Real Estate Riches Flow Into Newspapers -- As Moguls Buy Them

REAL ESTATE RICHES FLOW INTO NEWSPAPERS -- AS MOGULS BUY THEM
[SOURCE: Associated Press]
Subscribers, shareholders and advertisers may be leaving newspapers in droves but real estate moguls, of all people, are sinking part of their fortunes into the business. For better or worse, that gives outside magnates a growing role in newspapers at a time of dramatic change for an industry long dominated by traditional media ownership. The new players aren't all about real estate but have it at the core of their fortunes. They include Fortress Investment Group which purchased Liberty Group Publishing/GateHouse Media; Bruce Toll who bought The Philadelphia Inquirer and Philadelphia Daily News; and Sam Zell who just announced a deal for the Tribune Company. "When you think about it, there are a lot of reasons why real estate moguls would be interested in newspapers," said Morningstar analyst Arthur Oduma. Strong and predictable cash flows from media properties are a key lure, mirroring those in real estate holdings. Another draw is the acquired real estate itself, even though Zell's stated intent isn't to break up Tribune. The Chicago-based media conglomerate owns or leases 2.7 million square feet of office and production space in 289 U.S. locations alone with more than 1,000 acres of land, according to its annual report. Finance experts also say the ability to load companies like Tribune with debt and take them private minimizes the investment risk and makes the firms easier to run once they're away from Wall Street's harsh quarterly glare. The reliable cash flows make them better able to withstand the high debt loads.
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* GateHouse Completes $380 Million Purchase Of Copley Midwest Papers
GateHouse Media Inc. said Wednesday it had completed its acquisition of nine Copley Press Inc. papers for a net purchase price of approximately $380 million. With the purchase of the seven dailies, including the Peoria (Ill.) Journal Star; The State Journal-Register in Springfield, Ill.; and The Repository in Canton, Ohio, GateHouse now publishes 84 dailies in 19 states. The former Copley dailies have a combined circulation of 241,060. The deal includes two weekly newspapers with a combined circulation of 34,918.
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