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$600-Million Sale : Times Mirror to Purchase Sun Papers in Baltimore

May 29, 1986|JOHN J. GOLDMAN and NANCY RIVERA BROOKS | Times Staff Writers

NEW YORK — Times Mirror Co. said Wednesday that it has agreed to buy the venerable Baltimore Sun newspapers and two television stations for $600 million in cash, believed to be the most ever paid for a daily newspaper.

The announcement was made jointly by Times Mirror, which publishes the Los Angeles Times and seven other papers, and A.S. Abell Co., private owner of the morning and evening Baltimore dailies, among the nation's most honored newspapers, and the two stations. Over their 149-year history, the Sun papers have been known for pioneering foreign correspondence and the acerbic wit of editor H.L. Mencken. They have won 12 Pulitzer Prizes, including two in 1985.

The announcement was made only a day after Hearst Corp. ceased publication of the city's only other daily, the News American, whose circulation had dropped to less than 101,000 copies.

"I am delighted that the Baltimore Sun will be joining Times Mirror. There is no finer newspaper organization," said William E. McGuirk Jr., Abell chairman and president. "In recommending a sale to Times Mirror, the welfare of the Baltimore Sun, our shareholders, our employees and the city of Baltimore and the state of Maryland has been our paramount consideration."

Robert F. Erburu, chairman, president and chief executive of Times Mirror, said: "We look forward to serving the city of Baltimore and the state of Maryland. We have acquired a marvelous newspaper in a substantial market."

The Baltimore Sun has a morning circulation of 204,774, and the Evening Sun has a circulation of 152,153. The combined Sunday Sun has a circulation of 427,785. The TV stations being sold to Times Mirror are WMAR-TV, the NBC affiliate in Baltimore, and WRLH-TV, an independent station in Richmond, Va.

Current FCC rules do not allow the acquisition by one party of a newspaper and a television station serving the same market, and it is expected that WMAR-TV will be sold before the deal closes.

Reg Murphy will continue as publisher and chief executive of the Baltimore Sun, Erburu said.

The Sun is the latest in a series of big-city papers to change hands recently. The Detroit News, sold to Gannett early this year, drew a price of $717 million. But that deal included five television stations, and analysts believe that the amount Times Mirror is paying for the Sun represents a higher price for the newspapers alone, when the TV stations are excluded.

'Record-Record Price'

John Reidy, a New York analyst who follows Times Mirror for the Drexel Burnham Lambert investment firm, said that the company is paying "a record-record-record price for a newspaper property."

The transaction, which was approved by directors of the two companies, is subject to a definitive agreement, the approval of Abell shareholders and clearance by government agencies.

Abell board members have agreed to vote their stock in favor of the sale and to recommend that all other shareholders also do so. More than 80% of the Abell stock is committed to the sale.

Newspaper analysts generally praised the acquisition. "It gives Times Mirror a very prestigious newspaper," said John Morton, Washington-based newspaper industry analyst at the investment firm of Lynch, Jones & Ryan, who was familiar with the negotiations.

"To the extent that journalistic luster has become a valuable commodity in the newspaper business--and it has, certainly--adding a paper of the stature of the Baltimore Sun will enhance Times Mirror's image as publishers of quality newspapers. Unlike their acquisitions in Denver and Dallas, they don't have to spend a lot of money turning this into a good newspaper. It already is one." Among Times Mirror's other large newspapers are the Denver Post, Dallas Times Herald and Newsday in New York.

In Growth Area

Analyst Reidy said the Baltimore Sun "is the kind of paper that Times Mirror likes. It's got good management and it's a single newspaper city in a growth area." Baltimore "had good growth characteristics" and is enjoying a real estate renaissance, he said.

Said James Goss, an analyst with Duff & Phelps brokerage firm in Chicago: "Any time you can get a paper that is basically in a monopoly position in a major market, it's going to be attractive." Times Mirror papers in Denver and Dallas have suffered in battles with strong competitors, he said.

In 1985, the Abell Co. had revenues of $204.8 million. The company's publishing revenues were $172.5 million.

Analysts agreed that the Baltimore Sun is profitable but could not provide figures because the paper is privately owned and does not release such numbers.

"I don't know how profitable it is, but I have no doubt that it's a goodly profitable paper," Reidy said.

Diluted Earnings

Morton predicted that the purchase price would significantly dilute Times Mirror's earnings for several years but, "in the long run Baltimore, has a bright future."

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