Tampa Tribune sold for $9.5 million

Tribune sold to Tampa Media Group, Inc., a new company formed by Revolution Capital Group.

Here's the release:

http://www.media-general.com/press/2012/oct8_12.html

 

Is it just me, or does that number seem insanely low?

 

I could see that as a sale price if there was an assumption of debt, but there's no mention of that taking place ... so I gotta wonder if MG is maintaining ownership of the building where the Trib staffers are relocating to ....

 

Media General recently filed papers with Hillsborough County to split that parcel of property into two parcels.

 

So it was bought by a bunch of venture capitalists?

That has worked out so well for other papers.

 

For that price, I'm surprised St. Pete didn't buy it and close it.

Sorry, I meant, the Tampa Times... (I'll never get used to that...).

 

Philadelphia paper sold in a spin-off in 2006 for $550 million.

Earlier this year it went at a bankruptcy auction for $55 million.

So the $9 million may seem insanely low but it's far more in the ballpark than anyone wants to admit. Every newspaper is, since they all share the common trait of they have no idea how they will ever make any money.

 

No, they all have no idea how they will ever make any money at the OLD profit margin ratios ... which is NOT going to happen ever again ...

 

It isn't about returning to old profit margins. It's about making any money at all. Metro papers are bleeding to the tune of tens of millions per year.

 

For comparison, the family that owns the Decatur (Ala.) Daily paid more than $9 million when it bought the Florence paper from New York Times group in 2009. That's a couple of papers with circulation around 25,000 to 30,000.

 

Here's the rub: If the Tribune hadn't been obligated to send such significant chunks of its revenue to the highly over-leveraged Media General (and, by extension, Wall Street), the newspaper would be far healthier than it is today. Profitable, even.

You have to believe Revolution Capital did its due diligence and came to the same conclusion. Nobody except Warren Buffett buys newspapers for vanity ... the numbers had to make business sense.

By purchasing the Tribune and keeping it as ownership-flat as possible, Revolution is giving the paper a fighting chance and stands a good chance at making some money in the process. There's no chance they'll see profit margins of 20%, like in the Trib's heyday. But 7% seems more more realistic, after eliminating the bloated MG from the equation. Some businesses would kill for that kind of return.

The real question now is if Revolution will stay true to its promise to invest in the company for the long haul, rather than stripping it and flipping it.

I am told there was a lot -- a lot -- of applause in the Tribune newsroom this morning.

By the way, if you want to see video from the companywide staff meeting:

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