William Dean Singleton, the 36-year-old deal maker suddenly emerging as one of the nation's most aggressive newspaper barons, Thursday announced plans to buy the Houston Post from its Canadian owners for $150 million in cash and a possible future payment if revenue grows.
The deal would give Singleton, who already owns the Dallas Times Herald, papers in Texas' two biggest cities, though both are trailing in their markets.
The sale also would end the four-year stewardship of the Post by the Canadian tabloid publisher Toronto Sun Publishing Corp., which brought its saucy newspapering techniques from Canada and managed to maintain its advertising market shares, but continued to suffer circulation losses in the sagging Houston economy.
The Post, which publishes mornings, trails the all-day Houston Chronicle in circulation by 96,000 weekdays and 175,000 Sundays, according to figures from the Audit Bureau of Circulation. The Chronicle also enjoys 61% of the retail advertising in Houston, compared to the Post's 39%, and 66% of the classified advertising, compared to the Post's 34%.
The sale of the Post, which is expected to become final in November, would give Singleton's Dallas-based MediaNews Group Inc. 27 dailies with a combined circulation of more than 1 million, enough to rank his company among the top 10 in number of dailies. MediaNews also owns 28 non-dailies.
In an interview Thursday, Singleton said he first approached the Post's owners more than a year ago and again in January, but was turned down.
Last spring, Singleton then tried to buy the rival Houston Chronicle, but the nonprofit Houston Endowment Inc. instead chose to sell to Hearst Corp. for $400 million. Singleton complained that his rejected bid had been $15 million higher, and, after a brief inquiry by the Texas attorney general, Hearst raised its bid to $415 million.
In August, Singleton--a Texas native who, along with his newspapers, has acquired a reputation for ruthless cost cutting--turned again to the Post. In the negotiations, according to Singleton, the Sun still insisted that Singleton's offer of $150 million was too low, arguing that the currently troubled, oil-dependent Houston economy would soon improve.
To come to terms, Singleton agreed to an unusual formula, whereby if the Post's revenue grows he will pay Sun Publishing $1.25 for each $1 of growth in the Post's revenue over the next five years, a condition that industry analysts said Thursday will put even more pressure on Singleton to squeeze the Post's profit margins.
Although he expressed faith in the Houston economy, Sun President Doug Creighton said Thursday: "We believe the benefits of selling the Post to MediaNews Group on a basis which permits us to participate in future Post revenues outweigh the benefits" of owning the paper outright.
Said Gene McDavid, vice president of the Chronicle: "The competition here has been so severe, I can't imagine anything could happen (under Singleton) to make it worse."
The sale marks the second time in four years that the Post has changed hands. The Sun company bought the paper in October, 1983, for $100 million from the Hobby family, led by Texas Lt. Gov. William P. Hobby. Hobby is the son of former governor William Hobby and his wife, Oveta Culp Hobby, a former secretary of health, education and welfare.
During the 51 years the Hobbys owned it, the Post was part of the Texas establishment, conservative and conventional, but by the early 1980s the rival Chronicle, owned by a public foundation made up of other civic leaders, was significantly widening its lead in circulation.
Sun management brought in modern presses and added more color printing, provocative tabloid style headlines and what one official from the rival Chronicle called a "saucier" approach to news. Missing, though, was the "FUNshine" pinup girl featured in the company's Toronto Sun.
In the four years since the Sun company bought the Post, Houston has suffered economically and the paper's circulation has shrunk by more than 90,000. During the same period, the Chronicle's circulation dropped by about 50,000.
Singleton said the $150-million purchase price was "a little more than 10 times operating profit," which would mean that the Post earned $15 million on a cash-flow basis, before interest payments, depreciation and taxes.
The Sun, however, reported that after paying the debt and depreciating the cost of new presses the Post posted a loss.
Newspaper officials familiar with the Houston market said the Chronicle similarly is making a profit only on a cash-flow basis, and losing money after depreciation and debt payments.
Since 1985, Singleton's name, virtually unknown 2 1/2 years ago, has been associated with almost every newspaper auction in the country, including the sale in 1986 of the Daily News, then located in Van Nuys.
Singleton said Thursday that he had no plans to make changes at the Houston Post. However, as one rival executive at the Chronicle put it, "I would suggest you look at every other property he has purchased."
At the Hayward Daily Review, Fremont Argus and Tri-Valley Herald in Northern California, for instance, Singleton fired roughly 20% of the employees, including 25% of the news staff, shortly after taking over.
The week after purchasing the Dallas Times Herald, Singleton laid off 109 employees, roughly 9% of the staff.
Rhona Schwart assisted in the research of this story.