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Aug. 9 - COMMENTARY: Sadness Versus Realities in the Sale of Morris’s Newspapers

Category: Editorial & Opinion

By Lou Phelps, Publisher, Coastal Empire News

August 9, 2017 – My phone is ringing off the hook,and the emails are pouring in: “What’s YOUR take on the sale of the Savannah Morning News?!”  So ... here it is. 

Many of the Savannah Business Journal’s business readers are aware that in addition to owning Coastal Empire News, I own Phelps, Cutler & Associates, a national media consulting firm. PC&A works in the areas of both general business strategy and mergers & acquisitions for newspapers across this country, founded in 1991 in the Boston area. I also sit on the board of a very successful, independently-owned daily newspaper group in Indiana, and stay on top of what is going on with media transactions and the challenges of the print daily newspaper business. 

The sale of the Savannah Morning News and Morris’ other publications has seemed inevitable for a number of years.  William “Billy” Morris III, who has been the mainstay of the company since his mother gave him control of the Savannah Morning News and the former Evening Press, tried turning the company over to his son, Will, a number of years ago.  That didn’t go well.   

The company also had a spectacular bankruptcy filing, seeking protection from more than $550 million in debt.  They restructured, sold off a majority of assets, and held on to 11 daily newspapers and a family of weeklies, magazines and specialty pubs.

But, Billy is now in his 80’s.  There just comes a time when a family-owned company must make these types of decisions.

There has also been other issues hanging over the Morning News – significantly declining circulation, and a failure to attract a paid digital-only reader.   Ask a current advertiser of the paper what they believe the circulation of the Morning News is - what are they paying for - and you will get surprising answers.

In fact, Monday through Saturday, the Savannah Morning News'  home-delivered penetration in Chatham County has dropped to a very low penetration level. Home delivery subscribers are the guts of a newspaper's impact in the community.  Those with home delivery are the people who vote in elections, who buy cars or decide to try a new dentist.  With so many tourists in Savannah, single copy circulation, on the other hand, can be of less value to local advertisers.

That type of information can cause pushback from advertisers, and may be an issue that Gatehouse will have to address going forward – taking a hard look at planned advertising rates under their ownership.

Pick your reason why circulation penetration in Chatham County is so low:  many would say they perceive the paper as ‘mean-spirited’; ‘They manage the news’;  ‘There is little in depth coverage of the big issues’;  and on and on.

In their defense, the daily news business is TOUGH – whether with a print/digital or a digital only model.  And, there are some good journalists at the paper.  Paying for them takes advertising, and the competition for ad dollars is fierce, primarily now from outside forces, such as Facebook ads, and remnant buys available to colleges and car dealerships.   

The company that bought the Morning News also owns MY former Boston-area weekly group, The Mariner Newspapers. We sold 18 weekly newspapers in the Boston suburbs in 1988 to ABC/Capital Cities, who later flipped it to Fidelity Investments, who later flipped it to Gatehouse.  I know the President of Gatehouse – the guy who actually runs the company – Kirk Davis.  He’s a great guy, and it’s an innovative company that is striving to provide community news across the U.S.  

It is therefore disappointing to many to read today that Billy Morris will continue to control the editorial content of Savannah and Augusta.  We will have to wait to see how it all shakes out, in reality.

Gatehouse is now staggeringly large, a mega-corporation that is publicly traded on the New York Stock Exchange.  That fact puts enormous pressure on companies to meet the market’s expectations on profit performance.  Look for personnel cut announcements.

And, the purchase price was very low.  At only $120 million for 11 dailies and all of the assets of the company, including its niche publications in each market, the SMN had to have been valued at not much more than $5 to $6 million.  The largest Morris property, the Times Union in Jacksonville, had more than double the circulation of Savannah, and Augusta is much larger, as well. 

The Savannah headquarters on Chatham Parkway, assessed for $35 million by the Chatham County tax assessors, is not part of the transaction.  If other real estate across the U.S. was included in the assets sold, then the newspapers went for even less. 

The Savannah Business Journal has been a hard-news competitor to the SMN in certain news categories, for 19 years, with an unbelievably dedicated group of readers and advertisers.  But, there is still a real sadness for me, in this sale.  The history of independently-owned, community-focused newspapers is part of the fabric of this country.   

We’ll keep reporting on the big business, government and political stories that affect our beloved city, county and state, and watch for the changes ahead. 

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