As he nears a deal to buy the Star Tribune, Minnesota billionaire Glen Taylor is but the latest wealthy, high-profile businessman to see a newspaper and its digital business as a tempting investment.
Newspaper companies pose an interesting challenge for someone with an entrepreneurial mind, as the industry searches for new sources of revenue to replace the print advertising that’s fallen sharply in the past decade. They offer a degree of prestige and influence in the community. And they come much cheaper than in the past.
Asked by a TV reporter last week whether he wants to buy the company for altruistic or for business reasons, Taylor split the difference.
“Let’s just say 50/50,” he said. “It is both of those things.”
Taylor said last week that he has made a formal offer for the Star Tribune. Pending a 60-day due diligence review of the company, the sale could close by the end of May.
Alan Mutter, a journalism and technology consultant in Silicon Valley who tracks the newspaper industry, said the Star Tribune will need a patient owner with more than just a civic vision. Taylor must attend to the future of the business, he said, which is still profoundly challenged.
“The way to see to the health of the institution will be to not only do a good job in the moment but really also to look forward at what you have to do to make sure it’s going to be a healthy business,” Mutter said. “He has to make sure that it has a sound readership and revenue base going into the future.”
Wealthy buyers of newspaper companies in recent years have been headlined by Amazon founder and new Washington Post owner Jeff Bezos, as well as the successful investor, Red Sox owner and Boston Globe buyer John Henry.
Warren Buffett, whose Berkshire Hathaway Inc. has long owned the Buffalo News, added his hometown paper the Omaha World-Herald in 2011. Berkshire went on a buying spree in 2013 and now owns 69 newspapers across the Midwest and Southeast.
The traditional dependence on print advertising is a broken model, and those weaning themselves from it stand out. The Star Tribune — with a strong brand in a literate, well-educated and prosperous state — is one of those that have made progress, said Joshua Benton, director of the Nieman Journalism Lab at Harvard University.
“The Star Tribune has been one of the best-performing metro newspapers in recent years,” Benton said. “That’s not saying a lot, but it is something.”
With a net worth of $1.8 billion, according to Forbes, Taylor is not a billionaire on the order of Bezos or Buffett, but newspapers come at a steep discount these days.
McClatchy Co. bought the Star Tribune from the Cowles family in 1998 for $1.2 billion, which adjusted for inflation would be $1.74 billion today. When Avista Capital Partners bought the paper from McClatchy in 2006, the price was down to $530 million.
That deal weighed the company down with debt just before the worst economic downturn since the Great Depression, contributing to a 2009 bankruptcy. Since then the newspaper has been owned by creditors including Wayzata Investment Partners and GE Capital, who together hold about 75 percent of Star Tribune shares.
Neither Taylor nor the leadership of the Star Tribune have revealed the price on the agreement announced this past week. Ken Doctor, a news industry analyst who runs a blog called Newsonomics, estimates that the property will go for around $100 million.
Bezos paid $250 million for the Washington Post last year, and Henry paid $70 million for the Boston Globe in a deal that included the newspaper’s land.
Each of the recent newspaper purchasers has brought a distinct approach. Bezos, who has reportedly approved increased investment in the Post, is widely seen as hands-off, with a strategic eye to the digital future of news. Henry has rolled up his sleeves and gotten to work in Boston — even taking the title of publisher. Buffett, who favors smaller newspapers in markets with little competition, appears completely removed from his newspapers’ operations.
Taylor, 72, a self-made billionaire who grew up on a Minnesota farm and built an empire of businesses starting with wedding invitations and now including the Timberwolves and Lynx basketball teams, has said he will not take on a managing role at the Star Tribune, though he might put a family member on the board. By his own account, he will lean on the company’s existing management, led by Publisher Michael Klingensmith, a former Time Inc. executive who grew up in Fridley and came back to try to turn around his hometown paper.
“It’s a management team that has acted smartly,” said Doctor, a former managing editor at the St. Paul Pioneer Press. “With Taylor and his M.O. of owning many, many businesses, it’s kind of like Warren Buffett. You want a business that is well-run.”
Mutter said Taylor and the other wealthy new media owners across the country hearken back to an earlier era, when owning a newspaper was more of a way to stake a claim in a community than a way to make money.
“In the history of publishing in North America, people bought newspapers for fun, clout and profit,” Mutter said. “And profit wasn’t always even the number one reason.”
Up until the 20th century, most newspapers were owned by individuals and backed by political parties, Mutter said. Only after World War II did the number of newspapers start to shrink, publishers realized that they needed the biggest possible audience in order to charge more for advertising, and newspaper companies started to go public.
As Benton, of the Nieman Lab, has noted, there has been a bit of a trend in owners of sports teams buying — or trying to buy — major metro newspapers. Henry owns both the Globe and the Boston Red Sox. In Louisiana, New Orleans Saints owner Tom Benson tried but failed to buy the Times-Picayune. Dodgers owner Mark Walter has expressed interest in buying the Los Angeles Times.
As it turns out, the same pool of high-net-worth people who have the means to buy a sports team also are the ones who can buy a newspaper. Outside of sports teams and newspapers, there aren’t many other trophy purchases available in a given metro area.
“Other than the newspaper and the sports teams, what else is there?” Mutter said. “You can’t own the museum, you can’t own the symphony.”