For the third time since the Jackson family sold the paper in 1986, the New Haven Register has a new out-of-town owner. And for the third time, management claims that new ownership will mean new investment in the paper.
It didn’t work that way the last two times. It’s unclear whether it will this time, although the mood at the company has brightened.
The new owner is a $3 billion New York-based hedge fund called Alden Global Capital. The company was already an investor in the Journal Register Co. (JRC), the Yardley, Pennsylvania-based chain that owns the New Haven daily along with 17 other dailies, among other properties. It was announced Thursday that Alden has bought the company outright.
The company, which is privately held, didn’t reveal the terms of the deal.
Alden has been picking up financially troubled newspaper companies such as Dean Singleton’s MediaNews Group (whose vice-president for news is a refugee from a previous Register bloodletting, David Butler) and Philadelphia Media Network, which owns the Philadelphia Inquirer.
The company will continue to be called Journal Register. And John Paton, Journal Register’s CEO, is staying on under Alden.
Paton took over the once-reviled company after it emerged from bankruptcy protection in August 2009 and set about revolutionizing it. (Read about that here.) Under the slogan “Digital First,” Paton has pioneered an aggressive shift in the company to embrace the web and new technology, earning national plaudits (most recently in this profile in the Columbia Journalism Review’s July/August edition) for possibly pointing the way to make legacy newspapers more profitable. Journal Register also claims it earned $41 million in profits before taxes and interest in its most recent fiscal year, and that it boosted internet ad revenues by close to 70 percent.
Paton said Friday that Alden’s purchase represents a vindication of the company’s success. And he stated that it will mean renewed investment in the chain’s news organizations, along with a continuation of “Digital First.” That strategy calls for making cuts and consolidation only in the printing and back-office business ends of the company’s newspapers, while at least maintaining editorial and advertising staffing levels and investing in digital cameras, newer computers, and other gizmos.
“Alden was an early investor in JRC post-bankruptcy,” Paton wrote in an email message. “They have had a courtside seat to our turnaround. They like our Digital First strategy, and their investment yesterday is their endorsement of our strategy.
“As for the [Journal Register] name, it stays the same. Personally, I think as the company grows and becomes much more Digital we should contemplate a name change to reflect that.”
Knowledgeable independent analysis of the deal has been hard to find. The field of financial analysts of the newspaper industry has shrunk considerably along with newspaper profit margins in recent years. And when JRC went private, outside access to independently verifiable financial information became limited.
One observer still keeping watch, Craig Huber, a media research analyst with the firm Access 342, expressed doubts about the sale.
Huber has followed the newspaper industry for over 15 years. He worked on the Journal Register Co.‘s initial public offering in the mid-1990’s while at Morgan Stanley.
“I’m extremely skeptical anyone buying newspapers can fix what has been ailing them over past 10-plus years. Sam Zell at Tribune could not fix the long-term erosion of newspaper advertising and circulation. Nor have the management teams at various public newspaper companies. I certainly do not have a solution,” Huber said.
He predicted that Alden Capital will “go in there and try to cut costs even further than the previous management teams have done. In terms of internal investments, there are very few worth doing at a newspaper company; in fact, most public newspaper companies are going the opposite direction. Further, the timing of this transaction is very odd to me given the dire state of the economy which seems to be getting worse, and the increased local advertising competition from various ‘daily deal’ websites like Groupon and LivingSocial.”
One critic of the company in recent years — Rick M. Freeman, who went to court to try to stop court approval of the bankruptcy plan in 2009 —seconded Paton’s assessment of JRC’s financial worthiness. He said the sale confirms that the company “was, and is, a profitable enterprise.”
Freeman, who invests in media businesses and buys and sells ad space for a living, at one point owned 8 percent of JRC. “They are obviously betting on the fact that the newspaper industry is not dead,” he said of Alden. “They’re picking up some very good assets at very good prices.”
The Road To Here
When a chain headed by Ralph Ingersoll Jr. bought the Register in 1986 from longtime owners the Jackson family, it actually bought two New Haven newspapers: the then-afternoon Register and morning Journal Courier. It soon closed the JRC and began publishing the Register in the morning. Waves of layoffs followed, until the newsroom shrank to a mere fraction of its former strength.
Ingersoll bailed in 1990. A New York investment firm, Warburg Pincus, took over the firm; at the time people associated with the Register claimed that could mean new investment, since investment firms have lots of money. Instead, the new corporate bosses fired New Haven Register CEO Tom Geyer when he refused to make more cuts, and embarked on a series of new cuts (including eliminating water coolers) that became legendary in the business.
The cost-cutting fueled profits for the Journal Register Co. for years, until debt (from expansion) and declining readership (form decreased value) caught up with it, and the company went belly up.
By all accounts, the persistent gloom has lifted in the company’s newsrooms, as reporters have become part of an experiment in trying to make for-profit journalism pay.