HM Capital buys newspaper assets

The Dallas, Texas-based private equity firm is the latest to snap up struggling publications.

HM Capital Partners has acquired several newspapers, real estate and a web site from Blethen Maine Newspapers, a subsidiary of The Seattle Times Company, for an undisclosed amount.

HM Capital, formerly known as Hicks, Muse, Tate & Furst, has traditionally invested in media companies, including newspapers like the Wilkes-Barre Publishing.

“Reporting of the downward trends of newspapers has been skewed by the difficulties faced by fewer than 100 major market papers,” Peter Brodsky, a partner at HM Capital, said in a statement. “In fact, there are more than 1,300 newspapers in the US and the majority of them continue to be vital sources of local information for their communities, particularly in small and mid-sized markets.”

The media assets HM Capital is buying are The Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal, the Waterville Sentinel, the Coastal Journal and MaineToday.com. HM is partnering with Richard Connor, who has led several newspaper companies, on the deal. Connor will be the company’s chief executive officer.

Citizens Financial Group arranged the transaction’s financing.

Private equity firms continue to be interested in newspaper assets despite some high-profile disasters. The Tribune Company, which owns several newspapers including the Chicago Tribune, collapsed under the weight of a $13 billion debt load only a year after its $8 billion acquisition by real estate mogul Sam Zell. The Star Tribune Company, which owns the Minneapolis Star Tribune, filed for bankruptcy in January. Avista Capital Partners acquired it for $530 million in March 2007.

Warren Buffett, who owns the Buffalo News and a stake in the Washington Post Company, said at a shareholders’ meeting in May newspapers have the potential for “unending losses”. Buffett said there is no price at which he would consider making additional investments in newspapers.

In the gloomy environment, Platinum Equity, a distressed specialist based in Los Angeles, acquired the San Diego Union-Tribune earlier this year.

Meanwhile, Stephen Pagliuca, a managing director at Bain Capital, is reportedly part of a bidding group to buy the Boston Globe from the New York Times Company, while Warren Hellman, founder of Hellman & Friedman, is reportedly part of a group of concerned citizens look for a way to prevent the San Francisco Chronicle from shuttering.

HM Capital was established in 2006 when Hicks, Muse, Tate & Furst changed its name more than a year after its co-founder Tom Hicks left.