E.W. Scripps and Journal Communications merge media properties, will spin off newspapers
Merger, and spin off, creates two media companies: newspaper only Journal Media Group, and broadcast company E.W. Scripps
Who wants to own a newspaper? Certainly not those that currently do, and companies such as the Tribune Co. and News Corp have spun off their newspaper properties into new companies in order to separate out the print business from their broadcast holdings. Today, two smaller media companies, E.W. Scripps and Journal Communications, have merged in order to do that, as well.
The Milwaukee Journal Sentinel will now be the flagship newspaper for the newly formed publisher, headquartered in Milwaukee, called Journal Media Group. Meanwhile, a new broadcast company, which will retain the E.W. Scripps name, will be headquartered in Cincinnati. In essence, E.W. Scripps have traded their newspaper properties for Journal Communication’s broadcast properties.
“Everyone wins,” said Steven J. Smith, chairman and chief executive officer of Journal Communications. “It’s going to be a larger company than we have today with more employees than we have today.”
Well, that assumes that you actually want to own newspaper properties, of course – something few diversified media companies appear to want these days.
The new newspaper brand will own papers in 14 markets with annual sales around $500 million with EBITDA around $55 million, according the investor document on the deal. To sweeten the deal for investors, a $60 million cash dividend will be paid out.
Timothy E. Stautberg, currently senior vice president, newspapers at Scripps, will become CEO of Journal Media Group. He’ll have his work cut out for him as neither newspaper company is very digitally oriented, none have a Newsstand app, for instance, and each has taken the approach that their mobile and tablet apps are extensions of their websites (in other words, the Digital First approach, where “digital” means “web”).
Both, importantly, have been losing ad revenues at their newspaper properties.
Last quarter, while TV revenue increased 12.6 percent at Journal Communications, publishing revenue fell, though modestly at 2.7 percent. Operating earnings in publishing segment fell nearly 32 percent. At E.W. Scripps, newspaper revenue fell 3.7 percent for the full year of 2013, though profits were essentially flat.
At both companies, publishing operations were by far the smaller portion of its business. But Journal Communications, which has only one major newspaper, will now pick up the Scripps properties which include The Commercial Appeal in Memphis, the Knoxville News Sentinel in Knoxville, theVentura County Star in Camarillo, Calif. The new Scripps company will own 34 TV and 35 radio stations in eight markets.
“In one motion, we’re creating an industry-leading local television company and a financially flexible newspaper company with the capacity and vision to help lead the evolution of their respective industries,” said Rich Boehne, president and CEO of Scripps, who will remain with the now broadcast-only company.
As Journal Communications is the smaller company, its shareholders will now own 31 percent of the new Scripps company, and 41 percent of Journal Media Group.
Last month E.W. Scripps announced that it had hired J.B. Kropp as VP, digital strategy and business development. Kropp is a Cincinnati native and a veteran of Twitter where he was responsible for the Procter & Gamble account (if you are in Cincinnati that is what you do). One assumes he would continue with Scripps and work on the broadcast side.