Halifax Media’s CEO, Michael Redding of Daytona Beach, Fla., joined last month with Stephens Capital Partners of Little Rock to invest $143 million in 16 community newspapers within an industry that has allegedly tanked.
Redding’s reasons: Good selling prices now, and his confidence in economic improvement and the future of printed newspapers.
“Profits should be going up from the bottom,” he told Outtakes last week.
Technology changes, economic recession and greatly reduced profit margins have contributed to generalized pessimism in the newspaper industry. Redding acknowledged that pessimism.
“Really, it’s coming down to misunderstanding about the value of newspapers. In these sizes of markets, they are solid investments,” Redding said. “When you talk about what is normal [profit-wise], it’s going to be half of what it used to be, but it’s still respectable compared to most businesses.”
Market pessimism didn’t deter the CEO of Stephens Capital Partners, part of Little Rock investment banking firm Stephens Inc., from partnering with Redding to buy newspapers. And Warren Stephens has experience with newspaper investments: He owns Stephens Media of Las Vegas jointly with his cousins Witt Stephens Jr. and Elizabeth Stephens Campbell.
There is no plan to combine Stephens Media and Halifax Media, Redding said. The two companies are separate and only have a small amount of overlapping ownership.
Stephens Capital, Redding Investments of Daytona Beach and Jaarsss Media of Destin, Fla., joined in 2010 to form Halifax, which purchased the 16 newspapers from The New York Times Co. on Jan. 6.
Redding declined to describe how ownership of Halifax is divided. Stephens Capital executives Jackson Farrow and Noel Strauss of Little Rock and Phyllis Riggins of Dallas are on the Halifax board of directors.
Halifax is not the first media company Redding has led. In 2004, Redding founded HarborPoint Media in Daytona, but left the company — which, at one point, owned several Arkansas newspapers, including the Hope Star — after about six years. He resigned as publisher and withdrew as an investor to start Halifax Media. Halifax is named for the Halifax River in Daytona.
Halifax bought The Daytona Beach News-Journal for $20 million in April 2010 after a judge assigned a receiver to run the newspaper. That was Halifax’s first purchase with Jaarsss and Stephens Capital.
At the time, the Daytona daily had a weekday circulation of 68,000.
Halifax waited about 18 months to make further purchases.
A Halifax partner’s offer to buy another Florida newspaper, The Gainesville Sun, from Times Co. catalyzed the 16-paper deal, Redding said. The Sun wasn’t officially for sale, but Times Co. considered the offer. The prospect was complicated by the fact that the group of 16 local newspapers had their operations intertwined. For example, The Sun and The Star-Banner, 40 miles south at Ocala, shared some staff and kept a joint printing schedule.
“Then we said, ‘What about everything?’” Redding said. Times Co. agreed, bringing Halifax’s holdings up to 17 newspapers and total publication staffing from 300 up to about 2,000.
Redding said Halifax doesn’t have immediate plans for more purchases, but the company would be interested in expanding.
Halifax’s philosophy for managing the local newspapers is to provide flexibility and stability, Redding said. In keeping with a short-term agreement with Times Co., Halifax retained more than 90 percent of former Times papers’ employees, he said.
Halifax newspapers still field calls from subscribers who want to hold newsprint in their hands, Redding said, and Halifax has a division dedicated to growing the digital side of its publications.
“The strategy for online, as the migration occurs, is to accommodate however you want to get the news,” Redding said.
Such growth will likely involve adding pay walls to newspaper websites, he said, as Halifax learns with the rest of the industry how to make money online.
Newspapers have never appealed to young readers, Redding said, but he called subscribing to the local paper a “rite of passage” for people in their 30s with families and fresh interest in local government and schools.
“Our view is that print is not dead, and not even close,” Redding said. “When I invested my money, it was ‘We believe in it. Let’s go.’"
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