Media General, which owns several Virginia newspapers, including the Richmond Times-Dispatch, is looking to unload its newspaper operations. From a company press release we learn:
Media General said it has received inquiries from several third parties regarding the potential purchase of certain of its print assets. The company wishes to ensure that any divestiture it may make maximizes shareholder value.
Media General has indicated in recent months that it will consider asset sales at valuations that reflect the strength of its properties as a means of reducing total debt outstanding over time. The company noted that the valuations of local media properties in recent merger and acquisition transactions, including local newspapers, have reflected the strong market positions of the entities being sold. Media General’s newspaper brands are the leading print products in their core markets.
The company said there can be no assurance that any transaction will take place. Media General provided no definitive timetable for the evaluation process to conclude. Additional information will be provided if and when the company enters into a transaction.
Given that Media General owns a number of print properties, it’s anyone’s guess as to which might be on the block.
But there’s ample reason for them to field offers. Staying in print is only getting more costly, as the company’s 8-K notes:
Newsprint expense in the third quarter increased 19.5 percent from last year’s quarter. Consumption decreased modestly, while the average price per ton this year was $598, which compared with $494 per ton in 2010.
But the bigger reason for a sale? The company is eyes-deep in debt:
Debt at the end of the third quarter was $665 million.
That’s against $144 million in revenues. The math doesn’t look promising.
