NYT: On dealmaking sidelines, GCI came out ahead

Tribune Co., MediaNews Group and McClatchy Co. — all business partners of Gannett’s — gorged on newspaper deals in 2007 and 2006, only to wake up this year with too much debt and not enough income. Plenty of other investors made the same mistake, too, leading to an industry bubble that has now burst.

“There are some exceptions to this story,” Richard Perez-Pena reports for The New York Times today. “Companies like Gannett that do not have a lot of debt, and did not make major new newspaper acquisitions in recent years, are in much better shape than their peers, despite sharp revenue declines.”

The last big Gannett deal I recall was more than eight years ago, when the company paid $2.6 billion cash to the Pulliam family for The Indianapolis Star and The Arizona Republic, plus four dailies in Indiana and Louisiana.

Papers would be in trouble no matter what. “But the companies in the weakest condition are there largely because they borrowed a lot of money to buy papers,” Perez-Pena says, singling out Tribune, which just sought bankruptcy protection. “Tribune’s was the biggest of those deals, $8.2 billion to take private the company whose assets include the Los Angeles Times, the Chicago Tribune and 23 television stations, a transaction that almost tripled the company’s debt.”

[Image: yesterday’s Star front page, Newseum]

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