(Disclosure: Chuck Taylor, now retired, worked for the Everett Herald from 2010-22.)
A British Columbia court last week approved the sale of the Canadian company that owns the Everett Herald and 34 other local news outlets in Washington, as well as the Honolulu Star-Advertiser and other newspapers in Hawaii. The deal is expected to close on Friday, March 22.
Black Press Ltd., based in Surrey, B.C., is insolvent and will be dissolved, with its 144 news outlets transferred to a newly-formed company. The new company is controlled by two Canadian firms representing private investors, and it has a minority partner in Carpenter Media Group, an American small-newspaper chain based in Alabama.
The new ownership structure is opaque. The new company, oddly called 1000817790 Ontario Ltd., will take control of the Washington and Hawaii news outlets; newspapers in Alaska including the Juneau Empire; and about 100 newspapers, almost all weeklies, in western Canada. The deal emerged from a months-long bankruptcy and bidding process that slogged through the Supreme Court of British Columbia and U.S. Bankruptcy Court in Delaware for two months.
In the end, it appears the family owners of Black Press Ltd. will walk away from the newspaper business debt-free but with little else to show for the nearly five decades that founder David Black spent building the company through steady acquisition of publications north and south of the border.
According to court documents, Black Press owes $6 million (Canadian) for one or more loans by undisclosed parties represented by the two private equity firms — Canso Investment Counsel, a brokerage in Richmond Hill, Ontario, and Deans Knight Capital Management, a private-equity firm in Vancouver. Canso and Deans Knight will forgive the $6 million loan in exchange for ownership of Black Press properties. They will also assume other outstanding debts.
A new loan by Canso to Black Press of up to $11.5 million (Canadian) is covering legal and other expenses incurred during the weeks it’s taken to finalize the deal. It appears little cash will change hands. At the current monetary conversion rate, the whole deal is probably worth a little under $13 million U.S. — almost all of it debt forgiveness.
Purchaser 1000817790 Ontario Ltd. is controlled by the investors represented by Canso and Deans Knight. Minority partner Carpenter Media will actively manage the newspapers, and it seems likely that Carpenter Media will be the brand visible to the public. That’s about all that is publicly known about the new owners. None of the parties has commented much about the future except through statements promising journalism-as-usual. It’s hard to imagine there will be no changes, cuts, or closures. But Carpenter, which today owns 28 small newspapers, will have its hands full just swallowing the far greater Black Press holdings.
So what happens next at Sound Publishing, the Black Press subsidiary that owns the Everett Herald and other, smaller news outlets in Washington, is still unclear. Court documents indicate there will be unspecified Black Press layoffs before the deal closes on Friday. In the U.S., the federal Worker Adjustment and Retraining Notification (WARN) Act requires companies with more than 100 workers to give 60 days notice before mass terminations. No such notice is on file with the Washington Employment Security Department. But the WARN requirement might not apply in the case of a chain of newspapers with multiple job sites.
At the Everett Herald, members of the nascent Pacific Northwest Newspaper Guild local are protected because they have not yet negotiated their first contract with Sound Publishing, according to Kaitlin Gillespie, the union’s executive officer. The Herald news staff unionized in 2022. Last week, the union and Herald management met for the first time since December, which was about the time the Black Press insolvency and sale were developing.
“We had a productive session last week and made some progress on some non-economic issues,” Gillespie said. Sound Publishing negotiators told the Herald union they can’t make a wage offer because the sale is pending. “We have not heard anything about layoffs,” said Gillespie, who hopes a contract agreement can be reached by June.
Since Post Alley last reported on the Black Press sale on Feb. 3, circumstances have changed significantly. Most notably, a $45 million (U.S.) pension obligation weighing on Black Press — a result of the 2006 acquisition and 2016 sale of the Akron, Ohio, Beacon Journal — has been wiped clean, with Black Press paying a mere $2 million to the federal agency now responsible for the pension fund. That pension obligation was a big reason Black Press sought creditor protection and needed to sell.
Also, there recently was a period of weeks during which other parties could bid on the Black Press holdings. The private equity companies and Carpenter Media were designated by the British Columbia court as lead bidders who set a minimum price. Five other parties signed non-disclosure agreements to look at the books, and “various parties conducted extensive diligence,” but no one submitted a counter offer, according to court documents.
Meanwhile, something unexpected made the cost of the transaction rise: The Hawaii properties of Black Press (BP Hawaii) were hit by a January ransomware attack that froze crucial computer systems. “While BP Hawaii was still able to produce its publications following the Cyber Incident,” a court document says, “the encryption of the affected servers impacted BP Hawaii’s ability to issue invoices to advertisers and subscribers. This adversely affected BP Hawaii’s cashflow by approximately US $200,000 per day.”
These days, companies routinely negotiate such ransoms, and the firm hired by Black Press to do so managed to get the initial $4 million demand reduced to $150,000. “The estimated total cost of the Cyber Incident, including a full forensic audit of the breach and identification and implementation of necessary fixes, is between US $300,000 and US $750,000.” Those are among the expenses covered by the $11.5 million (Canadian) bridge loan.
Besides the Everett Herald, Black Press subsidiary Sound Publishing owns two other dailies in the state — the Peninsula Daily News in Port Angeles and the Aberdeen Daily World. But the vast majority of Black Press publications in the Sound Publishing family are small-town weeklies in the major suburbs of Seattle, including Mercer Island, Renton, Kent, Bellevue, Federal Way, and Auburn, and on Bainbridge Island, Whidbey Island, Vashon Island, and the San Juan Islands. In Hawaii, besides the Star-Advertiser, parent Black Press also owns the two main papers on Hawaii Island, the paper on Kauai, and an Oahu weekly called Midweek.
All this means a nail-biting time for employees and readers for one of the largest publishing companies in the Northwest, one that already slashed resources at numerous local papers.
Black Press originally bid on Seattle Weekly and Eastsideweek when they were put up for sale in 1997, and eventually bought the publications as an unlikely member of its very large Washington family. Seattle Weekly was later stripped down and the print editions closed, though a modest website remains, with borrowed articles. Black scooped up many community papers in the region, reduced staff, and consolidated printing and administration. Many good papers were lost in the process, and my only hope is that as Black fades from the picture, some of these towns (especially Bellevue and Everett) will find a way to resume local ownership and focus.
Oahu Publications, the parent company of the Honolulu Star Advertiser, does not own the Kapolei printing plant? It was sold by Black to raise money to repay debt. The plant is owned by https://www.tradewindcap.com/real-estate and was being leased back to OPI for $250,000 per month. Did the new buyers of Black Press make a deal to continue leasing the plant? I guess we will find out when the sale closes tomorrow.