Ottaway Buys California Paper

NewsInc, April 21, 2003

Building up its presence in California, the Dow Jones & Co. Inc. subsidiary, Ottaway Newspapers of Campbell Hall, N.Y., last week bought The Record, of Stockton, from Omaha World-Herald Co. for $144 million. The paper sold for 12-times-earnings before interest, tax, depreciation and amortization (EBITDA) and four-times revenues.

Ottaway has owned the Santa Cruz County Sentinel since 1982; Santa Cruz is 100 miles from Stockton and both communities are long-distance commutes to San Jose and the Silicon Valley.

The World-Herald Co. has owned The Record since 1994, when it purchased it from Gannett Co. Inc. Prior to Gannett, the paper was owned by Speidel Newspapers, which merged with Gannett in 1977. The newspaper broker Dirks, Van Essen & Murray of Santa Fe, N.M., represented the World-Herald Co. in the deal, which is expected to close by June.

The Record had a paid Monday-Saturday morning circulation of 58,764 and a Sunday circulation of 72,502, according to the Sept. 30, 2002 Audit Bureau of Circulations report.

Stockton is the seat of San Joaquin County, which had a 3.4 percent growth rate between 2001 and 2002, according to U.S. Census figures released last week. Slightly fewer than half the residents of the county live in Stockton. It is primarily an agricultural community, though because of its proximity to Sacramento and the Bay Area, a large amount of new housing is going up throughout the county. The median home price in February for San Joaquin County was $245,000 versus $540,000 in San Francisco or $445,000 in Silicon Valley.

Dow Jones said that the paper and all its affiliated publications had combined 2002 revenues of $37 million and EBITDA of $10.6 million. The company projects the group to generate full-year 2003 pro-forma revenues of approximately $38 million and EBITDA of $12 million.

Considered a troubled child during its Gannett days, the World-Herald people seem to have spruced The Record up a bit. It will be difficult to make a cluster out of Santa Cruz and Stockton, but maybe there's more to this transaction than meets the eye. Stay tuned. ...