Buyer Reportedly Found For Austin American-Statesman (Updated)

AUSTIN, TX — According to a published report, GateHouse Media has turned in the winning bid to buy the Austin American-Statesman that was put on the sales block late last year.

In a report by NiemanLab, GateHouse Media emerged as the winning bidder for the Cox Media-owned newspaper property over Hearst Corp. Final details of the transaction are being completed this week, NiemanLab reported.

Officials at the Statesman declined comment. Editor Debbie Hiott referred Patch to the publisher, but not before discrediting the report: "Susie Gray Biehle, our publisher, would be the best source for any statement, although I doubt Cox would have anything to say on that completely unsourced story from Ken Doctor," she wrote, referring to the author of the report.

For her part, Gray Biehle would neither confirm nor deny the report: "I have no comment," she wrote in an email.

Related story: Austin American-Statesman Newspaper Put Up For Sale By Cox Media

Should GateHouse Media acquire the publication, it would be on the heels of its unsuccessful bid for the bankrupt Boston Herald, which the media company had expected to buy. Instead, MediaLab reported, Digital First Media bought the Herald for $12 million. A week earlier, GateHouse added the Eugene Register Guard to its portfolio of 130 daily newspapers, according to the report.

The author of the piece estimates GateHouse could pay close to $50 million for the Statesman, which is nearly five times the daily's annual earnings. That price is a higher multiple that's atypical in the newspaper market, NiemanLab reported.

Many industry observers had expected Hearst Newspapers to buy the property, according to the report. Like GateHouse, Hearst is expansion-minded with plans to add to its portfolio of seven Texas dailies — including the Houston Chronicle and San Antonio Express-News. But Hearst reportedly paid close to the industry standard multiplier of four times earnings.

At the San Antonio Express-News, scuttlebutt has it that GateHouse completed the transaction a couple of weeks ago, according to sources. Others wonder what might happen to a press-sharing agreement with the Statesman, which uses the Hearst-owned Express-News printing press to put out its papers in a cost-saving move consummated some years ago.

The Statesman has a paid circulation of 79,000 on Sunday and 51,000 daily. NiemanLab notes the Statesman has managed to sell just about 3,000 digital-only subscriptions despite serving a city that bills itself as an emerging tech hub, NiemanLab noted in its report. The daily employs about 200 people.

On Thursday, a newspaper official disputed the author's assertion that the paper has just 3,000 digital-only digital subscriptions. Sylvia Rodriguez, senior director/audience at the Statesman, emailed Patch with corrected figures while saying she had been in touch with the author of the report for a correction.

"I’ve been in touch with Ken Doctor about a reference to the number of digital subscribers that we have at the Austin American-Statesman," Rodriguez wrote to Patch. "The reference to 3,000 digital-only subscriptions is not accurate. We have 16,786 digital-only subscribers at the Austin American-Statesman. Ken Doctor will be adding additional explanation to the column."

In October 2017, Cox Media announced it had put the local newspaper on the market. Cox Media Group President Kim Guthrie said in a statement the decision toe sell the papers is part of a strategy centered on markets where Cox has multiple media assets.

"After careful consideration, we have made the difficult but strategic decision to put our newspapers in Palm Beach and Austin up for sale," Guthrie said. "We have made the decision that we will be better equipped to operate our newspapers in Atlanta and Ohio, where we have the integrated opportunity with our TV and radio operations."

At the time of the announcement, Gray Biehle assured employees in a memo that an impending sale was not a reflection of the newspaper's work: "When Kim called last week to share this decision with me, she made it clear that this is not a reflection of the value the Statesman delivers to our readers, to our advertisers and to CMG," she wrote. "While I am sad to leave the Cox family, I am optimistic about the future for the Austin American-Statesman because of the strength of our brand, the quality of the journalism that we do and the talent of the people."

GateHouse Media has a reputation for gutting with layoffs the traditional media properties it acquires in its aggressive pursuit of a "hyperlocal” digital ad strategy, The company is also known for being thrifty: "Cost-cutting measures at GateHouse are absurdly draconian, ranging from the fact that editorial staffers don’t even get complimentary subscriptions to having to buy their own coffee for the office machine," American Prospect noted in a Dec. 27, 2017, report.

According to its website, GateHouse Media operates in 540 markets across 36 states. In Texas, the company owns nearly two dozen newspapers, including the Valley Town Crier in McAllen; the Waxahachie Daily Light; AdSack in Corpus Christi; the Nueces County Record Star in Robstown; Valley Bargain Book-North in Harlingen; Valley Bargain Book-South in Brownsville.

The company lists a holding in Austin in its list of 22 properties owned in Texas, something called CND that is an acronym of sorts for Center for News and Design, according to its online tally of acquisitions.

Privately held, the Austin American-Statesman has been put up for sale before. In August 2008, the paper was put on the market only to have company officials decide to keep it as part of a cog in a converged, multi-media strategy involving television and radio.

In December 2015, the company sold the lakefront property housing the newspaper to a family entity associated with Cox Enterprises, officials reminded in their statement. The entity has since hired Austin-based Endeavor Real Estate Group to create a redevelopment plan for the 18.9-acre site at the piece of prime downtown real estate that's long been the newspaper's home.

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Editor's note: An Austin American-Statesman official reached out to Patch to dispute the reported number of digital-only subscriptions. She said the paper has 16,786 digital-only subscribers, not 3,000 as the NiemanLab article reported.