquired local papers, bringing their electronic media expertise to the local news business.

Impact on Printing and Paper Industries

The fate of the newspaper publishing business in Canada has been similar to the decline in the US and hit another failure point in January. Black Press Ltd. filed for creditor protection under the Canadian Bankruptcy and Insolvency Act, shortly thereafter filing for Chapter 15 protection in the US to secure its interests in Hawaii, Alaska, and Washington State. The company plans to restructure its debt and remain in business, publishing its newspapers while working through the insolvency proceedings. The company has lined up a buyer group that has made a stalking horse bid for the 94 newspapers it publishes in Canada, mostly in British Columbia, plus several titles in the US. In court documents, the company noted that it will be cutting costs by consolidation of its print operations.

Paper Excellence, the latest successor in a long line of owners of the Catalyst mill located in Crofton on Vancouver Island, has announced that the mill will indefinitely cease papermaking operations. In October, 2022, Paper Excellence announced the cessation of papermaking at this mill. Canadian federal government funding forestalled the shutdown, but after a two-year delay, it appears that the mill will now cease papermaking for the foreseeable future and operate only as a pulp mill. The machines at the Crofton mill primarily manufactured newspaper grades of paper.

* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Page 1 Printers in this transaction.