VANCOUVER “” Amid the struggles of the U.S. newspaper industry and a real estate meltdown that has hit California particularly hard, David Black still believes an ailing San Diego daily has value.
Mr. Black, who controls about 150 mostly small newspapers in Canada and the United States, and Los Angeles-based Platinum Equity agreed to acquire the San Diego Union-Tribune yesterday for an undisclosed price. This, just one day after the venerable Seattle Post-Intelligencer farther up the West Coast published its last edition on paper.
The deal vaults Victoria-based Mr. Black from the community-newspaper league in Western Canada where he has made his name and into the higher-stakes business of U.S. newspaper publishing as many big names are retrenching.
Despite swiftly shrinking advertising revenues and heavy debt loads that are impaling many newspapers, the business still has fundamental strengths, Mr. Black said yesterday after the deal was announced. Many newspapers still have solid readership, between papers and their websites, and an improving position in local markets compared with radio and TV stations, he said.
The trick is getting from here – a deep recession – to there, recovering some ground in classifieds, and adding more local retail advertisers to papers.
“I believe in newspapers, and so does Platinum,” Mr. Black said yesterday afternoon in an interview. “There’s a lot of advertisers out there that we’re not calling on and we have to figure out how to get them in to the newspapers.”
Mr. Black’s privately held Black Press Ltd. of Victoria is about 20 per cent owned by Toronto Star owner Torstar Corp. In a blaring and brutal sign of the newspaper times, Torstar values its Black Press stake, which it bought in 2002 for $20 million, at zero.
Many of Black Press’s titles are small, mostly located in Western Canada and many published weekly. Black Press also owns some U.S. papers, led by its largest holdings, the Honolulu Star-Bulletin and the Beacon Journal in Akron, Ohio.
Several months ago, Black Press bumped up against private equity player Platinum Equity bidding for unnamed properties. They discovered they had entwined interests and complementary skills: Mr. Black knew the business, and Platinum had a lot of money – its funds have attracted more than $3-billion in funds.
So Mr. Black, individually, teamed up with Platinum, and they won the Union-Tribune, whose roots date to the 1860s.
Mr. Black serves as a director and adviser for Platinum, a firm that says its expertise is in “businesses facing complex operational challenges in declining or transitioning markets.” Mr. Black, working with a firm with stakes in, among other things, fibreglass, North American Hispanic telecommunications, and construction crane rentals, will be the newspaper man.
Newspapers face the greatest crisis in the history of the business. Every paper is hurting. Denver’s Rocky Mountain News, among others, is freshly dead. Once-unassailable titles such as the San Francisco Examiner teeter.
“This is what I’ve done for a long time now in my life, so I have a pretty good feel for it,” Mr. Black said. “I don’t have to go to a mountain top and reflect for months to figure out some of the basics in our business. It can’t be grey. It has to be colourful, local, entertaining, topical and witty.”
It won’t be easy. Further cuts, Mr. Black suggested, are likely.
But it will come back, he is certain. Newspapers such as the Union-Tribune have the intangible and valuable asset of solid trust and local acumen. Newspapers, through this decade, rode the economic, real-estate-fuelled bubble, greatly bolstered advertising and especially lucrative classifieds, which have all crashed, a fall made infinitely worse by unserviceable debt loads.
Never mind Craigslist.
Gaining some of it back, and expanding a presence with local advertisers, makes it add up, Mr. Black said, especially in places like San Diego.
He wouldn’t talk about potential plans in Canada or the possibility that about properties owned by the heavily-indebted CanWest Global Communications Corp. could emerge for sale.
In San Diego, at least, the sun will shine tomorrow.
“Well, other than the fact it’s one of the nicest cites in North America, it’s a great market,” Mr. Black said. “It’s a market you know is going to keep growing.”
By David Ebner
March 19, 2009