Tronc in New York state of mind, buys Daily News
Tronc, Inc.’s purchase of the iconic New York Daily News for just $1 while taking on its pension liabilities sends an ominous signal about the market value of news enterprises, but significantly boosts prospects for the former Tribune Publishing Company. Justin Dearbon, CEO of Tronc — which publishes the Los Angeles Times, Baltimore Sun, and Chicago Tribune — said the acquisition provides “another strategic platform for growing our digital business, expanding our reach and broadening our services for advertisers and marketers.” The company is assuming the Daily News’ roughly $30 million pension obligations, which require $4 million of cash contributions per year, according to a research report issued yesterday by Cowen Credit Research and Trading.
The report says the paper has $16 million of workers comp and auto insurance liabilities, and $19 million of letters of credit outstanding.
“We reiterate our enthusiasm for Tronc equity,” wrote Lance Vitanza, the research report’s author. “New York City has to this point been the obvious gap in
Tronc’s footprint.”
Shares of Chicago-based Tronc closed at $14.76 yesterday, up 10 cents.
The New York Daily News has an estimated 200,000 daily print circulation, with 240,000 on Sundays, and brings in roughly 25 million unique monthly visitors through NYDailyNews. com, the Cowen report says.
The paper’s total revenue fell 11 percent from 2012 to 2016 as average daily print circulation slipped 13 percent.
Tronc is also acquiring the Daily News’ printing facility in Jersey City, N.J., and an interest in 18 acres of underlying land, with views of the Statue of Liberty and Manhattan skyline, the Cowen research report said. The report said the land is potentially worth several hundred million dollars.
Tobe Berkovitz, a media expert at Boston University, said covering Daily News liabilities will be a tall order.
“At newspapers, pension liabilities are major factors, because of printing unions and delivery and all of that,” he said. “That’s sort of the gift that keeps on giving to the new owners.”