Want to buy a newspaper?

Raise your hand if you've ever thought, "I could run that paper better than they do." 🙋

If you play your cards right, you just might get your shot.

First, there are still tons of acquisition targets among the roughly 4,500 weekly newspapers in the US, many of them family-owned with no second generation waiting in the wings. That’s about 6x the number of stand-alone local, independent digitally native publishers. 

Second, acquisitions are generally less risky than new startups – if you know how to go about making a good deal. At the LION Independent News Sustainability Summit in San Diego, we went deep on how to do just that with John Cribb of Cribb & Associates, the country's oldest newspaper brokerage; Amy Bushatz, founder of the Mat-Su Sentinel in Palmer, Alaska, who bought the 80-year-old Frontiersman this spring; and Pat Davis of the New Mexico News Group, which acquired the Roswell Daily Record (yes, that Roswell) in July.

If you have acquisition on your mind, here are five things worth pondering:

Bushatz and Davis’ acquisitions have worked because the buyer could answer two questions without flinching: How does this make our impact bigger and how does it make our economics better?

For Amy, acquiring the Frontiersman meant taking stewardship of an 80-year archive while expanding the audience and revenue base she had already built with the Mat-Su Sentinel. The deal brought a larger base of paying subscribers and new revenue streams, including legal notices and obituaries. 

Pat’s group saw a similar combination of mission and business opportunity in Roswell: a chance to expand their service in southern New Mexico and use the strengths of their existing operation to address the paper’s reader revenue and advertising challenges.

If you’re considering an acquisition that doesn’t clearly deliver on both, John’s advice is to have a very honest conversation with your team, your spouse and your accountant before you go any further.

Two years ago, Pat's group lost 15 percent of its revenue in two weeks when federal money disappeared from local governments and non-profits in the DOGE days. They laid everyone off, brought them back half-time for a bit, and rebuilt around sustainability principles that led to a cash reserve. That reserve is what they eventually tapped to give their new Roswell acquisition 30 days of runway. You can’t rescue a failing paper if you're failing. Get your own house in order first.

When a chain or an out-of-town owner finally decides to sell, they call the people they already know. Amy's first move, six months before the Frontiersman was ever listed, was a cold email to the publisher: "You don't know me, but if you ever decide to sell, call me."

He never replied. But she tracked the email, so she knew he'd read it, and that started the process of putting Amy front-and-center as the no-doubt buyer. 

Plant the flag now. Send the email. Have a broker make the call for you if you'd rather stay anonymous. The worst case is that nobody answers your email. The best case is they call you first when it’s time to make a deal.

Using short-term debt to survive a cash crunch is a normal business practice. Debt lingering for months or years is a sign the organization has materially lost steam, not just gone through a rough patch. Understanding the debt dynamics of the asset you’re acquiring is crucial to a successful deal.

Pat described the financial challenges of the Roswell paper: The owner took on credit card debt and then payday-style loans to make payroll. Roswell went from profitable to closed, with the unemployment office set up in the lobby, in about six months.

Understand exactly what a seller is carrying before you sign, and know your options for financing the deal. John’s experience suggests newspapers typically sell for 1.5 to 3.5 times EBITDA, or 10 to 50 percent of revenue if there’s no cash flow. Seller financing is common right now and can be tax-friendly for the seller, while small local banks may be willing to take risks that larger banks won’t.

John's standing advice: Hold on to your cash.

Amy was very clear about what had value to her in the Frontiersman: intellectual property and subscribers. Not the building, not the printing press, and not all of the company’s brands (she subsequently sold the Alaska Press brand she acquired in the deal to two eager entrepreneurs who have relaunched that property). 

She was smart to stand her ground, Cribb advised, and she was even smarter to have thought through the value of the things she did want in her existing business.

That’s because the assets she bought were smaller than advertised. The "30,000" email list was about 14,000 real addresses after scrubbing. The 700 "paid" subscribers included a lot of credit cards that had stopped working. And precious few of the 368 print subscribers were going to become digital subscribers, because they want a print product, crossword and all, in their hands.

It still worked out: the email list grew by 14,000; paid supporters went from 159 to 422; she picked up a 30,000-follower Facebook page and the aforementioned new revenue streams, some of which did not appear in her pre-deal valuation. 

So what can you do? Before you make an offer, run the scenarios: what's this deal worth if the list is half what they say? If a third of the paid subs are dead cards? If the print people leave? If the answer is still yes at the pessimistic end, you have a margin of safety. And then, of course, get confirmation on the details during the due diligence phase. If the deal only works at the seller's numbers, you don't have a deal. Ask early questions, Amy said, that feel too obvious to ask.

Pat's team looked at a dead paper and saw a disengaged subscriber base and a community that still really, really loved their paper (and a building the local bank was happy to lend against).

Six weeks after closing, the team had paid off the most painful loans, refinanced the rest against the real estate, dropped the digital subscriptions strategy in favor of a voluntary contribution model, and excised syndicated filler for New Mexico news from partner papers.

The subscription team called 2,500 lapsed subscribers with a free month. Seventy signed up the first week. Half of them just paid anyway.

This is both about potential business acumen and the energy and vigor you can bring to a new venture. 

Want the LION presentation where John Cribb broke down trends in local news M&A and with more details on the work in Alaska and New Mexico? Just reply to this email and we’ll send it over. 

If you want to talk (confidentially) about potential acquisitions, you can email us at [email protected] and we’ll be in touch.