Turnaround Specialist Zelnick Media Rejects Newspaper Deal
This story was written by Rory Maher.
You can add Zelnick Media to the list of potential buyers who don't see enough turnaround potential in the once-profitable newspaper business. According to Reuters, the media fund has walked away from a potential deal to buy the Austin-American Statesman.
Cox Enterprises put the paper up for sale in August 2008 for about $200 million, according to sources involved in the sale. Zelnick's initial attraction apparently has been dampened by the rapid decline of the newspaper industry since then. Platinum Equity and Texas newspaper company Granite Publications have also been cited as potential buyers. It's unclear whether they continue to be interested.
While some sales are occurring Reuters says Cox has found a buyer for two other Texas papersZelnick's pass is notable because it operates a media-focused private-equity fund, and buyout funds typically have the stomach for risky turnaround deals. Sam Zell bought Tribune Company in 2007, financed by nearly $13 billion in debt, and then filed for bankruptcy in December 2008 amid declining ad revenue. Perhaps other buyout funds are looking to avoid making the same mistake.
By Rory Maher