In August 2014, the Tribune Company spun-off the Tribune Publishing Company and the spin-off went right to work buying up smaller newspapers around the country. For a while, there was speculation that Tribune Publishing would actually sell off newspapers such as the Chicago Tribune and the Los Angeles Times to pay some of the $350 million in debt that the company will have to deal with. But CEO Jack Griffin has come out swinging and is investing millions in smaller newspapers.
Seems Like A Big Risk
According to the Crain’s Chicago Business website, these acquisitions by Tribune Publishing can be risky because there is simply not a lot of profit in buying small newspapers. But Griffin is pushing forward and has already pulled off deals such as paying $30 million for two small Maryland newspapers that border the geographic reach of the Tribune’s Baltimore Sun. Risky or not, Griffin is determined and he has several other deals in the works.
Locking Up Geographic Areas
It appears that one of the reasons why Tribune Publishing is buying these smaller newspapers is to grab control of the flow of news in certain parts of the country. For example, Tribune Publishing is looking to buy six daily newspapers and 32 weekly newspapers that all surround the geographic area serviced by the Chicago Tribune. The pattern in Maryland and Illinois shows that Tribune Publishing is trying to become the premier source for news in expanding geographic areas and that could have very positive financial rewards.
Local Advertising Is Up For Grabs
One of the biggest reasons that Tribune Publishing is trying to tighten its grip on certain geographic areas is the need to increase advertising revenue. Local newspapers have a very specific audience they reach and, right now, Tribune Publishing is not benefiting from that advertising revenue.
By combining the media resources of Tribune Publishing with the local advertising revenues of all of its smaller papers, the company will see tremendous revenue growth over time. Larger advertisers can pay more to reach specific geographic audiences that Tribune Publishing could not really get to with its larger papers.
Expanding Media Exposure
Buying up smaller newspapers means that Tribune Publishing will also reach more people on their smartphones and tablets. The growth of local newspaper exposure on mobile computing devices is significant and Tribune Publishing is putting itself in the perfect position to take advantage of all of that extra media exposure.
In less than a year, the debt-strapped Tribune Publishing Company has reached out and purchased a surprising number of local newspapers. While the initial financial damage is intimidating, the long-term plan for increased revenues and strengthening the company’s hold on local markets cannot be denied. Larger online publishing companies are starting to see significant value in utilizing their associated websites to their advantage. When a large publishing entity can lock up the distribution of news and information in a particular area, then there will be significant opportunities to increase local, regional, and even national revenues.