Star Tribune sold to Timberwolves owner


By Jaewon Kang, Updated 05:25 PM, Jun-30-2014 ET

The Minneapolis Star Tribune is under new management again, with the owner of pro basketball’s Minnesota Timberwolves on Monday completing a deal for the newspaper at a price believed to be under $100 million — a far cry from the $1.2 billion it fetched in 1998.

Star Tribune Media Holdings Co. announced on Monday that Timberwolves owner Glen Taylor has purchased the newspaper for an undisclosed sum. Included in the deal is the publication’s production facilities in Minneapolis.

The newspaper and Taylor announced the acquisition on April 1 after a letter of intent was signed. Wayzata.

Investment Partners LLC had held a majority stake in the newspaper that serves Minneapolis, which is only 13 miles from Wayzata, Minn., where the private equity firm is based. Officials at the buyout firm couldn’t be reached.

Star Tribune Media said in a statement Monday that there won’t be changes to Star Tribune’s operations or management after the sale.

“The Star Tribune is not only a good business, it’s an important institution for all Minnesotans,” said Taylor in his own statement. “Our state and the region benefit from the presence here of a strong journalistic enterprise.”

Star Tribune Media didn’t disclose financial terms of the sale, but it’s likely valued around $90 million, according to Kevin Kamen, president of Kamen & Co. Group Services, a newspaper brokerage firm.

Such a figure represents a tremendous drop in value for the newspaper.

New York private equity firm Avista Capital Partners bought the newspaper from McClatchy Co. for $530 million in 2006, less than half the $1.2 billion McClatchy paid for the newspaper in 1998. Avista Capital owned 96% of the equity in the company, while the Christopher M. Harte 1992 Family Trust owned the balance, when it filed for Chapter 11 on Jan. 15, 2009, in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan.

Wayzata acquired a majority stake upon Star Tribune’s exit from Chapter 11.

Star Tribune has carried out a strong turnaround since emerging out of bankruptcy, and Taylor, who owns a number of businesses besides the Timberwolves, will bring a synergy to the paper with his connections, Kamen asserted.

“Don’t be surprised if he begins to show interest in acquiring (other) publishing companies within a year or so,” Kamen said.

He declined to name specific newspapers, but he said Taylor could venture out in acquiring local weekly newspaper chains.

That is exactly what hotelier Douglas Westchester did after purchasing the San Diego Union-Tribune, said Gregg Knowles, owner of Knowles Media Brokerage Services.

Since the San Diego real estate developer bought the publication in 2011, Knowles said Westchester has picked up a dozen or so smaller newspapers because he saw the value in such publications. Compared to larger newspapers, smaller publications serving communities with populations of less than 50,000 have been doing well financially, he said, adding that a lot of the newspapers in the Minneapolis area are smaller.

The St. Paul Pioneer Press, the daily newspaper in that neighboring city, could be a potential buyout candidate for Star Tribune, according to Ken Doctor, a media analyst at Newsonomics, a media consulting firm.

While the Pioneer Press, owned by New York City-based Digital First Media, has not put itself on the auction block, Doctor pointed that it has been made substantial staff cuts as of late.

Calls to Digital First Media officials weren’t returned Monday.

Kamen & Co.’s Kamen said Taylor could invest in distribution or have the newspaper’s editorial team focus on hyperlocal news.

“If anything, there will be investments in the publication rather than realignments,” he said.

Taylor is the latest billionaire to scoop up a newspaper. Last summer, Inc. CEO Jeff Bezos bought the Washington Post for $250 million, and Boston Red Sox owner John Henry purchased the Boston Globe for $70 million.

Faegre Baker Daniels LLP’s Bruce Engler, Ryan Miske, Brandon Mason and Brian Jacobson served as legal advisers for Star Tribune, and Stinson Leonard Street LLP for Taylor. Taylor’s Taylor Corp. officials couldn’t be reached Monday.