VALUE OF NEWSPAPER M&A ACTIVITY UP 244% IN 1ST QUARTER Survey finds that 23 newspaper deals in early 2005 were worth $2B.

Against a backdrop of a variety of newspaper mergers and acquisitions last week, a leading New York investment bank said that the value of newspaper deals in the first quarter of 2005 went up 244 percent over those in the same period last year.

The Jordan, Edminston Group Inc. of New York City said last Monday that it had counted 23 deals in the newspaper business during the quarter -- up from 20 last year -- which totaled almost $2 billion in value. The overall deal activity in the media and information industries was up 28 percent in the quarter, the firm said, while the value of deals was up 132 percent.

And during the week, newspapers in Southern California and West Virginia changed hands, a publicly traded newspaper company liquidated its stake in a newsprint mill and a family-held media company revealed its expansion strategy.

In Los Angeles County"s San Fernando Valley, the Los Angeles Times Community News division of the Los Angeles Times has purchased two weekly newspapers with a combined circulation of 25,000.

The La Canada Valley Sun and the Crescenta Valley Sun serve communities northeast of Glendale. The Community News division publishes six smaller papers in the county, including the Glendale News-Press, the Foothill Leader and the Burbank Leader.

The seller was The Century Group, owned and operated by Jerry Bean, while the buyer is a division of Chicago"s Tribune Co. No terms of the deal were revealed.

"We believe in the foothill area community, and we are impressed with the distinctly local newspapers that the Valley Sun staff has built over the years," said Will Fleet, publisher of the three Times Community valley newspapers.

Bean purchased the La Canada Valley Sun in 1989 and started the Crescenta Valley Sun in 2002. Bean started the company in 1987 after a 20-year career with Gannett Co. Inc.

On the other side of the country, a daily and two weeklies in Williamson, W.Va., were sold to Heartland Publications LLC, by Mid-South Management Co. Inc. of Spartanburg, S.C. No terms were disclosed.

The daily, the Williamson Daily News circulates about 8200 papers a day and Mid-South has owned it since 1963. Also part of the deal were the Gilbert Times and the Independent Herald of Pineville.

Mid-South said that it sold the papers in order to concentrate on a new strategic direction for the company, concentrating on clusters of newspapers in the Southeast. The company and an affiliate publish 19 newspapers and a magazine in Virginia, the Carolinas, Georgia and Alabama.

Heartland, based in Jacksonville, Fla., owns 22 papers in Kentucky, Ohio, Oklahoma, North Carolina, Tennessee and West Virginia. The company was started last year by the New York City investment banks Wachovia Capital and The Wicks Group of Cos.

On Friday, Dow Jones & Co. Inc., said it had sold its 39.9-percent minority interest in F.F. Soucy Inc., a Canadian newsprint mill. The buyer was the majority owner, Brant-Allen Industries.

The companies said the sale price was $40 million in cash, or about 23 times average net income over the last five years. As part of the deal, DJ has a long-term newsprint supply contract with Soucy.

DJ said it would use the after-tax money -- about $38 million -- to reduce its commercial borrowings. The company expects an after-tax gain of about $9.5 million, or 11 cents per share. Excluding the gain, the sale will be "slightly accreditive to after-tax earnings in 2005," the company said.

"Using the proceeds from this sale to lower our debt balance will reduce interest costs and further strengthen our strong credit profile," said Chris Vieth, DJ"s vice president and chief financial officer. "The long-term newsprint supply contract will help us contain our newsprint expense. These are the latest examples of our continued focus on reducing our costs."

And during February and March, executives of Schurz Communications Inc., of South Bend, Ind., met with the company"s operational managers to outline the company"s strategy for the next decade.

The company said that the message to managers was that the financial goals over the next 10 years are to more than double Schurz" revenue and that 30 percent of that growth will come through acquisitions.

"The vision," said Todd Schurz, vice president of technology and business development, "requires SCI to become more proactive, more focused on growth from existing properties and acquisitions and more adaptive to its customers and its markets."

Schurz is a family-owned, nationwide media business whose seven daily newspapers have a combined circulation of almost 225,000. The company also publishes shoppers, has four TV stations, four radio stations, two cable companies and a printing company.

The acquisition team will be aided by consultant Adlai Stevenson, a former Lee Enterprises executive who is the grandson of the former Democratic nominee for the presidency.

Two-hundred, forty-four percent, huh? While the people running newspapers these days still believe it"s a cold, cruel world in advertising, the people who buy newspapers apparently have a different opinion. And after the credit markets busted DJ"s chops over the MarketWatch.com acquisition, the company should get extra credit for the $38 million to pay down debt.