Report: Hedge Fund Vultures Circle Standard-Times' Carcass
SAN ANGELO, TX — The local paper may have a new owner soon, according to a report in the Wall Street Journal.
The Journal reported that Gannett, the parent company of the San Angelo Standard-Times, is being eyed for takeover by a hedge-fund-backed media group called Digital First Media, but officially named MNG Enterprises, Inc.
Digital First offered $12 per share for Gannett, a 23 percent premium over Gannett’s $9.75 per share closing price Friday. The Journal reported Digital First already has a 7.5 percent stake in the newspaper company most widely known as the publisher of USA Today.
Gannett owns and operates hundreds of newspapers throughout the country, including AZCentral.com, The Jackson, Miss. Clarion-Ledger, and the Des Moines, Iowa Register.
In Texas, in addition to the Standard-Times, it owns the El Paso Times, the Corpus Christi Caller-Times, the Wichita Falls Times Record News, and the Abilene Reporter News.
In all, Gannett employs 17,000 workers throughout its newspaper properties.
Digital First owns 97 papers, including the Denver Post, according to its website. The Journal reported it owned about 200.
In 1920, Missouri newspaperman Houston H. Harte purchased the San Angelo Evening Standard, and then merged it with the San Angelo Morning Times in a later acquisition. The Standard traced its history back to 1884. In 1927, Harte joined Abilene publisher, Bernard Hanks, at that city’s paper, the Reporter-News, and together the two entrepreneurs formed Harte-Hanks Communications and took over newspapers throughout the region.
The Standard-Times building at its current location at Harris Ave. and Irving St. was built in 1951 with a basement and foundation sturdy enough to expand the structure upwards to 10 floors high, according to the book, San Angelo: 1950s and Beyond. In 1984, the building was renovated and an additional 10,000 square feet added, to make the building 48,000 square feet in size.
Rumors that the Standard-Times building is up for sale have circulated for more than a year, but no public listings have been located. There are also the assets of the newspaper inside and the brand.
According to a source inside the local banking industry, last year, a group of local San Angelo investors attempted to make an offer to purchase the newspaper and its real estate. The investors felt that San Angelo needed a reputable and sustainable newspaper for the city’s continued economic development.
According to our source, the local investors were unsuccessful convincing Gannett to sell.
The news of Digital First’s possible takeover of Gannett comes a month after Gannett’s President and Chief Executive Officer Robert J. Dickey announced his retirement. Gannett also lost the head of its online marketing arm, ReachLocal, that it acquired in 2016. According to a Gannett press release, ReachLocal CEO Sharon Rowlands left Gannett in December to pursue other opportunities. Her replacement is a former chief revenue officer named Kevin Gentzel.
If Digital First is successful in its takeover of Gannett, it will be the fourth owner of the Standard-Times since 1997 when Harte Hanks sold the San Angelo newspaper to the E.W. Scripps Company. Scripps was bought out by the short-lived Journal Media Group in 2015 before Gannett acquired JMG in 2016.
Update 1/14/2019 at 11:51 a.m.
Bloomberg reported this morning that MNG Enterprises (Digital First) made an unsolicited hostile takeover bid for Gannett in the amount of $1.36 billion. Shares shot up to $11.75. According to the report:
"A deal would turn MNG, backed by hedge fund Alden Global Capital, into the largest owner of U.S. daily newspapers. MNG already has more than 200 daily and weekly titles, including the Denver Post and Orange County Register, and has been eliminating jobs to try to squeeze profits from the troubled sector. The moves have drawn protests from journalists.
"The cash offer of $12 a share by MNG represents a 23 percent premium to Gannett’s closing price on Friday."