Unlimited possibilities in buying business newspapers

Roy Brown is the chief executive officer of Ohio-based Brown Publishing Co., a newspaper company that in the past six months has entered the business newspaper industry by purchasing weekly and bi-weekly papers around the country.

Brown Publishing has purchased the Des Moines Business Record in Iowa, the Charleston Regional Business Journal in South Carolina and the Fort Worth Business Press in Texas.

In addition, last week it purchased the Boulder County Business Report in Colorado. That acquisition included a majority ownership of the Northern Colorado Business Report in Fort Collins, the Wyoming Business Report in Cheyenne, Wyo., and DataJoe LLC, a research and online data e-commerce company.

Brown became president and CEO on Jan. 1, 2000. After five years on the company’s board of directors, Brown joined the company full-time in 1996 as the company’s first general counsel and dealt with a wide range of day-to-day legal issues while also helping to develop the company’s long-term growth strategy. Brown served as the company’s chief operating officer in 1999 until his appointment as CEO.

Brown talked by e-mail with Talking Biz News about the company’s business newspaper strategy. What follows is an edited version of that conversation.

1. Your company has traditionally owned small dailies and weeklies. Why did it become interested in business newspapers?

We have looked at the space for over two years and became attracted to the unique focus on its high-end audience and advertisers. The businesses we have acquired are innovative, have good financial track records, and are the leading source of business information in their markets.

We are not interested in business newspapers per se but rather market leading business information providers, or BIPs.

The BIPs we have bought recently and will continue to seek 1.) serve great markets; 2.) are well-branded and targeted; 3.) have a clear and open field to create digital revenue streams; and 4.) serve highly-engaged and information hungry end-users.

In addition, we have acquired an exceptional software and data management company in DataJoe. It is currently used profitably by over 50 business and trade publications because of its unrivaled cost saving and revenue producing functions. It is a tremendously well-integrated package that streams data seamlessly for any number of revenue generating print and online products.

2. So far, you’ve bought business weeklies where your company doesn’t have any dailies. Do you plan to buy business newspapers in Ohio where you already have papers?

Not in the near term.

3. Is the future of business weeklies different than for traditional newspapers? If so, why?

We see a great future for both businesses. Our BIPs probably have a better growth profile now because they are flexible, smaller businesses in large markets with great branding. Our newspaper businesses also have great branding, provide very stable and reliable income but already have a larger market share with fewer local targets of revenue growth opportunity.

Even still, we operate our community newspapers in small markets where their products remain the most effective information and marketing media. Both our BIPs and our newspapers are the best content providers to their end users, which will make them attractive and sustainable businesses in the long term.

4. What do you look for in a business weekly when you’re examining a purchase?

See answer to question no. 1, plus, great people.

5. What changes do you make after an acquisition?

I think we try to add value as a larger company where possible (e.g. benefits, financial management, vendor relationships, best practices, etc.), but, for the most part, our investment in BIPs will change our corporate approach to management more than it will change their local approach.

These are entrepreneurial operations that have grown at great rates. Their leaders aren’t potted plants. In fact, they are locally and nationally respected and are not going to let an ownership change screw up the good things they have going. We will take our cues from them as much as they will from us.

6. In Fort Worth, the top editors left soon after your purchase. Was that planned during the acquisition?

I greatly respect Bill Thompson, our former editor, and we do not discuss the status of any specific employees. We are currently hiring editorial staff in Fort Worth, and I think if you check in with us next year you will find that we have added staff — specifically in editorial — rather than cut back.

7. How many business weeklies would you eventually like to own?

How many are there? Seriously, I would say as many BIPs as we can reasonably digest both operationally and financially. Again, check back next year.

8. So far, you’ve bought business papers in smaller cities. Would you like to purchase them in bigger markets as well?

You’d be surprised how big Charleston, S.C., and Fort Collins, Colo., appear when you’ve operated in Hillsboro, Ohio and Ada, Ohio. They are great communities all. In any event, I think we would feel comfortable operating any BIP that fits the characteristics listed above regardless of size.

9. How are you funding these acquisitions?

We are a privately held company that is entirely family owned. We have used cash on hand, but also a limited draw on our debt facility.

10. Does running a business weekly differ in any major ways from running a news weekly or small daily?

Yes, but there really is no single way to run a newspaper or a BIP. I think the key to both is to remain focused on serving the specific needs of the end-users in any particular market. Our strength in both businesses is the emphasis on communication across different internal functions and the operational flexibility to tailor our products to the needs of our end-users.

There are many similarities with our BIPs and our small daily and weekly newspaper businesses, but also significant differences. We are comfortable with the small office environment, which breeds communication and cooperation among departments in both businesses.

We focus and tailor our content in both businesses, rather than trying to be all things to all people or fooling ourselves that ‘one size fits all.’ Finally, we promote and work through dedicated, trustworthy and entrepreneurial local leaders in each business who are actively involved in their communities and lead by example.

The differences between the two businesses are significant and we are still learning them. Our BIPs generate revenue through more channels than our newspapers. Events, magazines, special pubs, custom publishing, and data mining are all developed revenue and income streams in good BIPs. In addition, new digital revenue streams are being created that dovetail with the traditional print products. Our DataJoe business is a good example of a new revenue stream with several business applications that began as a support application for a special publication.

Finally, it is important to note that the BIPs we have bought have been successful in the same markets as some of the largest newspaper businesses in the country. This ‘steel on steel’ sharpening of their models is different from our newspapers, which generally have occupied the lead print position in their markets for many years. We are hopeful, therefore, that the innovations pursued and perfected by our BIPs will help us develop new product offerings in our newspaper markets.

11. Your first business weekly purchases are spread across the country. Are you particularly interested in one geographic area more than others?

No. We would be interested in good BIPs anywhere.