New Media reports 5% revenue increase in 2Q, plans to acquire N.C. publisher

NEW MEDIA Investment Group Inc. announced plans to acquire a North Carolina publishing company for $18 million.
NEW MEDIA Investment Group Inc. announced plans to acquire a North Carolina publishing company for $18 million.

PROVIDENCE – New Media Investment Group Inc. reported a drop in net income, an increase in revenue, and plans to acquire a North Carolina publishing company in its earnings report released Thursday.
New Media, whose GateHouse Media owns the Providence Journal, said it had a 16.2 percent drop in net income in the second quarter to $9.4 million, or 21 cents per diluted share, from $11.2 million, or 25 cents per diluted share, in the year-ago quarter.
It also said revenue increased 5.1 percent to $314.8 million from $299.5 million a year ago.
“Over the last several quarters, New Media has been committed to investing in both print and digital initiatives to drive its topline, and the improvement in our Q2 revenue trend indicates that we are building momentum towards achieving organic revenue growth by year-end 2017,” Michael E. Reed, New Media president and CEO, said in a statement.
Reed noted that New Media reached an agreement to acquire the family-owned Fayetteville Publishing Co. for $18 million. The flagship newspaper of the Fayetteville Publishing Co. is the Fayetteville Observer. Established in 1816, the Observer is the oldest newspaper still being published in North Carolina, and has a daily and Sunday circulation of approximately 36,000 and 45,000, respectively, according to New Media.

“Given the out-of-favor and fragmented nature of the local media market, we believe there continues to be a compelling opportunity for New Media to acquire great assets at attractive valuations within this sector. With our print and digital initiatives contributing to our improving revenue trend, identified expense savings to be realized over the second half of the year, a strong and growing pipeline of potential acquisitions, and significant recurring cash flow from our core newspaper business, New Media remains well positioned to create substantial value for our shareholders,” Reed said.
New Media anticipates that the Fayetteville acquisition will close in the third quarter.
The company said the second quarter represents the fourth consecutive quarter of improving same-store revenue trends. Total advertising print revenue fell 10.2 percent on a same-store basis, driven by softness in preprints, local print advertising and classified print.
However, it said that digital, its “consistently growing category,” climbed 6.7 percent to $31.2 million. Circulation also grew 2 percent over the year due to promotions and redesigns to the company’s newspapers and websites.
The company reported a 39.8 percent year-over-year decline in cash flow from operations to $30.8 million for the first six months of 2016.

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