Following the announcement of New Media Investment Group's plans to acquire "substantially all" of Stephens Media’s assets, Warren Stephens said it was one of the best investments he's ever made and that it was time to pass it on to better management.
Stephens said in an interview with Arkansas Business that his family saw an "outstanding" return on investment.
"Despite the decline in ad revenues over the last five, six years in newspapers, the Donrey/Stephens Media investment's probably going to go down as our best investment of all time. Now are [newspapers] as good as they were back in 1993? No. But I still think they're a good investment," Stephens said.
Stephens said the deal with New Media, which announced that it would pay $102.5 million in cash for the Stephens Media assets three months after it acquired Warren Stephens' other newspaper chain, had been in the works since late last year. He said the deal takes the family out of the operation side of newspapers.
"I think we're really financial investors, we're not really newspaper operators, and I think you've really got to have some people whose business it is providing local media coverage to figure out what the balance is between print and digital and how you pay and charge for that," Stephens said. "We weren't doing a very good job of that, so after things had stabilized and improved in 2014, we just felt like maybe somebody else could and would do a better job than us."
New Media said in a news release that the Stephens Media newspaper chain has a daily circulation of about 221,000 and 244,000 on Sunday. The deal is expected to close in the first quarter of this year.
Michael E. Reed, New Media’s President and CEO, said in a statement that the company was "very excited to welcome Stephens Media into our growing New Media family."
"We are pleased to announce the proposed transaction to acquire Stephens Media. The portfolio is anchored by an attractive set of print publications with a strong community focus, solid readership base, and stable advertisers with limited customer concentration," Reed said. "These award-winning, daily newspapers are the trusted source of local news in their communities providing journalistic excellence for more than 100 years."
Reed said that in New Media’s first year as a publicly traded company, it has entered into agreements to acquire $457 million in local media assets, which includes the $280 million purchase of Halifax Media.
"We are very pleased that each of these acquisitions has met both our financial and operational criteria. As we begin 2015, we remain focused on operating the Company to drive strong revenue trends while integrating newly acquired assets and assessing future acquisition opportunities," he said. "Looking forward, we feel very optimistic about our ability to continue to create tremendous shareholder value."
Ed Moss, president and CEO of Stephens Media, said in a statement that he was "extremely pleased for all of our employees."
"New Media is well positioned to build off of our company's successes and lead the organization to new heights with their strong portfolio of print and digital products and services. We have dedicated and talented employees that will prove to be great assets to the outstanding organization that New Media is building," Moss said.
Stephens Media, jointly owned by Warren Stephens and his cousins, Witt Stephens Jr. and Elizabeth Stephens Campbell, has laid off dozens of reporters, editors and printing staff in Arkansas and sold papers in Hawaii and Washington since Moss took over as CEO in December 2013.
Arkansas Business reported in December that the family’s interest in newspapers appeared to be waning following the sale of Halifax Media — partially owned by Stephens and headquartered in Daytona, Florida — to New Media.
But according to filings by New Media with the U.S. Securities & Exchange Commission, Halifax made money for Stephens before he sold it for $280 million. Before downsizing that chain, Stephens assembled 36 newspapers for just over $243 million and sold them off, in total, for almost $298 million.
Stephens Media began in mid-1993 when the Stephens family acquired Donrey Media from the estate of founder Donald W. Reynolds. The company included 53 daily papers, 71 non-dailies, a TV station and 11 outdoor advertising companies.
More than 20 years later, the company now consists of 11 dailies and 64 other publications. In Arkansas, Stephens owns the Pine Bluff Commercial, the Southwest Times Record in Fort Smith and 15 non-daily papers. In Nevada, its holdings include the Las Vegas Review-Journal.
Stephens Media is also part of a joint venture with the Arkansas Democrat-Gazette’s owner, Wehco Media, called Northwest Arkansas Newspapers LLC. Stephens said that partnership remains in place.
While Stephens has gotten out of the operations side of newspapers, he said he still has about a 26 percent interest in the California Newspapers Partnership run by Digital First Media.
"We actually talked to other newspaper groups about investing in them," Stephens said. "We haven’t done that, but we certainly understand the business, we understand the challenges, so anytime there's an industry we feel like we're comfortable in and know, we'll certainly take a look at it."
He added that, "This phase has pretty much come to an end; that doesn't mean there will not be future phases, other investments in print media."