David Robinson News Business Reporter
The second-biggest shareholder of Lee Enterprises, the Iowa-based media company that owns The Journal Times, said Thursday that he wants to try to buy the company.
The Hoffmann Family of Companies, which owns just under 10% of Lee’s stock, said in a letter to Lee executives that it wants to have “open discussions” about buying Lee in its entirety.
The letter of intent from David Hoffmann, the company’s billionaire chairman, comes after Hoffmann has been steadily adding to its stake in Lee, which also owns publications in 73 U.S. markets, including the St. Louis Post-Dispatch and the Omaha World Herald.
In an interview Thursday, Hoffmann said combining Lee’s 78 newspapers with the 21 publications his company owns would create the second-largest newspaper company in the United States, behind Gannett.
“Local news and journalism is important to me,” Hoffmann said. “To me, it’s part of the fabric of America. I’ve had some success in my life, so it’s something that I’d like to invest in and try to preserve, and at the same time, I think we’ll be successful from an investment point of view.”
In a statement, Lee said it would evaluate any offer Hoffmann were to make.
“Lee’s board of directors and management team are committed to acting in the best interests of all shareholders,” the statement said. “Consistent with its fiduciary duties, Lee’s board of directors will carefully review any credible proposal to determine the course of action that it believes is in the best interests of the company and Lee shareholders.”
Hoffmann, in his letter, expressed concern about Lee’s intention to divest $25 million in non-core assets and its recent earnings, which included a net loss of $16 million during the final three months of last year.
He also said he hoped that, by purchasing Lee and combining it with the other media properties that he owns, it would allow it to support and grow the local news outlets.
“We believe this commitment represents a sharp contrast to other potential acquirors, such as non-local hedge funds and investment firms primarily concerned with increasing profits over jobs, local concerns and the power of quality journalism,” Hoffmann wrote.
“Today, more than ever, we embrace the concept that local news is a fundamental component of journalism and the communities it serves, and its preservation is in the best interest of a well-informed public,” Hoffmann wrote.
“I thought, now’s probably a good time to put my money where my mouth is,” Hoffmann said in the interview.
While Hoffmann said the declining sales of newspapers is likely to accelerate, he said Lee’s digital business, which now generates more revenue than its print products, is an asset.
“We believe deft management and navigation of this transition to be essential to Lee’s future viability,” Hoffmann wrote.
Lee’s stock, which has lost 26% of its value over the past year, rallied by almost 14% on Thursday after news of Hoffmann’s letter became public.
Hoffmann’s letter did not include any details on the price he might be willing to pay for Lee, although he indicated that he would like the process to move quickly.
While Hoffmann noted the decline in newspapers, he said he has no plans to move away from them.
“We’re pretty good at getting advertisers to advertise in the hard copy, as well as the transformation into digital media. We think there’s a place for both. And I’d like to preserve that,” Hoffmann said. “I, personally, still like reading the newspaper. A lot of my friends like reading the newspaper ... and I think we can create a new revival of that medium.”
Hoffmann said he spoke with Lee executives Thursday morning and told them the letter was coming. As he built his stake in Lee, Hoffmann had previously expressed interest in potentially acquiring more Lee newspapers.
“It’s been a very positive ongoing dialog. I don’t think they’re surprised about our letter. I don’t think very many people are surprised about our letter,” Hoffmann said. “We’re not an activist, we’re not antagonistic. We’ve been regularly talking.”
Hoffmann, whose net worth was estimated at $2 billion by Forbes magazine, operates dozens of businesses, from real estate developments and wineries to luxury transportation and manufacturers. In all, the Hoffmann Family of Companies employs more than 16,000 people.
“We have a strong record of success in the media industry, as evidenced by our ownership of 14 media companies, including our most recent successful acquisitions of the Napa Valley Register, St. Helena Star and Inside Napa magazine,” which it acquired from Lee.
Posts
No comments:
Post a Comment