Alabama pension funds continue investment in CNHI newspapers
RSA takes over 100 percent of CNHI
What was announced last week as the sale of Community Newspaper Holdings Inc. to the Retirement Systems of Alabama was really an acquisition of the small percentage RSA didn't already own, according to RSA CEO David Bronner.
"We already owned 87 percent of it," Bronner said.
RSA is made up of several state employee pension funds. Its holdings include golf courses, office towers and, until now, Raycom Media, of which CNHI was a part. But Raycom was sold to Gray Media, while CNHI will remain based in Montgomery with RSA.
"It was not exactly a startling revelation," Bronner said. "Why sell something when everybody's gotten the prices depressed, when you have decent cash flow, and you've got real estate all over the dang country?"
Arguably one of the most powerful people in Alabama, Bronner has long pursued a strategy of making lots of money for RSA in part through economic development. It owns the Robert Trent Jones Golf Trail and in 2006 it built the tallest building in the state, the 35-story RSA Battle House Tower in downtown Mobile.
"The point is, just like Raycom, we owned 87 percent of it to begin with," Bronner told SNPA. "This is not exactly the market you'd want to sell anything in because the prices are too low. And you've got community newspapers which still are profitable. They still make money. And you have a wealth of real estate assets there. You wouldn't want to give it away at two times earnings."
Essentially, Bronner said, RSA bought out the other 13 percent for between $13 million and $15 million, in a deal that totaled a little over $100 million.
CNHI is made up of more than 100 daily and weekly newspapers and websites in 22 states. They are mostly in relatively small communities, and Bronner said that while revenue has been "slowly declining" and printing and other non-newsroom functions have been combined as has happened in the rest of the industry, the company is generally in good shape.
"What you've got to do now is to try figure out how to stabilize it so that you don't have further declines, and that means coming up with some new revenue sources, probably. We'll address that," Bronner said. He declined to discuss specific possibilities but said there would be no immediate changes.
He believes in the need for community newspapers, noting that many of CNHI's newspapers are in relatively isolated communities up to 100 miles away from the nearest local TV station.
"It provides a real service to the community. Everybody tends to forget about that," he said. "There's still a huge need throughout the country, and the more isolated the community, the greater the need for local news, because nobody knows about anything if you don't have a local newspaper."
With the exception of an occasional blogger, such community newspapers provide the only source for local sports, local politics and what's happening generally, Bronner said.
While cuts have taken place as the industry has declined, Bronner said community papers need to hang on to veteran news staff and even expand news coverage if possible. He praised the work of Donna Barrett, president and CEO of CNHI, for bringing the papers online and in some cases adding news staff.
"The important thing is that you have an outlet for making sure that the city council and the mayor and the local sheriff and the local police department and the local city can function. And it plays that role."
Jane Nicholes, a regular contributor to the Southern Newspaper Publishers Association's eBulletin, is a freelance writer and editor based in coastal Alabama. She is an award-winning veteran of more than 30 years in the newspaper business. Reach her at firstname.lastname@example.org.