David Hoffmann, the newest billionaire plunging into the newspaper enterprise, stands out as the most formidable 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 turn out to be 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 can 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 folks aren’t considering native information,” he mentioned.
Folks could search for native information on websites like Instagram “however I believe the native shops will win out due to the integrity of the reporting and professionalism and independence of the journalists, which I believe 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 searching for alternatives all through Florida and the U.S.”
“By economies of scale, we are able to work collectively to take care of these important information sources so many small communities depend on,” he mentioned.
Now Hoffmann’s additionally massive 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 they usually’re betting on its return.
“A whole lot of sensible folks assume the newspaper business is lifeless. I don’t. We expect the newspaper business, which has been overwhelmed down, could be worthwhile once more,” Hoffmann told the publication.
Hoffmann now owns slightly below 10% of Lee. The corporate has insurance policies in place to forestall 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 would publish Lee’s flagship St. Louis Put up-Dispatch. Lee closed its press in January and outsources manufacturing to Gannett.
“It’s tied to a different newspaper that’s non-public 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 a variety of methods.”
I ponder if Hoffmann’s additionally making an attempt 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 already know, I’m positive you admire confidentiality agreements,” Hoffmann mentioned once I requested about McClatchy. “And we’ve simply acquired 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 making an attempt 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 obtained nationwide protection.
“I’d like to inform you in regards to the one in Missouri however I can’t, however I can inform you this: I believe anyone that’s had an curiosity in promoting their newspapers referred to as us,” he mentioned, “and proper now I’d say we’re the most well-liked recreation on the town inside the newspaper business.”
Lee looks like a discount, should 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 embody profit-sharing with senior staff and emphasizing protection of faculty sports activities, he mentioned.
Hoffmann’s not the one purchaser. Final yr noticed a report variety of newspaper gross sales, mentioned Tim Franklin, senior affiliate dean at Northwestern College’s Medill College.
“We’re going to see much more of it this yr due to the financial pressures that the business is going through,” Franklin mentioned.
Different patrons embody CherryRoad Media, a venture of New Jersey tech entrepreneur Jeremy Gulban, and Carpenter Media, the Southern chain that acquired Sound Publishing final yr.
Then there’s former TV newsman Chuck Todd, who told The New York Times recently that he and a financial institution could 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 accomplished in Los Angeles, Boston, Minneapolis and Washington, D.C.
They’re as a substitute betting on the enduring worth of native information in principally 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 minimize newsroom jobs to scale back prices.
That’s my largest query for Hoffmann, particularly if he involves personal the most important share of America’s newspaper business.
Different patrons, together with Carpenter and McClatchy, acquired newspapers that had been already thinned out and minimize them additional. That’s left their native papers with few assets to do investigative journalism and even completely cowl authorities and establishments.
Will Hoffmann purchase ghost newspapers and additional minimize prices? He replied by pointing to what’s occurred at newspapers he’s purchased.
“Up to now within the 21 newspapers we’ve not laid off anyone that we purchased,” he mentioned. “That’s counter to our tradition. We’ve 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 believe being non-public 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 virtually 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?
“Effectively, I’m a giant believer in journalistic integrity and journalistic independence,” he mentioned. “And so I believe that if you wish to have an excellent newspaper you’ve acquired to have good reporters and journalists. And so, yeah we do this, and we take a tough have a look at that, however we’re not frightened of investing in people and expertise to make that occur. We don’t hesitate to try this.”
By now we must 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.
