San Diego Union-Tribune Sold To Private Equity Firm

SAN DIEGO — The parent company of The San Diego Union-Tribune said Wednesday that it agreed to sell its flagship newspaper to a private equity firm for an undisclosed price, a rare vote of confidence in an industry that's hurting so badly that several other once-prized newspapers have been unable to find buyers.

Copley Press Inc. agreed to sell the dominant newspaper in the nation's eighth-largest city to Platinum Equity, based in Beverly Hills, Calif., eight months after it put the newspaper on the block. It marks the end of the Copley family's run in the newspaper business, including 80 years as San Diego's dominant media company.

Louis Samson, a principal at Platinum Equity, called the newspaper "a good fit."

"The Union-Tribune is more than a business. It's an institution in San Diego," Samson said. "But it faces enormous challenge in a period of tremendous upheaval for the newspaper industry. We will bring a strong operational focus that helps ensure the Union-Tribune not only survives in this market, but thrives."

Like much of the newspaper industry, the Union-Tribune's fortunes have sagged as readers have migrated to the Internet.

Gene Bell, the newspaper's chief executive, told employees in January that the Union-Tribune's advertising revenue fell 40 percent since 2006. He said then that the newspaper faced a "challenging" environment in its search for buyers, forcing unpaid furloughs and other cost-cutting measures.

Asked at a staff meeting Wednesday whether the newspaper was profitable, Bell said he didn't want to answer, then, after a pause, "It depends on the week."

Platinum said its team includes David H. Black, whose company, Black Press Ltd. of Canada, owns dozens of community newspapers, mostly in western Canada, and has expanded in the United States with acquisitions of the Honolulu Star-Bulletin in 2000 and the Akron (Ohio) Beacon Journal in 2006.

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"The Union-Tribune is a premier media property in an outstanding market," Black said in a statement.

Mark Barnhill, a Platinum principal, said Black will help the equity firm navigate the newspaper market but declined to specify what role he might play at the Union-Tribune. The Honolulu Star-Bulletin reported that Black would be a part-owner.

"He kind of teamed up with us early in the process," Barnhill said. "David will continue to be part of this process going forward."

The Union-Tribune is Platinum's first newspaper purchase. The firm owns a variety of technology and manufacturing companies, including steel processor Ryerson Inc., communications gear maker USRobotics and crane rental company Maxim Crane Works.

The deal is expected to close in three to six weeks, said Bell, who plans to leave the company. Editor Karin Winner said her future depended on the new owner's plans.

"In my heart of hearts, I'd like to stay," she told dozens of staffers.

The Union-Tribune is the nation's 23rd-largest newspaper with a weekday circulation of 269,819 during a six-month period that ended in September, down 3 percent from a year earlier but better than the newspaper industry's 4.6 percent annual decline, according to the Audit Bureau of Circulations.

Some newspaper buyouts by private equity firms haven't panned out well.

The Star Tribune of Minneapolis filed for bankruptcy protection in January, burdened by heavy debt it took on when it was bought by Avista Capital Partners LP in March 2007.

The owner of Philadelphia's major daily newspapers filed for bankruptcy protection last month. Philadelphia Newspapers LLC publishes The Philadelphia Inquirer and Philadelphia Daily News.

The Union-Tribune won a Pulitzer Prize in 2006 for its reporting on the bribery scandal that landed former Republican Rep. Randy "Duke" Cunningham in federal prison. Since then, it has made drastic cuts to its staff that included closing its Washington, D.C., bureau.

Platinum probably was able to pick up the Union-Tribune at a bargain-basement price, said Benchmark Co. analyst Edward Atorino.

"It just shows there are some people still out there who are interested in these old media properties that still have some brand equity," Atorino said. "As long as you don't have to invest large amounts of capital into them, you can probably make a go of it."

In another hopeful sign, Gannett Co. now believes it will be able to sell the Tucson (Ariz.) Citizen to one of two bidders instead of closing the 139-year-old newspaper on Saturday, as had been planned.

E.W. Scripps Co. stopped publishing the 149-year-old Rocky Mountain News last month because it couldn't sell it and the 146-year-old Seattle Post-Intelligencer put out its final print edition Tuesday after owner Hearst Corp. gave up trying to find a buyer.

The Union-Tribune reported that other companies known to have considered buying the newspaper include Tribune Co., publisher of the Chicago Tribune and Los Angeles Times, MediaNews Group Inc., publisher of the San Jose Mercury News and The Denver Post, and Los Angeles billionaire Ron Burkle's Yucaipa Cos.

The Union-Tribune traces its roots to 1868. The Copley family had four publishers spanning three generations.

Ira Copley, an Illinois businessman, bought The San Diego Union in 1928 and was publisher until 1947. His son, James Copley, took over until 1973 and James Copley's wife, Helen, was publisher until in 2001. Helen Copley named her son, David Copley, to replace her.

The Union, a morning newspaper, merged with the Copley's afternoon paper, the Evening Tribune, in 1992.

In 2006, Copley sold the Torrance, Calif., Daily Breeze and three Los Angeles-area weekly newspapers to Hearst Corp. for $25.9 million. Hearst transferred the papers to MediaNews. Copley sold nine newspapers in Illinois and Ohio to GateHouse Media Inc. for $380 million in 2007.

The Union-Tribune reported Wednesday that Copley sold the Borrego Sun, a community newspaper east of San Diego, to Patrick Meehan, a part-time resident who runs HandMade PLC, a British entertainment firm.

Dean Nelson, director of the journalism program at Point Loma Nazarene University in San Diego, said Copley's editorial positions have been "relatively conservative, status quo and pro-business."

He was encouraged that Black will be involved, given his track record in Akron and Honolulu.

"Can you turn a newspaper around?" Nelson said. "I think the answer is no. Can you keep it from going under? Yes, you can in some diminished state."

___

AP Business Writers Michael Liedtke in San Francisco and Anick Jesdanun in New York contributed to this report.

Comments

[CurtisEMayle]

A little background on the acquiring company which is owned by Tom Gores. Tom and Alec Gores operate holding companies, Platinum and Gores Technology. They have a successful history of buying very distressed companies, then extracting the cash out (management fees) and gut the companies of their expensive talent. Traditionally, they acquire technology companies and leverage them for product maintenance revenues and cleanup the balance sheet for re-sale (absent the intellectual property and talent that would make the company viable). This would be the first publishing company acquisition. Rarely do their companies produce new products; it's simply not their objective ... too expensive. I'm unaware of any growth investments with any companies. The "turnarounds" they perform are only to the extent that the owners can extract maximum profit as a result of downsizing and other operational "efficiencies". They seed the top-level management staff with their own team which follow their very limited agenda; extract cash, don't spend cash. Other than for the owners and their key execs, I'm unaware of any concern for stakeholders of their companies, i.e., employees, vendors, or community. I have had direct executive corporate experience with and for them.

[Bitsko]

Sorry to hear about the loss of jobs, but this is one fanatically right wing newspaper we didn't need.

[Prattvictory2]

I heard David Copley sold because he wanted to spend more time with his family.

[planetjeffy]

UT is completely devoid of news. I've been reading the LA Times instead for years.

[Prattvictory2]

I read the Times, I used to read them both. The Times isn't what it was.

[MagisterLudi]

NY Times is the only daily worth reading in U.S. Period.

[Bitsko]

I've been saying that about the LA Times for twenty years, since they stopped writing those epic multi-part news stories.

[obamaworship]

http://www.flickr.com/photos/coyote2012/3328598465/

[MagisterLudi]

Spam. do not click.

[obamaworship]

Until this happens, we won't get ANY news!

[shockmagog]

Couldn't happen to a better right wing k.o.o.k rag.

Hopefully, good riddance.

[lletaa]

The union is best used as cat box liner or puppy training. Their recomendations for elections are always straight republican down the line. The editoral page is like fox news or cnbc with 75% conservative viewpoints. But what would you expect from San Diego, very conservative city.

[lwaxanatroi]

San Diego used to be a very conservative city. But remember, it elected Donna Frye as mayor. (I do realize she isn't sitting in the mayor's chair, but that's not because she received fewer votes than the current occupant). I think the city is ready for a different voice from its newspaper, one that questions development projects instead of mindlessly backing anything the developers want. Heck, if we get such a paper, I might even read it. I swore off the U-T when its Sunday political sheet contained columns from the right, balanced by--a column or two from the further right. Something along the lines of "Why Bush is Better" on one side with "Why Kerry Is Rotten" on the other. So whoever these Beverly Hillbillies are, they have a fighting chance of putting out a more centrist if not liberal rag.

[Prattvictory2]

Remember it elected Susan Golding, Dick Murphy and now former police chief Jerry Sanders as mayor. Bonnie Dumanis the Republican District Attorney never sides with the public in police shootings.

It may be more blue than before but its still a Republican town with a Republican power base.

[liberaldiva]

Actually the city of San Diego is more blue than people realize. I'd say we're more moderate leaning slightly left. As a city we've been voting Dem in the Presidential election for quite some time. Obama carried the county this last Presidential election. It's our neighbor to the north the OC that is more conservative than San Diego. And as another poster pointed out our real mayor is Donna Frye (a Dem) . She just got the shaft unfortunately. As for the Union -Tribune. They have been so out of touch it's ridiculous. They do not represent America's Finest City. They're less useful than toilet paper.

[andyg]

Donna Frye losed the race, Jerry Sanders won.

[CurtisEMayle]

I lived in San Diego for 50 years and am now in Orange County. According to the polls (and empirically), you are correct about how the demographics have been trending. Both counties have become bluer, though OC still has deep pockets of red, dark red, but there is a moderate evolution.

As for the papers, Union-Tribune and OC Register, I'd also agree that tp is much more useful.

[dougbob]

The Huffington Post is too addicted to the old media, and this story proves it.
There were plenty of local bloggers and alt media reports on this sale, yet they took the easy road out and ran the AP story. (And, yes, as a citizen-journalist, I did submit a story to huffpo) The U-T's history of anti-trade unionism and collusion with corrupt business barons are simply glossed over. The decline of the San Diego Union-Tribune was about the slow death of of one of most reactionary papers of the 20th century.
Here's reporting about the sale with a more local flavor: http://obrag.org/?p=5380 or http://lastblogonearth.com/2009/03/18/black-and-platinum-intiially-offered-15-million-for-the-union-tribune/ or http://www.voiceofsandiego.org/articles/2009/03/19/economics/856uniontrib031809.txt

[JBCinSD]

We quit subscribing years ago, not because of the internet, but because of the reactionary, far-right-wing of the editorial page. The paper's position is not even thoughtful conservatism - just knee-jerk.

The Pulitzer for the Cunningham story was only partly deserved - the UT's reporters didn't discover Cunningham's corruption b/c they never looked. All they did was follow up once the corruption was discovered by a real estate agent. They fail to hold our local politicians accountable and have even closed their Washington office.

The Copleys never understood that San Diego evolved from a town of right-wing retired military to a city with a vibrant university, biotech and research community.

The UT can't get worse. I hope against hope that the new owners will see the opportunity and hire some seasoned, intelligent reporters and editorial-page editors and revive the paper. Since Sam Zell has gutted the LA Times, some good newspaper people may be available.

[BurgessPenguin]

I used to live in SD and remember avoiding the editorial page like the plague. Now I live in Las Vegas where the Review-Journal's editorial lean is to far to the right, the damn newspaper is about to capsize.

[obamaworship]

Won't stop this from happening

http://www.flickr.com/photos/coyote2012/3340867099/

[philipwitak]

re: "...Copley­'s editorial positions have been "relatively conservative, status quo and pro-busine­ss."

in the interests of accuracy and honesty, better make that 'relentless right-wing drivel.'

[mybostonjack]

As a resident of San Diego, my opinion is that a new buyer can only improve (hopefully) this daily fish wrap....

[Prattvictory2]

As a kid I used to deliver the San Diego Union. I have refused to buy it under the current owners. I doubt if the new ownership is going to bring much change.