Profile of a private company in Florida
Daytona's Michael Redding, backed by billionaire Warren Stephens, is betting big on the future of local newspapers.
Halifax Media-owned newspapers now have 300,000 readers in Florida.
Last month, Halifax Media, a Florida venture bankrolled in part by Arkansas billionaire Warren Stephens, bought 18 daily and weekly small-town newspapers in Florida’s Panhandle and in North Carolina. The deal came just six months after Halifax acquired 16 newspapers in six states. The buy took Halifax from a single newspaper in Daytona Beach with 88,685 in Sunday print circulation to a newspaper group with more than 658,000 in print circulation, more than 300,000 of it in Florida, making Halifax one of the largest media companies in the state.
"An active market"
Halifax Media’s announcement that it would buy 16 newspapers helped make 2011 a good year for newspaper acquisitions. Newspaper M&A firm Dirks, Van Essen & Murray, which represented Halifax, reports 71 newspapers changed hands in 2011 for a total of $788.75 million, the most dailies sold since 2007, when a record 91 went for more than $20 billion.
“I think there’s clearly an active market out there for the smaller newspapers. Prices are far below what they were. There’s even some prospect for modest growth going forward,” says Owen Van Essen, president of Dirks, Van Essen & Murray.
This year is shaping up to be even better. Warren Buffett’s Berkshire Hathaway acquired 63 Media General newspapers and Halifax bought 18 daily and weekly newspapers from Freedom Communications.
“At Halifax Media Group, we believe in the future of newspapers,” CEO Michael Redding said in announcing the purchases.
That belief makes Redding and Halifax contrarian investors. Halifax gobbled up papers at a time when conventional wisdom says the internet has done to newspapers what Henry Ford did to buggy whips.
Once, owning a media company in a growth state with market-dominating properties in tiny Panhandle towns and in Sarasota, Lakeland, Daytona Beach, Ocala, Gainesville and Winter Haven — as Halifax does — meant a ticket to fat profits. But the model has taken a pounding, most recently from the internet.
Newspaper print circulation peaked nationally in 1984 and has declined steadily even as the population has grown. Sunday circulation at the News- Journal in Daytona, for example, fell 21% in the past 10 years. Circulation at the 16 papers Halifax acquired in January is down, depending on the property, from 14% to 38% over the decade.
While the websites of Florida’s major papers all attract millions of readers, papers haven’t been able to get advertisers to pay to reach them at rates comparable to print ads. Meanwhile, print advertising revenue — where newspapers always made most of their money — has been dismal. Classified advertising, a high-margin business that once accounted for nearly a third of some papers’ revenue, has been eroded by internet sites likeCraigslist.
Standard & Poor’s expects that for the foreseeable future, uneven growth in digital revenue won’t offset double-digit average declines in print advertising revenue.