David Hoffmann, the most recent billionaire plunging into the newspaper enterprise, could be the most bold one but.
A lifelong newspaper fan who made his fortune with an government recruiting agency, Florida-based Hoffmann heads a sprawling enterprise community that started shopping for newspapers in 2022.
That accelerated final fall. A belief in his spouse’s title started shopping for shares of Lee Enterprises, the nation’s third-largest newspaper chain, in hopes of buying the Iowa-based firm with newspapers in 72 communities in 25 states.
Hoffmann, 72, informed me that he goals to develop into America’s largest newspaper writer, overtaking even the large Gannett chain inside a number of years.
“If all goes in accordance with plan, we’ll in all probability surpass Gannett as the most important newspaper” writer, he mentioned by cellphone.
Though the business has been on a downward trajectory for 20 years, Hoffmann believes it should endure. He sees alternative in each its digital evolution and the printed newspaper, which he believes “is a part of the material of America.”
“I simply can’t imagine America goes to be a spot the place individuals aren’t fascinated by native information,” he mentioned.
Individuals might search for native information on websites like Instagram “however I feel the native shops will win out due to the integrity of the reporting and professionalism and independence of the journalists, which I feel is essential to proceed within the nation,” he mentioned.
The newspaper foray started when Hoffmann acquired Florida Weekly, a gaggle of 9 papers, and employed its co-founder, Pason Gaddis, a former Gannett enterprise supervisor, as CEO of Hoffmann Media Group.
Gaddis shared the larger ambitions on the time, telling Gulfshore Business that the group was “actively looking for alternatives all through Florida and the U.S.”
“By means of economies of scale, we are able to work collectively to keep up these important information sources so many small communities depend on,” he mentioned.
Now Hoffmann’s additionally taking a look at huge communities. Simultaneous with its transfer on Lee, the belief began shopping for shares of The Dallas Morning Information mother or father firm.
Gaddis and Hoffmann informed Florida’s Enterprise Observer in November that they imagine the newspaper enterprise reached its low level and so they’re betting on its return.
“A variety of sensible individuals assume the newspaper business is useless. I don’t. We expect the newspaper business, which has been overwhelmed down, will be worthwhile once more,” Hoffmann told the publication.
Hoffmann now owns slightly below 10% of Lee. The corporate has insurance policies in place to stop a hostile takeover however Hoffmann believes they’ll negotiate a deal.
In a potential signal of confidence, he’s buying a press in Missouri that might publish Lee’s flagship St. Louis Publish-Dispatch. Lee closed its press in January and outsources manufacturing to Gannett.
“It’s tied to a different newspaper that’s personal and we’re shopping for that both means,” Hoffmann mentioned, including that it’s a comparatively new press that’s “higher than something they’re doing with Gannett or something they had been doing, it’s extra environment friendly in quite a few methods.”
I’m wondering if Hoffmann’s additionally attempting to purchase the McClatchy newspaper chain, which is now owned by New Jersey funding agency Chatham Asset Administration. It owns The Kansas Metropolis Star, which offered its press in 2020.
“Yeah, I can’t, you understand, I’m positive you recognize confidentiality agreements,” Hoffmann mentioned after I requested about McClatchy. “And we’ve simply received to watch out on what we touch upon and after we’re pursuing papers.”
I couldn’t get a remark from McClatchy earlier than deadline. Lee directed me to a March statement that it’s attempting to “work constructively with Hoffmann” and entered right into a confidentiality settlement so he could make a proposal and element financing.
Hoffmann mentioned publishers are reaching out, particularly after his Lee bid acquired nationwide protection.
“I’d like to inform you concerning the one in Missouri however I can’t, however I can inform you this: I feel anyone that’s had an curiosity in promoting their newspapers known as us,” he mentioned, “and proper now I’d say we’re the preferred recreation on the town inside the newspaper business.”
Lee looks as if a discount, in case you imagine newspapers nonetheless have potential. With a market cap at $53 million on Thursday, that values its newspapers at round $700,000 apiece on common. Not counting round $450 million in debt.
Hoffmann mentioned his present papers have a 25% revenue margin. Keys to success embrace profit-sharing with senior staff and emphasizing protection of college sports activities, he mentioned.
Hoffmann’s not the one purchaser. Final 12 months noticed a report variety of newspaper gross sales, mentioned Tim Franklin, senior affiliate dean at Northwestern College’s Medill Faculty.
“We’re going to see much more of it this 12 months due to the financial pressures that the business is going through,” Franklin mentioned.
Different consumers embrace CherryRoad Media, a venture of New Jersey tech entrepreneur Jeremy Gulban, and Carpenter Media, the Southern chain that acquired Sound Publishing final 12 months.
Then there’s former TV newsman Chuck Todd, who told The New York Times recently that he and a financial institution might make investments as much as $2 billion in a community of local-news websites, additionally emphasizing youth sports activities.
These are completely different strikes than the purchases of iconic newspapers, like rich buyers have achieved in Los Angeles, Boston, Minneapolis and Washington, D.C.
They’re as a substitute betting on the enduring worth of native information in largely smaller cities and communities.
Surveys say most People belief and worth native information however many unbiased, native publishers are struggling. The large chains are deeply indebted to, or owned by, financiers and lower newsroom jobs to scale back prices.
That’s my greatest query for Hoffmann, particularly if he involves personal the most important share of America’s newspaper business.
Different consumers, together with Carpenter and McClatchy, acquired newspapers that had been already thinned out and lower them additional. That’s left their native papers with few assets to do investigative journalism and even totally cowl authorities and establishments.
Will Hoffmann purchase ghost newspapers and additional lower prices? He replied by pointing to what’s occurred at newspapers he’s purchased.
“To this point within the 21 newspapers we’ve not laid off anyone that we purchased,” he mentioned. “That’s counter to our tradition. We’ve got 16,000 staff worldwide. We had a modest layoff throughout COVID. We had zero wage misplaced by any of our staff worldwide.”
Hoffmann continued:
“I feel being personal and large is a bonus typically and we don’t imagine in layoffs and we definitely don’t imagine in wage reductions.”
What about Lee newsrooms which have nearly no reporters and native editors left? They might be worthwhile however they’re low-quality. Would he run them as-is or do they want extra funding?
“Nicely, I’m a giant believer in journalistic integrity and journalistic independence,” he mentioned. “And so I feel that if you wish to have an excellent newspaper you’ve received to have good reporters and journalists. And so, yeah we try this, and we take a tough take a look at that, however we’re not terrified of investing in people and expertise to make that occur. We don’t hesitate to do this.”
By now we should always all be cautious of guarantees from Florida billionaires.
Native possession of newspapers can be preferable to additional consolidation.
However you possibly can’t be too choosy when extra layoffs, closures and a recession are looming.
If Hoffmann’s dedication to saving native information and journalism jobs is honest and enduring — and he doesn’t demand 25% margins — maybe these limping newspaper chains can thrive once more.
