I love you for your real estate*

What will the sale of the San Diego Union-Tribune to Platinum Equity mean for the newspaper? Ken Doctor, who writes at Content Bridges, analyzes the deal over at PaidContent. After surveying what Platinum Equity partner David Black has done at the Akron Beacon-Journal, and considering what Platinum really values in the deal, Doctor's prognosis is unsurprising: the new owners will cut.

Doctor writes:

Judging from Akron, we can intuit that the new private-equity owners and David Black will look first to “efficiencies.” That means less headcount and a concentration on lower-paid, less-experienced reporting staff. Morale—never a newspaper strong suit—will take another hit.

-snip-

The Union-Tribune will get smaller and much more locally focused. And that real estate under its building (and the Union-Tribune’s other San Diego real-estate holdings, which are part of the deal)—that is the real motivator for the purchase. Consider that the Blethen Maine Papers (owned by the Seattle Times publisher) are about to be auctioned off for the value of the related real estate – not that of the papers. This is a big trend worth watching. Commercial real estate has seized up in the recession and the credit crunch. But that’s cyclical. It will come back—and far faster than metro-newspaper values – and therein may lie the next chapter in newspaper ownership.

*Update: Alan Mutter agrees.

'Fire-sale price'

The Wall Street Journal story on the sale of the San Diego Union-Tribune to Platinum Equity has a little more information about the price:

The deal price wasn't disclosed, but a person familiar with the matter said it was less than $50 million, a price largely driven by the Copley Press real estate, which includes the complex housing the Union-Tribune and another facility. The value of the assets -- even amid a downtrodden real-estate market -- gives the buyers some cushion against the struggling newspaper, according to people familiar with the matter.

The fire-sale price reflects the dried-up market for big newspapers. A number of papers have been put up for sale in the last year, but bankers say suitors are staying on the sidelines while it is hard to predict when advertising declines will hit bottom. E.W. Scripps Co. recently closed the Rocky Mountain News and Hearst Corp. this week ended the print edition of its Seattle Post-Intelligencer after the papers attracted no serious offers.

Union-Tribune sold to private equity firm

Copley announced today that it has sold the San Diego Union-Tribune to Beverly Hills-based Platinum Equity for "an undisclosed price."

This effectively ends Copley's run as a newspaper company. But what does it mean for the Union-Tribune? For one thing, it means the paper isn't going to close down - at least not yet. Officials at Platinum have swaddled the sale in vapid business lingo, which offers little to chew on. For example:

Louis Samson, the Platinum Equity principal leading the Union-Tribune acquisition, called the newspaper “a good fit for Platinum” and its operations-focused approach.

The Canadian publishing company Black Press has a stake in the deal. From the Union-Tribune:

The firm said in a statement that its team includes David H. Black, whose company Black Press owns dozens of community newspapers, mostly in western Canada, and has expanded its U.S. presence with acquisitions of the Honolulu Star-Bulletin in 2000 and the Akron (Ohio) Beacon Journal in 2006.

Black Press ran into some controversy in 2007 for criticizing the judgment of reporters and editors at the Victoria News after they ran a story that offended a major advertiser.