Evening News OKs Merger With Gannett : USA Today Publisher to Pay $717 Million
Evening News Assn., the Detroit-based parent of the Detroit News and five television stations, agreed Thursday to a merger with Gannett Co. in a cash transaction valued at $717 million.
The agreement apparently ends a monthlong bidding war touched off in July by a hostile takeover bid from Hollywood executives Norman Lear and A. Jerrold Perenchio and marks the end of 112 years of family ownership of the Detroit News, the nation’s ninth-largest newspaper.
The sale will bring the 333 Evening News shareholders $1,583 for each of the 453,000 shares outstanding.
Lear and Perenchio, through a newly formed company called L. P. Media, originally offered $1,000 a share but last week raised the offer to $1,250. Less than a year ago, a small number of shares of closely held Evening News changed hands for less than $200 each.
Intensify Competition
Gannett Chairman Allen J. Neuharth and Evening News Chairman Peter B. Clark announced the deal to Detroit News employees. They assured them that, under Gannett, the News would intensify its circulation and advertising war with its archrival, the Detroit Free Press.
“We were impressed by the clear dominance the Detroit News has in this market,†Neuharth said later in a press conference. “Not only does it have the best content, but it is the leader in circulation and advertising. We hope and expect to sustain and enhance that position.â€
The Detroit News, with daily circulation of 666,949, holds a 20,000-paper circulation edge over the Free Press, which is owned by Miami-based Knight-Ridder. The News controls about 67% of Detroit newspaper advertising lineage.
Besides the Detroit News, Evening News Assn. publishes four daily and six weekly newspapers in Michigan, California and New Jersey. It also owns two Detroit radio stations and five television stations, including outlets in Washington, Austin, Tex., and Tucson.
Analysts said it was those properties that made Evening News an attractive takeover target. Because of its costly battle with the Free Press, the News has lost millions of dollars over the past several years, depressing the parent company’s earnings.
In 1984, ENA posted a $12.9-million profit on operating revenue of $310 million, a very low return for a diversified media company with television stations in five profitable markets.
Gannett publishes USA Today and 85 other newspapers with a total circulation of 4.7 million, and it owns six television stations and 14 radio stations. It had revenue last year of nearly $2 billion.
“The merger with Gannett assures that the excellent newspaper and broadcast services, which ENA has long provided, will be sustained and enhanced,†Clark said. “ENA executives, editors, writers, other employees and stockholders can be very happy about the merger.â€
The deal ends weeks of suspense among editorial staffers at the News, who feared that the money-losing newspaper would be folded by its new owners.
“The uncertainty has ended, and there’s cause for optimism,†one Detroit News editor said. “There’s euphoria now. We’ll see what lies ahead.â€
Family Members Pleased
Members of the Scripps and Booth families, which have controlled the media company for generations, were pleased by the outcome of negotiations and the price received, said David McKearnan, an investment banker with the Wall Street firm Donaldson, Lufkin & Jenrette.
“We certainly think the price is very adequate. This is a very good reflection of the marketplace for television stations, which represent 85% of the value here. Gannett will do a very good job of managing the properties,†said McKearnan, whose clients own 21% of the outstanding ENA shares and have been pressing for the sale of the company.
Unsuccessful bidders for the media concern were said to include investor Jack Kent Cooke, owner of the Washington Redskins, and Oklahoma Publishing Co., which dropped out earlier this week as the price soared.
A spokeswoman for Lear and Perenchio said they would have no immediate comment on the announcement but have not ruled out increasing their bid for the media group.
However, the ENA-Gannett agreement includes a “lock-up†provision granting Gannett separate options to buy the Detroit News and WDVM-TV in Washington.
Times staff writer Stephanie Droll, in Detroit, also contributed to this article.
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