$600-Million Sale : Times Mirror to Purchase Sun Papers in Baltimore
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.
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.
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.”
J. Kendrick Noble Jr., a media analyst with Paine Webber, agreed that the acquisition would dilute Times Mirror’s earnings for a time, but he added that “it’s not the sort of charge that analysts will be bothered by because it’s a good property that will contribute to the growth of the company over time.”
“It’s a little early to come up with specific numbers,” Erburu said in an interview. “We will have some dilution in our earnings for three to four years.” The company has reported profits of $237 million on revenues of $2.95 billion for 1985.
“We think, long-term, this acquisition has the potential to contribute very positively to Times Mirror’s earnings,” Erburu said.
The Sun newspapers had not been known publicly to be up for sale. Stock of the Abell firm is held principally by four families and the A.S. Abell Foundation. Erburu said that the acquisition was first discussed at an April 30 board meeting in Los Angeles. Directors expressed approval of the idea, and Erburu contacted McGuirk.
They met on May 13, and negotiations continued in Los Angeles, where, it is understood, Times Mirror increased its initial, undisclosed offer.
Used Pony Express
Over the years, the Sun has been a pioneer in newspaper innovations. Ten years after the Baltimore Sun was founded, it used the Pony Express to carry dispatches reporting the Mexican-American War and to tell President James K. Polk that his army was victorious. That strong tradition of foreign correspondence continues in the present papers.
H.L. Mencken, editor of the Evening Sun in the early part of this century, was one of the most important editors of his time. Mencken, the “bad boy of Baltimore,” began his career at the Baltimore Herald in 1899, moved to the Sun in 1906 and wrote for the paper regularly until 1948. As a curmudgeon, an iconoclast, a wit and a brilliant lover of language, Mencken used his column in the Sun to lash out at pomposity, prejudice and hypocrisy and made a career of lampooning those in authority and attacking what he considered low levels of culture and taste.
At the headquarters of the newspapers on North Calvert Street in downtown Baltimore, the announcement of the Times Mirror’s acquisition was greeted by surprise in the newsroom.
The news, coming one day after the announcement that the News American was suspending publication, was “like a one-two punch,” said Ernest F. Imhoff, an assistant managing editor, who added that, although unexpected, the sale to Times Mirror was viewed by the staff as positive.
The Baltimore Sun was founded by three partners, including Arunah S. Abell, who already was publisher of the Public Ledger in Philadelphia. The Evening Sun was started 76 years ago to serve the expanding Baltimore metropolitan area.
Worried About Future
In separate newsroom meetings, the staffs of the Sun and the Evening Sun asked about the future, especially of the afternoon newspaper. They were assured by publisher Murphy that the afternoon newspaper would continue. Although the business and production staffs are combined, the two newspapers have separate--and competitive--editorial staffs.
In addition to the Los Angeles Times, Newsday, the Dallas Times Herald and Denver Post, Times Mirror owns the Hartford Courant, the Morning Call in Allentown, Pa., the Advocate in Stamford, Conn., and the Greenwich Time in Greenwich, Conn. The company is also engaged in broadcast and cable television, book and magazine publishing and other informational services.
Times staff writer Gaylord Shaw in Baltimore contributed to this report.
LARGEST NEWSPAPER ACQUISITIONS SINCE 1983
Circulation figures represent averages for the six months ended March 31, 1986, according to the Audit Bureau of Circulations.
Paper Year Circulation Buyer Detroit News 1986 650,445 Gannett (Evening News Assn.) all day) (incl. 5 TV stations) Baltimore Sun 1986 356,927 Times Mirror (incl. 2 TV stations) comb. daily) Louisville Courier- 1986 295,965 Gannett Journal & Times comb. daily) Des Moines Register 1985 227,796 Gannett (incl. the Jackson, (morning) Tenn., Sun and 2 Iowa weeklies) Los Angeles Daily News 1985 148,133 Jack Kent (morning) Cooke New Haven (Conn.) 1986 130,000 Ingersoll Register & Journal- (comb. daily) Publications Courier Chicago Sun-Times 1984 631,808 Rupert (morning) Murdoch
Paper Price Detroit News $717 million (Evening News Assn.) (incl. 5 TV stations) Baltimore Sun $600 million (incl. 2 TV stations) Louisville Courier- $300 million Journal & Times Des Moines Register $200 million (incl. the Jackson, Tenn., Sun and 2 Iowa weeklies) Los Angeles Daily News $176 million New Haven (Conn.) $170 million Register & Journal- Courier Chicago Sun-Times $90 million