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FEATURE: New Media/Gatehouse announces acquisition of Savannah Morning News, and other Morris assets

PHOTO: The Savannah Morning News' building on Chatham Parkway in Savannah.  The company's local operations are located on the second floor, with tenants on the first and third floors. (Photo by Chatham County Tax Assessors Office.)

by Lou Phelps, Coastal Empire News

August 9, 2017 – UPDATED 12:57 p.m. - New Media Investment Group Inc. (NYSE: NEWM) announced today that it has purchased the majority of the remaining newspapers and assets owned by Morris Publishing Group,LLC, headquartered in Augusta , GA. Morris is the owner and publisher of the Savannah Morning News, Augusta Chronicle and the Jacksonville Times Union, in the Coastal Georgia region.

New Media’s newspapers are operated under the publishing brand of 'Gatehouse.'  The firm is one of the largest publishers of locally-based print and online media in the United States as measured by number of publications, with over 130 daily newspapers in their portfolio, and hundreds of weeklies and community websites. 

In the Coastal Empire, the other publications included in the sale are Beaufort Today, Bluffton Today, Bryan County Now, Business in Savannah, Effingham Now, Hardeeville Today, Hilton Head Island Today, Jasper County Sun, and The Sun Today.  Savannah Magazine is not part of the sale.  Morris will retain its magazine division. 

New Media has agreed “to acquire many of the newspapers and related assets from Morris Publishing Group, LLC (“Morris”) for $120.0 million,” the company stated today.  “New Media is acquiring many of the Morris portfolio of U.S.-based newspaper assets located across Georgia, Florida, Texas, Kansas, Arkansas, and Alaska. New Media is acquiring 79 publications including all eleven dailies, the largest of which are The Florida Times-Union (44,750 daily circulation and 68,591 Sunday circulation), The Augusta Chronicle (26,862 daily circulation and 31,682 Sunday circulation), and the Savannah Morning News (21,588 daily circulation and 26,048 Sunday circulation),” the company confirmed.  Morris also has a travel publication division that is not addressed in the announcement.  

In addition to the print publications, the acquisition includes Morris’s Main Street Digital group, substantially all weekly and niche print products and all related websites and digital operations.

Gatehouse has been an innovator in the newspaper industry, moving the production of the majority of its newspapers to one centralized production facility in Austin, TX., and has had a strong focus on digital advertising for a number of years. 

“New Media is very excited to welcome the Morris publications and their employees into our Company,” said Michael E. Reed, New Media President and Chief Executive Officer (pictured at right.)  “For over 80 years, the Morris family has built and operated an incredible collection of local media assets. We are honored that the family has chosen us to uphold the rich tradition of journalism and innovation they have established. This transaction will expand our footprint into new states and add some very attractive markets to our local media portfolio. We see strong synergies between our two companies and look forward to the value creation opportunity that will exist as we combine the portfolios.”

Reed announced that William S. “Billy” Morris III, chairman of Morris Publishing, will remain as publisher of The Augusta Chronicle and will oversee editorial-page policy for the three Morris newspapers in Georgia. (pictured below)

According to Morris, “Since 1929, the Morris family has had a great love and passion for journalism and the local communities that they serve. However, every newspaper company in America is battling trends and redirected advertising dollars, so it is necessary for newspapers to be part of a large newspaper group to build and maintain the necessary resources to compete. We are deeply grateful for the many friendships and business relationships we have enjoyed for these many years and look forward to the impact the next generation will make.”

The purchase price is within New Media’s stated acquisition range of 3.5x – 4.5x the seller’s ‘Adjusted EBITDA.’  The firm has now spent almost $900 million in acquiring newspapers since New Media was formulated, with a new publicly-traded company.

Locally, the Savannah Morning News' circulation has decreased dramatically over the past five years, according to audit information available through the Alliance for Audited Media, and the company has secured less than 1,000 digital-only subscribers. 

The transaction will be funded with cash on New Media’s balance sheet.

“We expect it to be highly accretive to free cash flow with net synergies of $10-15 million. We expect the transaction to close early in the fourth quarter,” Reed added.

Moorgate Securities and Avondale Communications acted as financial advisors to Morris Publishing Group in connection with this transaction.

As of June 25, 2017, New Media/Gatehouse was operating in over 555 markets across 36 states, with a portfolio that includes over 2 630 community publications and over 550 websites that serve more than 225,000 business advertising accounts, and reaches over 21 million people on a weekly basis, according to the company. 

© Copyright by 2017, a digital publication of Coastal Empire News, Savannah, GA. All Rights Reserved.

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