TABLOIDS, M&A TOP NEW YEAR NEWSPAPER NEWS NYT Co. buys into Boston Metro; DC's Washington Examiner to debut

NewsInc, Jan 10, 2005

Close on the heels of a report that indicates that newspaper mergers and acquisitions were up 43 percent last year, the New York Times Co. on Tuesday said it would pay $16.5 million to buy 49-percent ownership of Metro Boston, the city's commuter tabloid started in 2001 by Metro International SA of London.

The Times Co. publishes the Boston Globe and Janet Robinson, Times Co. president and chief executive, said in a statement that the investment, "furthers our long-term strategy of serving our audiences in Boston."

The companies said that Metro International would continue to manage the paper and that it would remain editorially independent of the Globe -- though the broadsheet would provide the tabloid non-exclusive news stories.

Patrick Purcell, owner of the Boston Herald, responded to the news by saying he would seek to have the deal overturned by the U.S. Justice Department. Of the acquisition, Purcell said, "It is clearly anti-competitive and not in the best interests of the general public or advertisers."

And Boston wasn't the exclusive venue of news about free tabloids last week -- Denver investor Philip Anschutz said through his Clarity Media Group Inc. on Monday that it would begin distributing a free daily newspaper in the nation's capitol starting Feb. 1.

The new paper will be called the Examiner, a nod to Anschutz' first newspaper acquisition, the San Francisco Examiner, a free daily tabloid that carries the historic Hearstian name.

Anschutz is an entrepreneur with stakes in professional soccer and basketball teams, movie theaters, railroads, real estate and oil -- the industry where he got his start.

Clarity purchased Journal Newspapers Inc. of Alexandria, Va., last September. Journal publishes two free suburban tabloid dailies, one in Northern Virginia and another in Maryland. Clarity is managed by former Denver Post president and publisher Ryan McKibben and former Post chief financial officer Frederick "Fritz" Anderson. McKibben's brother, Scott, is the publisher and president of the San Francisco operation.

In December, Clarity trademarked "The Examiner" in at least 68 cities around the country, ranging from Washington, D.C., to Anschutz' hometown.

Clarity has put Journal Newspapers on a growth-path, by doubling circulation of the existing editions to more than 200,000 and now, adding an edition for Washington. The Examiner will be distributed free to doorsteps in select Zip Codes and through newsracks.

Washington, of course, has another free tabloid daily -- Express, owned by The Washington Post Co. Started 17 months ago, today the paper distributes 175,000 copies per day.

Journal Newspapers has about 47 editorial employees and it is anticipated that to produce the Washington edition it will need fewer than 10 more.

Ironically, on Thursday the Miami Herald announced that a free weekly tabloid it developed is going to cease operations. The Herald said that it would shutter Street Weekly because of "consistent" financial losses. The "alternative weekly" was started by the paper in 1999.

On Monday a New York City investment bank released its tally of media mergers and acquisitions in 2004 and found that in newspaper publishing, the deals had increased 43.1 percent over 2003.

The Jordan, Edmiston Group Inc. (JEGI), said that there were 83 deals involving newspapers in 2004, up from 58 in 2003; the 2004 trades were valued at $4.8 billion, while the 2003 deals were $4.1 billion.

Overall, JEGI said, its survey showed that total media and information industries mergers and acquisition deals were up 31 percent for the year and that total deal value was up more than 50 percent, with more than 465 total media deals in the year and more than $30.7 billion changing hands.

Though newspapers showed a dramatic growth in the number of deals, large growth spurts were seen in newsletters (number of deals up 73.3 percent, though total deal value was down 33.6 percent), consumer books (deals up 72.7 percent, value down 64.6 percent) and on-line media (where deals were up 70.6 percent and value was up 198.5 percent).

The largest deal value growth factor was in conferences and exhibitions category, which was up 752.8 percent when comparing 2003 to 2004. Large value growth was also seen in business-to-business magazines (up 237.7 percent), database information services (up 150.2 percent) and the aforementioned on-line media.

Back in Boston, Steve Nylund, the president of Metro International's U.S. division, told the Associated Press that Boston Metro hadn't taken any significant number of readers from the Boston Herald.

"I don't think there's any hard evidence that we have stolen readers," Nylund said. Metros throughout the world are designed for quick, painless reading, with short wire service stories and almost non-existent local stories. The papers are heavy on sports and comics -- the kinds of things you can easily read while commuting on a train or a bus.

Nonetheless, the Herald and the Globe have been fierce competitors for decades, dating back to when Hearst owned the Herald and the Taylor family owned the Globe.