The Business A 125-year-old weekly newspaper located in a historic, rapidly growing rural community (population 3,500) in a Great Lakes state. A white-collar crowd continues to flock to the region covered by the paper (population 50,000), which is within an hour's drive of a major metropolis. Paid circulation of the 24-page weekly is approximately 5,700; a weekly advertising supplement is distributed free to another 15,500. Ads generate 90% of revenues.* * *
Financial Summary 1988 1989 1990*
Gross revenues $502,000 $582,000 $620,000
Pretax profit $82,000 $113,000 $120,000
Outlook Pretty favorable: there are no direct competitors in this paper's town. As a group, community weeklies have been the fastest-growing segment of all newspapers. This paper's region has so far proved recession-resistant: unemployment continues to decrease; population, the price of homes, and the number of new businesses continue to increase. The paper's nearly 20% profit margins are excellent, says one insider who notes that margins can range from 8% to 18% for suburban weeklies.
Price Rationale The price includes assets necessary to assemble -- but not print -- a paper; a five-year renewable building lease; and two dozen or so dedicated employees who presumably will remain. Newspapers are idiosyncratic and difficult to evaluate, but some analysts say that one to one-and-a-half times gross is the right ballpark, so the price for this paper is a little high.
Pros The paper has doubled its revenues in the past five years without raising subscription rates. There's an opportunity for a new owner to continue with advertising supplements and raise subscription rates, which are cheap (roughly half the industry standard).
Cons Deadlines, angry letters to the editor, and a readership that might not embrace change (the current owner has been at the helm for three decades). Given that the price is no bargain, a new owner will need to be good with numbers as well as words. -- Alessandra Bianchi* * *
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Bolitho-Sterling & Associates, Kansas City, Mo., (816) 374-7645. n