Hearst Corp. Buys Houston Chronicle In $400 Million Deal
HOUSTON (AP) _ The Hearst Corp. is making the biggest newspaper purchase in its 100-year history with a $400 million acquisition of the Houston Chronicle, the largest daily newspaper in Texas.
″We’re very, very confident in your management and you,″ Hearst president Frank Bennack Jr. told the newsroom staff after the sale was announced Thursday. ″You will continue to operate very much as you do now,″ he said.
The Houston Endowment Inc., a non-profit corporation that owned the newspaper, had to sell it by 1989 because of a tax law change requiring tax- exempt foundations to divest themselves of control of operating companies.
″We’re disappointed it had to happen, but you go on,″ Richard J.V. Johnson, who will remain Chronicle president and publisher, said at a Thursday night news conference.
He described Hearst’s proposal as the best offer received and said he was pleased with the sale. Hearst has been in the newspaper business for 100 years, since Randolph Hearst became proprietor of the San Francisco Examiner in 1887.
Bennack said the sale involved $300 million in cash and $100 million in notes. Hearst and Chronicle officials would not discuss further details of the transaction.
The acquistion is Hearst’s largest newspaper purchase and its second biggest purchase behind last year’s $450 million acquisition of Boston television station WCVB, said Bennack, a former publisher at the San Antonio Light, another Hearst-owned newspaper.
Bennack said Hearst hoped to close the deal between May 1 and June 1.
The Chronicle failed to respond to a higher offer from William Dean Singleton, a native Texan who bought the Dallas Times Herald for $110 million last year, said Christopher Shaw, chairman of Henry Ansbacher Inc., a New York investment firm specializing in media purchases.
Shaw, who represented Singleton in his attempt to buy the Chronicle, said the Dallas newspaper owner also tried to buy the Houston paper in October with a $500 million offer.
The Chronicle, which publishes morning and afternoon editions, lists its paid circulation as 425,434 daily and 528,153 Sunday. The Dallas Morning News is second in the state with a daily circulation listed at 390,987, but is first on Sunday with a circulation of 531,417.
The sale came one week after the Chronicle eliminated 52 full-time positions, including 47 layoffs, amid declining revenues caused by the depressed energy industry.
Bennack, however, said he is optimistic about Houston’s recovery.
″It’s my belief this is one of the nation’s greatest cities,″ he said. ″I think the future is bright.″
Bruce Thorp, a newspaper industry analyst in Washington with John Morton & Co., described the $400 million sale price as ″a pretty full amount″ for a competitive paper.
At the rival Houston Post, Editor-in-Chief Peter O’Sullivan said he welcomed the purchase.
″We felt at some time The Post had been put at a disadvantage because it’s in a position of competing with a newspaper funded by a giant charity, which doesn’t have to answer to the business bottom line. So we’re looking forward to spirited and now fair competition.″
Houston Endowment was the charitable trust established by the late Jesse H. Jones and his wife, Mary Gibbs Jones. Jones was a Houston financier and publisher of the Chronicle, which was founded in 1901.