Walter Mencken 2 p.m., Aug. 22
Union-Tribune Sold to Private Equity Group Teaming with Black Press, Long-Time Rumored Buyer
The Union-Tribune announced this morning that it has been sold for an undisclosed price. The buyer was announced as a Beverly Hills private equity firm, Platinum Equity. However, a member of the Platinum Equity "team" is Vancouver's Black Press, whose chief executive and acquisition assistant have been spotted at U-T headquarters several times. Black's possible role has been discussed on this blog numerous times, but the company has never responded to inquiries. The company that owns the Toronto Star, Torstar, owns slightly less than 20 percent of Black. The acquisition appears quite similar to the 2007 deal in which Copley Press sold its Illinois and Ohio papers to GateHouse Media of upstate New York. At the time, GateHouse was very heavily leveraged. It had gone public and made a raft of newspaper acquisitions quickly. It was controlled (and still is), by Fortress Investment Group, a combination hedge fund/private equity group. GateHouse clearly did not have the money to pay the near-$390 million price for the Copley papers. The money was forwarded by Fortress. But both GateHouse and Fortress fell on hard times. GateHouse stock was $17 a share at the time of the transaction. This morning, it was trading at 7.5 cents. It has lost massive amounts of money. Fortress, meanwhile, once a Wall Street darling, plunged from a high of $16 over the last 52 weeks to a low of 77 cents. This morning, it is trading at $1.83, up 14.47 percent. Private equity groups came on hard times as lending froze. Right now, however, there seems to be moderate confidence that the banks might pull out of the mire, partly because of an accounting change expected later this week that will modify so-called "mark to market" accounting procedures for assets. Privately-held Black Press has had a tough time, as have other newspaper chains. That's why it appears that Platinum has essentially provided the money for the purchase. Black may well run the company. It could do printing and certain layout functions from a remote location, thus not burdening itself with the U-T's outdated equipment. Whether it will go partly- or entirely-online, and only have a printed edition a few times, or perhaps one or no times a week, is uncertain at this time. Black Press has alternative papers in its Vancouver markets, featuring racy material. However, its standard newspapers are not garish in nature. Platinum fashions itself as a turnaround expert, buying troubled companies in troubled industries, such as the newspaper industry. We will provide more information as we dig it up.