A second possible buyer has emerged for the Boston Herald, challenging GateHouse Media’s plan to acquire the Herald out of bankruptcy and add the paper to its vast newspaper holdings in New England and across the country.
Revolution Capital Group, a Tampa-based investment firm, made a rival offer in federal bankruptcy court in Delaware Tuesday. Herald Media Holdings, the local company that owns the Herald, filed for Chapter 11 bankruptcy protection in December to renegotiate its debts and shed pension liabilities in advance of a sale to GateHouse.
Like many newspapers, the Herald has been struggling amid an extended plunge in print ad revenue. At the time of the bankruptcy filing, Herald Media employed about 240 people and was projected to lose money this year.
GateHouse proposed paying $4.5 million in cash, as well as at least $500,000 in assumed liabilities, including paid time off owed to employees.
Through an affiliate, Revolution Capital said in court filings Tuesday that its offer for the Herald is superior to GateHouse’s proposal: It’s offering a $3 million cash payment, up to $2 million for severance payments, and a minimum of $750,000 for employees’ paid time off. The Revolution bid also would set aside a 10 percent stake in the new firm that would own the Herald for employees.
Revolution Capital said it isn’t requiring a break-up fee in case the deal falls through. GateHouse is seeking $200,000 for this contingency.
“We’re excited to be a part of the process and we feel we have the best offer for the employees of the company and the business moving forward into the future,” said Robert Loring, managing partner of Revolution Capital.
The new bid drew immediate praise from the Communications Workers of America, which represents more than 100 unionized workers at the Herald. The union said in a court filing Tuesday that it considers the Revolution Capital bid to be the superior offer, in part because of the money the firm is committing to severance and paid time off.
Executives at Herald Media and GateHouse couldn’t be reached for comment Tuesday. Any buyer would need to be approved by a bankruptcy court judge before the sale goes through.
In court filings, Herald Media said GateHouse made the only firm bid during a pre-bankruptcy search for a buyer. But Revolution Capital said it was not contacted by the Herald or the outside firm it hired to conduct the sale, even though it expressed an interest in buying the Herald in 2013.
The filing from the Revolution Capital affiliate came just two days before the Herald bankruptcy case has its next hearing before a federal judge in Delaware.
“We appreciate the increased interest in the Boston Herald companies and look forward to a vibrant court-managed process to determine what is in the best interest of the newspaper’s future,” Herald publisher Pat Purcell said in a statement.
Loring is a Boston College graduate who grew up on the South Shore and owns a house in the area. (He had a brief stint as an intern on the Herald’s sports desk after he graduated from BC.)
Loring primarily built his career in M&A while at Platinum Equity, a California private equity firm, before teaming up with Cyrus Nikou to launch Revolution Capital in 2009. (Nikou left in 2016.) The private equity firm invests in small and midsize businesses in a variety of industries, ranging from a medical uniform business to a furniture products manufacturer. It doesn’t currently own any newspapers.
Loring was among the bidders for The Boston Globe when the New York Times Co. put the Globe up for sale in 2013; Times Co. eventually sold the Globe to Red Sox principal owner John Henry.
Revolution Capital had acquired the Tampa Tribune in 2012 and later sold it to the Poynter Institute, the nonprofit owner of the Tampa Bay Times in 2016; the Tribune was folded as a result of that transaction.
GateHouse, meanwhile, is one of the country’s biggest newspaper publishers. Based near Rochester, N.Y., GateHouse owns dozens of daily and weekly papers in New England, including the Providence Journal, the Telegram & Gazette of Worcester, and the Patriot Ledger of Quincy.
Rick Edmonds, a media business analyst at Poynter, said he expects Revolution’s goal would be to eventually sell the Herald at a profit within several years of buying it, much like what happened with the Tampa Tribune. He said he expects that job cuts at the Herald will be likely under either buyer. In fact, both bidders have said they plan to retain only 175 employees.
But Edmonds said the long-term health of the paper might be better preserved under GateHouse, which already has an extensive publishing infrastructure in place.
“Yes, they do make cuts themselves, and they have profit targets that they’re trying to hit,” Edmonds said of GateHouse. “[But] they have a body of resources and competence that I don’t think Revolution Capital has.”