Gannett Co. said Monday that it has agreed to pay about $300 million in cash for the Louisville Courier-Journal and Times newspapers, adding a third major newspaper property in the last year to the giant media chain's holdings and ending a nearly 70-year Kentucky journalism dynasty.
"It is not easy for me to see the Courier-Journal and Louisville Times pass from my family into other hands," said Barry Bingham Sr., whose family has been split by a bitter feud that forced the sale of its media empire. The Binghams' Louisville television station, two radio stations and a printing firm will be sold later.
6 Million Paid Circulation
"My distress is mitigated by the character of the owners who will now guide the destinies of our newspapers, the Gannett publishing company and its chief executive officer, Allen Neuharth," Bingham said.
The combined circulation of the morning Courier-Journal and the afternoon Louisville Times would make the papers the third largest of Gannett's 93 daily newspapers in 36 states. The proposed purchase would bring Gannett's total daily paid circulation to more than 6 million.
Gannett had been rumored to be the winner in the quest for the Louisville papers, besting other potential buyers that reportedly included Tribune Co. of Chicago and Washington Post Co. Before the official announcement was made Monday morning, newspaper staffers were tipped off by the overnight appearance of a USA Today newsstand in front of the two papers' shared downtown office and by a 6 a.m. newsroom visit by Neuharth, wearing a jogging outfit and looking for a cup of coffee.
For Gannett, the nation's largest newspaper group, the deal is the latest in a series of major acquisitions that seem engineered to garner Neuharth and the company the respect of the journalistic community that was lacking a few years ago when Gannett was known as the owner of a string of profitable but mediocre small-town newspapers, media watchers said.
Buying the Louisville papers "feels like winning the Triple Crown," Neuharth told the newspapers' combined staff at a meeting Monday. Gannett won bidding contests for the Des Moines Register and the Detroit News as part of a $1-billion, eight-newspaper spending spree during the last year.
Gannett "is a changed company," said Tom Goldstein, who teaches journalism at UC Berkeley.
"These are three highly respected newspapers," Goldstein said. "It shows a commitment to excellence that some people weren't sure was there. . . . It's a dramatic boost in their image."
Bruce Thorp, a Washington-based media analyst for the Lynch, Jones & Ryan brokerage firm, said Gannett has reached a size where such important acquisitions are possible. "They've gotten big enough now so they can expand their reach, and they've certainly been doing that--going after bigger markets, paying more and generally coming out of these deals pretty well," he said.
Small acquisitions don't make sense anymore for Gannett, said Victoria Butcher, who follows Gannett for F. Eberstadt & Co., a New York investment firm.
"They've become a much larger company, so to buy little-town newspapers isn't relevant anymore," she said.
One reason that Gannett has bought three large companies in the last year is because three companies became available, which doesn't happen too often, Butcher said. "They have to take the opportunities as they arise," she said.
Whether Gannett will make major changes in its new acquisitions isn't known. Some media critics contend that chain ownership "homogenizes" a newspaper and kills any local editorial flavor.
In his meeting with the Louisville newspapers' staff, Neuharth promised that local editorial decision making will remain and that "no one at Gannett will be telling you what to write."
Thorp said Gannett usually makes changes at its papers simply by introducing its news service, for example, but "I don't think there's a conscious effort to homogenize."
"There are things that group owners will do just because they're able to," he said. "The Gannett papers are very much local papers."
10% Pretax Profit Margins
Butcher said Gannett "will do whatever it takes to make money on it. They're very bottom-line oriented."
"Journalistically . . . they don't have a standard," she said. "Anything that works in the local community is fine with them."
Pretax profit margins at the Louisville papers are about 10%, well below the Gannett minimum of 20% and its 30% average, Butcher said. "We expect profit margins to double under Gannett," she said.
In addition to its daily newspapers, Gannett owns 40 non-daily newspapers and the USA Weekend magazine as well as eight television stations and 15 radio stations. It has agreed to buy another radio station in Seattle, which must be approved by the Federal Communications Commission.
It also owns North America's largest outdoor advertising firm and has units that specialize in research, marketing and commercial printing.
GANNETT'S LARGEST NEWSPAPERS
Includes some combined morning and afternoon papers; daily figures are for six months ended March 31, 1986.
1 USA Today 1,417,077
2 Detroit News 650,445
3 Louisville Courier-Journal and Times 295,965
4 Des Moines Register 227,766
5 Rochester (N.Y.) Democrat & Chronicle and Times-Union 226,968
6 Cincinnati Enquirer 190,686
7 Nashville Tennessean 120,825
8 Wilmington (Del.) Morning News and Evening Journal 120,247
9 Camden (N.J.) Courier-Post 108,360
10 Jackson (Miss.) Clarion-Ledger and Daily News 102,220
Source: Audit Bureau of Circulations