The Journal Communications, E.W. Scripps media property swap goes into effect today
New newspaper chain, Journal Media Group, starts its business life with only $10 million in reserves, but without old pension obligations hanging over its head
The day may by April 1, but it is a not a joke: Journal Communications really did trade its broadcast assets to E.W. Scripps for their print products. The deal, one of the stranger to ever be initiated in the U.S. media business, become effective today, and now both companies will look for ways to make it work.
“As dawn broke across our markets this morning, Journal Media Group continued a vital and proud tradition of providing communities with compelling public service journalism. That tradition started with the commitment of media pioneers Edward W. Scripps and Lucius W. Nieman and has continued for more than 130 years under the stewardship of The E.W. Scripps Company and Journal Communications,” said Tim Stautberg, president and CEO of Journal Media Group in true press release fashion.
From the outside, the merger/property trade makes no sense: no one, it seems wants to remain in print if choosing between print and broadcast. But unlike some deals, where the print company is split off and is saddled with massive debt, this deal actually is about ridding the print company of its debt.
Journal Media, the new newspaper company, will start life with a clean balance sheet: $10 million in cash and no outstanding deb. Scripps, on the other hand, gets all the qualified pension obligations. Such is the value of broadcast over print, that Scripps agreed to take over the debt in order to take over the broadcast outlets (and rid themselves of print).
“We’re excited to have the financial flexibility to make strategic decisions that will help our enterprise navigate the ongoing transformation of the local media landscape,” Jason Graham, senior vice president, CFO and treasurer of the newspaper company said.
Unlike the Gannett spin off, there is no trading of digital brands, and so Journal Media will be free to pursue its own way.
“Clearly the popular wisdom about pure-play newspaper companies is clouded right now,” Elizabeth Brenner, vice president and regional publisher for Journal Media Group, told the Milwaukee Journal Sentinel. “People look at newspapers — newspaper-based companies, because we’re a newspaper and a digital company — and they say, ‘Well, how are you going to survive?’ I think we’re going to survive the same way every media company is going to have to learn to survive. We’re going to evolve and increasingly become more digital but not abandon who we’ve always been and what got us here.”
Becoming more digital will be difficult for Journal Media. Like many mid-major newspaper companies, Journal Communications has not been enthusiastic developers of its own digital media products, outsourcing its replica e-edition app, and still uses a rather old-fashioned website design. (Disclosure: I once talked to the paper about online video and found them quite uninterested – though that was, admittedly, a number of years ago.)
But all this can change, and by having a portfolio of newspaper products Journal Media may find itself in a great position to experiment. While it will be very tempting to use the property merger to consolidate functions, hoping to save some costs, it will be important to let the individual newspapers try new things on their own, in an attempt to see what will work for them in their markets which include the Naples Daily News, The Commercial Appeal in Memphis, and Ventura County Star in California.