Times Mirror Agrees to Sell Denver Post for $95 Million : Texas Publisher Singleton Leads Acquisition Group; Comes on Heels of His Deal to Buy the Houston Post

Times Mirror said Monday that it has agreed to sell the Denver Post for $95 million in cash and notes to a group led by William Dean Singleton, the 36-year-old newspaper executive who only last week purchased the Houston Post for $150 million.

The deal, which is expected to become final in December, means that Singleton, whose privately held group of companies last year bought the Dallas Times Herald from Times Mirror, will own the trailing papers in the country’s three oil capitals, Houston, Denver and Dallas.

Times Mirror, which also publishes the Los Angeles Times, bought the Denver Post in 1981 for $95 million. It has since switched the Post from an evening to a morning paper and invested heavily in new equipment, promotion and staffing in an attempt to overtake the Rocky Mountain News, the city’s leading newspaper.

In fact, the Post won the 1986 Pulitzer for public service and succeeded in taking the lead in Sunday circulation. But its share of Denver’s advertising linage declined during Times Mirror’s tenure, slipping from 52% in 1980 to 46% this year, and the Post only briefly posted an operating profit for Times Mirror, according to Chairman Robert F. Erburu.

Newspaper industry analysts estimate that the paper posted pretax operating losses in 1986 somewhere between $2 million and $10 million, and they project similar losses this year.

Erburu, who cited the economic slump in Denver as a cause for the Post’s “significant financial losses,” said Times Mirror wanted to devote its resources to other priorities, such as the recently acquired Baltimore Sun, “a very large property . . . which requires substantial additional investment to reach its full potential.”

Victory Still Distant

Analysts differed on whether Times Mirror eventually might have become No. 1 in Denver. Nevertheless, they praised the deal, which, along with the earlier sale of the Dallas Times Herald, rid Times Mirror of its two unprofitable newspapers. Times Mirror owns eight newspapers and a variety of other media properties.

“Unfortunately, this is probably a good move,” said J. Kendrick Noble, an industry analyst with the brokerage firm of Paine Webber Mitchell Hutchins, “unfortunately, because they had a good management team in place, and given time and better economic conditions might have been able to win out, but victory was not yet in sight.”

Analysts viewed the $95-million price, however, as low, “a get-out price,” said Victoria Butcher, an industry analyst with the brokerage firm of F. Eberstadt & Co.

Bruce Thorp, an analyst with the brokerage firm of Lynch, Jones & Ryan, said Singleton is paying $370 per subscriber, a multiple significantly lower than the roughly $500 per subscriber he paid in Dallas and Houston.

Times Mirror said the sale would reduce the company’s net profit in 1987 by roughly 50 cents a share, or 11%, according to most industry projections, a signal that it is selling the Post for less than book value. Including $2.07 per share from the sale of assets, Times Mirror had earnings of $6.31 per share in 1986.

On the New York Stock Exchange, Times Mirror shares fell 87.5 cents to close at $98.625 Monday.

Times Mirror did not disclose how much of the purchase price would be in cash and how much in notes. Last year, slightly less than half the price that Singleton paid Times Mirror for the Dallas paper was cash.

Changing Times Seen

One difference in Denver is that Times Mirror will keep the Denver Post’s downtown land and buildings and the printing plant there--valued at $20 million--and lease them to the new owners. If included, they would have raised the price per subscriber closer to $450. But Singleton is getting a new, $56-million, 45-acre printing plant and warehouse outside town.

Industry analysts interpreted the Denver sale as a further signal that the days in which publicly traded media companies, such as Times Mirror, could afford to wage costly wars in two-newspaper towns had ended.

Analysts said that Singleton, as a private owner without the pressure of answering to public shareholders, can more easily absorb small profits over an extended period.

Times Mirror bought the 93-year old Denver Post at a time when some major publicly traded media companies still saw great potential in acquiring struggling newspapers, improving them and overtaking the competition. Knight-Ridder Newspapers exemplified that model in Philadelphia, where in little more than a decade its Inquirer drove the rival Bulletin out of business. The Inquirer is now considered perhaps the best of the Knight-Ridder papers.

In Denver, “Times Mirror did many, if not all, the right things,” said Joe Fuchs, an industry analyst with Kidder, Peabody & Co. But the Rocky Mountain News, owned by Scripps Howard, proved to be “an extremely well-managed competitor.” Then the Denver economy collapsed because of declining energy prices.

And it became increasingly clear in the 1980s that the Philadelphia model would be difficult to duplicate.

“I think the error was buying it at all,” said Butcher.

Times Mirror was among the many potential suitors who, after looking, rejected the idea of buying the Denver Post in 1980. The company changed its mind after entreaties from Post management. At the time, many industry analysts were surprised at the apparently high price Times Mirror paid: $25 million down, with $55 million to be paid in 10 years at 10% annual interest and the last $15 million to be paid in 20 years.

Privately, some industry analysts knowledgeable about the 1981 sale said Monday that the Denver Post might have closed if Times Mirror had not bought it.

Times Mirror officials Monday conceded that their attitude about owning anything but monopoly newspapers has changed. “I think the economics of newspapers . . . in situations where there is head-to-head competition in the same geographic area . . . is such that they are no longer attractive to us,” said Times Mirror President David A. Laventhol. “You can interpret this sale that way.”

Sees a Difference

Fuchs also speculated that the announced sale Monday confirms that Times Mirror “is moving into a different type of operating profile in which it wants to build long-term and short-term profits with consistent momentum” in quarterly profit growth.

Today, “places like Denver are perhaps better owned by private companies,” Fuchs said.

“I do think there is a difference between Singleton’s ability to operate the Denver Post as a privately held owner and our ability to operate it as a publicly held company,” said Erburu.

Singleton is buying the Post with retired New Jersey Publisher Richard B. Scudder and Media General, the Richmond, Va. media company. Media General will have the option to buy up to 40% of the Denver Post.

Analysts speculated that Singleton, who has a reputation for fierce cost cutting, might trim the Post’s expenses. “If the paper is losing $5 million a year and he can cut $10 million, he can cover the interest expenses of buying,” said Butcher.

Singleton indicated Monday that he thought the Post’s 1,175-person staff, which was trimmed by 156 earlier this year, was lean enough, though he said that the changes in the editorial personality of the paper were needed.

The sale will give Singleton’s Media News Group 28 daily and 28 non-daily papers. Media General owns four daily and 30 non-daily publications.