Has the window passed on local ownership of The Tennessean?
According to multiple sources familiar with the deal, a Nashville-based group that included former Tennessean publisher Craig Moon and former Scene editor Bruce Dobie attempted to buy the daily paper this summer, offering more than $200 million for Gannett's Tennessee properties, which are led by the Nashville daily. But Gannett, which values the properties substantially higher, rejected the deal. As a result, prospects of the newspaper being sold in the near term are dim at best.
Neither Moon nor Dobie would comment. Nor would a Gannett spokesman when reached. But the daily papers would have included The Tennessean, The Leaf-Chronicle (Clarksville), The Jackson Sun, and The Daily News Journal (Murfreesboro), as well as weeklies The Dickson Herald and The News-Examiner (Gallatin). Nashville Lifestyles magazine is also part of that publishing group.
Gannett announced in August that it would split into two entities: one focused on broadcast and national digital properties, the other (which will own The Tennessean) on print publications and their websites. That proposed split likely locks The Tennessean into its current management until well after the new company is spun out into its own division.
One source, who was familiar with the deal but not part of negotiations with Gannett, said The Tennessean's profitability — the paper's profit margins exceeded 20 percent last year — made it an attractive option even in challenging times for the newspaper industry. The source added, however, that the prospective Nashville buyers thought the company's current management had damaged the paper's brand, and that both revenue and circulation could be improved.
In preparation for spinning off its print division into its own publicly traded company, Gannett has begun to cut costs at its newspapers, including a 15 percent staff reduction at the Tennessean. In public statements, management claims they will convert more positions to reporting jobs, but will have fewer editors and photographers. Many familiar names are already gone, including shopping columnist Cathi Aycock, sports writer Nick Cole, photo editor Tom Stanford, political writer Chas Sisk and editors Lisa Green and Toni Dew.
The hangup appears to be how Gannett values the paper. The company's stock price currently trades at roughly 6.6 times Gannett's EBITDA (earnings before interest, taxes, depreciation and amortization), a number that also reflects the company's more valuable broadcast properties. Most newspaper-only deals are valued substantially lower (typically, between 3.5 and 4.5 times EBITDA). Any transaction would likely include cash to help cover Gannett's tax bill.
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