Farewell To More Family Dynasties
The Berkshire Eagle and the Lesher papers in California follow the Raleigh N&O into the arms of chains.
John Morton (firstname.lastname@example.org), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.
The Raleigh News & Observer, the Berkshire Eagle in Pittsfield, Massachusetts, the Lesher papers in California – one after another, well-known family dynasties are being taken over by newspaper chains. How long will this go on?
Not very long, for the simple reason that there are few traditional family dynasties left. By my count, only 77 independently owned, family controlled newspapers of 30,000 circulation or greater remain in the United States, and by the time this piece sees print the number may be smaller. These papers represent about 5 percent of the 1,525 or so dailies still in business in the United States.
There remain about 380 independently owned dailies with circulations less than 30,000, but because of their size and lack of visibility their acquisition by a chain does not capture the imagination the way the sales of better known newspapers do.
Concentration of ownership in the newspaper business has been growing with a vengeance over the last 25 years or so. The only thing unusual about this is that, compared with other industries, ownership concentration has come rather late to newspapers. And still, compared with automobile manufacturers, grocers, steel makers, retailers and most other businesses, the newspaper industry remains diverse in ownership.
About 455 individual companies own the nation's dailies (this number is approximate because it changes practically every month). Of these, 129 now own (or soon will because of pending deals) 80 percent of the total. These are the companies known as chains (most owners prefer the blander title "group").
In fact, calling many of these companies chains is a bit grandiose – 53 of them own newspapers with total circulation of less than 50,000, and another 33 have total circulation between 50,000 and 150,000. These smaller chains are mostly family companies that have grown over the years by buying up nearby properties.
The Berkshire Eagle, a distinguished small-town daily of 30,000 with a Pulitzer in its past, was itself the flagship of a chain of three smaller dailies in nearby New England cities. Total circulation of the company's papers: 62,000.
Lesher Communications is a somewhat larger example; when the company recently agreed to be taken over by Knight-Ridder it owned four dailies with total weekday circulation of 185,000.
Indeed, smaller family chains are no less targets for acquisition by big chains than individually owned newspapers, as the Lesher sale demonstrates. Ten years ago there were 155 chains instead of 129, and there were 65 with total circulation of 50,000 or less instead of 53. The decline in the number of smaller chains is almost wholly because of acquisitions by larger ones. This growth by the bigger companies means that the 15 largest chains now control 53 percent of the nation's total daily circulation; 10 years ago, the top 15 controlled 49 percent.
The reasons newspaper families sell out have not changed significantly over the years.
If a large percentage of the ownership resides in one person, that person's death might force heirs to sell in order to pay high estate taxes, unless careful estate planning has been underway for a long time, a rarity. Although it is not known whether concern about taxes drove the sale of the Lesher papers, it followed the death of patriarch Dean S. Lesher.
More often, a newspaper might be sold before a death to avoid estate taxes, since the capital gains tax is usually much lower.
Ownership frequently becomes dispersed among many family members, since most family controlled papers are in their third or fourth generation. Many family members have no active role in the newspaper and may become disenchanted with the level of dividends and the management practices of the family members who run the paper. Selling out is one way to resolve the inevitable conflicts.
Of course, plain old financial problems can also bring about a sale. The Berkshire Eagle company made a bad $25 million real estate investment just before the New England economy collapsed in 1990, and that burden finally forced the family owners to sell.
One new element that may be entering into sellers' thinking is the looming challenge posed by the electronic information highway.
Whatever the reasons, about 460 newspaper companies of all sizes, from very small dailies to chains as large as Donrey Media, have changed ownership over the last 10 years.
When I wrote on this subject 10 years ago, I said we were witnessing the beginning of the end of family newspaper dynasties as we have known them. That observation was occasioned by the sale of a family controlled newspaper in Des Moines.
Since then, family dynasties have disappeared in Baltimore, Boston, Detroit, Honolulu, Houston, New Haven, Tacoma and dozens of smaller cities. Ten years from now, the list is sure to be much longer. l ###