Business

Digital First Media completes acquisition of Herald, ending 24 years of local ownership

Daily print sales of the Herald have fallen to roughly 45,000 from 300,000-plus in 1994.
Daily print sales of the Herald have fallen to roughly 45,000 from 300,000-plus in 1994.

When Pat Purcell acquired the Boston Herald in 1994, the deal came with the hopes that local ownership would ensure the long-term survival of Boston’s No. 2 daily newspaper.

That survival will now depend on a new owner, a New York hedge fund firm, and not the man who led the Herald for much of his career in the news business.

Digital First Media, which is owned by Alden Global Capital and also does business as MediaNews Group, completed its acquisition of the Herald Monday after beating rival GateHouse Media last month with a nearly $12 million bid in a bankruptcy auction.

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Digital First pledged to offer jobs to 175 people, out of the roughly 240 who worked there in December. A number of workers left on their own accord, while many others learned in recent days that they would be out of a job.

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The people who remain are bracing for more cuts, perhaps later this year. Union members in the Herald newsroom and advertising department last Thursday approved a new two-year contract that kept pay levels stable but left the door open for outsourcing. They also expect that some pension benefits will be trimmed as a result of the Herald’s bankruptcy filing in December.

“We did the best we could under the circumstances we had,” said Brian Whelan, who works in the Herald’s ad department and represents union workers there. “It’s a new day, starting today. We’re at least in the game.”

Digital First executive Kevin Corrado will take Purcell’s place as publisher; he is also publisher of the company’s two other dailies in Massachusetts, the Lowell Sun and the Sentinel & Enterprise of Fitchburg. Herald editor Joe Sciacca will remain in charge of the Herald newsroom.

Digital First’s next steps with the Herald remain unclear, and executives at the company didn’t return calls for comment. Employees said they were told on Monday to expect a revamp of the website as the company tries to build the paper’s digital audience.

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“We’re looking forward to going back to work and having work to focus on as opposed to trying to figure out bankruptcy proceedings,” said O’Ryan Johnson, a Herald reporter who represents the newsroom in the Newspaper Guild of Greater Boston. “It’s been a pretty rough ride over the last few months. We’re looking forward to things being calm for a little bit, before the next tidal wave hits.”

Digital First is also consolidating operations onto one floor at the Herald’s South Boston offices and ended its printing contract with the Globe; the Herald will instead print at a GateHouse facility in Providence. Globe executives said the company will continue to deliver the Herald.

Boston University journalism professor John Carroll pointed to recent layoffs in other Digital First newsrooms, such as at the Denver Post, as unfortunate harbingers of tight times ahead for the Herald.

“Digital First is owned by a hedge fund, and the hedge fund seems to see newspapers as revenue centers more than journalistic organizations,” Carroll said. “They have a history of siphoning off as much revenue as they can.”

Carroll said the Herald’s reliance on newsstand sales could be particularly problematic. Nearly two-thirds of its roughly 45,000 daily print sales are single-copy purchases as opposed to subscriptions, according to Alliance for Audited Media data.

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When Purcell acquired the Herald in 1994 for between $15 million and $20 million, the paper had a circulation of 300,000-plus. Last year, facing continued loses from declines in ad sales, Purcell put the Herald on the block. But he found a buyer only after agreeing to put the company into bankruptcy, to shave much of its $30 million-plus in debt and other liabilities. The early favorite among bidders was GateHouse, which owns a number of other papers in the state, but it was outbid by Digital First.

Carroll said it is encouraging that a buyer could be found to keep the Herald alive. But he expects it will have considerably less influence under its new owners.

“The question comes down to: ‘Is it better to have half a Herald than no Herald at all?,’” Carroll said. “I say, most likely, it is. But I think the position of the Herald in the community is likely to be much diminished.”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.