Dan Primack, writing for PE Week Wire, says Pat Purcell is now actively soliciting bids for the Boston Herald and Community Newspaper Co., which comprises about 100 papers in Eastern Massachusetts. (“PE” stands for “private equity.”) First-round bids are due today, according to the item. Primack writes:
What exactly is for sale? Is it just the private equity consortium’s minority stake? Is it just the community papers? Is it also The Boston Herald itself?
The answer is that Wachovia [the financial firm that’s helping Purcell broker the deal] is seeking bids for the entirety of Herald Media Inc., and that it hasn’t been too receptive to partial proposals. Why? Because, on a cash-flow basis, the community newspapers are the jewel while the Boston Herald is the millstone. As I’ve discussed previously, community papers continue to outshine most big city dailies because (A) They often has exclusive news-you-can-use content (school lunch menus, pee-wee football scores, church events, etc.) and (B) Their classifieds have not been cannibalized too much by Monster, Craigslist, etc. This dichotomy is particularly striking in the case of Herald Media, where the big-city daily is a secondary read that doesn’t have much home delivery distribution outside the city limits. It also has been hurt by a free tabloid partially owned by The Boston Globe (thus lessening the Herald’s number of subway/bus readers).
To reiterate, bids are due today. Expect offers anywhere from 9x-12x cash-flow, and a new Herald Media owner by springtime.
Among the possible buyers, according to Primack: Enterprise NewsMedia, which owns the Patriot Ledger of Quincy and the Enterprise of Brockton. Kind of ironic, given that Purcell had long wanted to buy those papers himself.