San Diego Business Journal

Douglas F. Manchester, owner of the San Diego Union-Tribune, has agreed to purchase the North County Times and Daily Californian for $11.95 million, according to seller Lee Enterprises.

News of the transaction was first reported in the San Diego Business Journal.

The sale comes less than a year after Manchester acquired the Union-Tribune and renamed it U-T San Diego, and just months after Manchester lost out in the bidding for the Orange County Register.

For the 52 weeks ended Aug. 26, the Escondido-based North County Times had revenue of $27.6 million and operating cash flow, excluding unusual matters, of $800,000. It has an average daily circulation of 74,848, according to the ABC North County Audit for the six months ending March 31. That circulation includes a significant number of subscribers to its Daily Californian edition in southwest Riverside County.

Lee, the Iowa-based newspaper holding company, said it will sell the newspaper and its digital media operations to Manchester Freedom LLC, an affiliate of MLIM Holdings, the parent company to the Union-Tribune.

The sale price appears to be a premium, though it probably is not. Daily newspaper sales prices are traditionally valued as a multiple of their operating cash flow. While much higher in more profitable days, currently daily newspapers are selling in the range of five times their operating cash flow. The North County Times’ cash flow is $800,000, so an expected price might be $4 million. Manchester, however, gets a building and a printing press and production operations that are worth $7 million to $8 million. The acquisition also gives Manchester control of all but two of the high-speed, large presses in the county.

Manchester and John Lynch, chief executive officer of the newspaper, have said they continue to evaluate other newspapers in the region. A logical purchase might be the Riverside Press-Enterprise, the daily for Riverside County, which currently prints and packages the North County Times and Californian. In the past, Manchester has also expressed interest in purchasing the Los Angeles Times, whose parent company, Tribune, is schedule to exit its nearly four year bankruptcy proceeding later this fall.

The North County Times first published Dec. 3, 1995, after the merger of two longtime rival newspapers, the North County Blade-Citizen of Oceanside and the Escondido-based Times Advocate. The Times Advocate’s roots extend to 1886; those for the Blade reach back to 1892. On Jan. 1, 1997, The Californian in Temecula became an edition of the North County Times.

Manchester paid $110 million for the Union-Tribune in December, when the newspaper was reported to be earning before interest, taxes and accounting adjustments about $20 million. Manchester, who prefers to be called “Papa Doug,” has expanded editorial coverage in high school sports, military and social events in his short time as publisher and owner. Several months ago, Manchester launched a television station, U-T TV, which has failed to attract much viewership, but which has allowed the media company to leverage all of its content-generating muscle.

It is expected Manchester will continue to publish the North County Times as a separate publication, but the purchase allows Manchester to consolidate and reduce production, sales and back-end expenses. How much consolidation of editorial functions there will be under the new ownership has not been determined. Manchester told North County Times staff recently that a study would be conducted to determine how to proceed with the publication and who would be retained.