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.
"We learned that giving away our products back in the beginning of the internet was not our best move. Pay walls are now inevitable.”
— Halifax CEO Michael Redding
Their parent’s prestige didn’t save the local papers from industry trends, however. Over the decade, the group’s 44% increase in new digital revenue (off a small base) was swamped by a 12% drop in circulation revenue and a 50% drop in ad revenue. Revenue for the regionals came in at $260 million in 2011, a 39% drop over the decade. Last year, the Times group wrote down the $152-million goodwill value of its regional newspaper group to zero.
Halifax hasn’t said much about its plans for the papers and their 2,900 employees, but several factors provide some indication of the company’s thinking and strategy.
- The papers are in small markets where a newspaper still can dominate the news business and not have to worry about competition from the multiplicity of sources faced by metro papers.
- Halifax has taken steps to improve margins. As it did in Daytona, it has cut staff at the former Times papers. Poynter Institute for Media Studies in St. Petersburg reported in February that Halifax laid off 30 employees at the Times regional group headquarters in Tampa and instructed the remaining 20 to relocate to Daytona or be laid off. The Times papers already shared a common web format. Some papers in nearby markets shared administration and support.
Halifax: The Players
• Halifax Media has three major investors: Stephens Capital Partners, Redding Investments and Jaarsss Media.
• Halifax’s point man is CEO Michael Redding, a former Daytona Beach News-Journal ad executive living the wage-slave’s dream of buying his one-time employer. Before Halifax, he worked for newspaper chains Gannett, American Publishing Co. and Liberty Group and founded HarborPoint Media, owner of the Leesburg Daily Commercial and other papers.
• HarborPoint got its papers from a company led by Better Built Group’s Rupert E. Phillips, a Destin investor whose interests through the years included the Honolulu Star-Bulletin and papers in Arkansas.
• Arkansas happens to be the home state of billionaire Warren Stephens, whose Stephens Media holdings include the Las Vegas Review-Journal and small-town papers in nine other states.
- The company bought viable businesses. Though diminished in recent years, the 16 Times group newspapers Halifax purchased churned out a $36.6-million operating profit last year. And Halifax’s investment is protected on the downside by the asset value of those properties, which it bought essentially for scrap prices — at a discount to the value of their real estate and other property.
The Times had pegged the net asset value of the papers at $159 million. Halifax paid $143 million for the lot. (Halifax took on $74.2 million in debt to close the purchase.) It didn’t disclose terms for the 18 small papers bought in June from Freedom Communications.
In his written comments, Redding said, “Maybe someday the printed product in its current form will be discontinued, however we don’t think it will be anytime soon.”
In Redding’s view, print advertising still gets results. It fell because businesses cut expenses as consumers cut spending. “Newspapers for the most part were the largest part” of companies’ advertising budgets, Redding wrote. “We are starting to see that trend flatten off and beginning to turn the corner.”
His partner Stephens, in an interview with Forbes magazine’s Steve Forbes, professed a belief that readers eventually will recognize the value of professionally produced local news. “We have a joke around the office about people that are always in their pajamas blogging. Well, that’s not really news; that’s not really professional reporting. I’m interested in reading someone that’s thoughtful and a professional journalist that’s had an editor question what their sources are and improve their writing and get the story as tight as it can be,” Stephens said. “I just don’t think there’s any way you’re going to get local news, sports, politics from any other source but your local newspaper.”
With the newspaper industry’s future clouded, Halifax now is routinely mentioned as a possible acquirer of other chains and properties, including Media General’s Tampa Tribune. On the question of additional acquisitions, Redding didn’t respond.
Halifax Media newspapers the Tuscaloosa News in Alabama and Sarasota Herald-Tribune have won Pulitzer Prizes, but both won for work done while owned by the New York Times. When Halifax bought the News-Journal in Daytona in 2010, CEO Michael Redding announced to readers a shift in opinion-page policy at the liberal paper. “Our own editorials will champion free enterprise, individual rights and responsibilities, and the importance of community involvement,” Redding wrote.
After the Times deal closed this year, Halifax drew negative attention within the industry for a short-lived attempt to get employees of the former Times newspapers to sign non-competes. Redding backed off and requires them now only of new hires.
Online postings have had plenty of negative things to say about Halifax, but complaining reporters are common and across the industry, newspapers routinely have cut pay, staff, benefits and resources to stay alive. If Halifax’s cuts affect the quality of its papers, it won’t be the first.