Washington Redskins owner Jack Kent Cooke yesterday agreed to buy the suburban Los Angeles Daily News from Tribune Co. for $176 million and indicated he is eager to acquire additional newspapers.
At the same time, Tribune Co. said it has agreed to sell nine of its cable television systems, including the one in Alexandria, to a Colorado-based cable company.
For Cooke, the deal marks a return to the media business, where he made his initial fortune years ago in Canada, and to Los Angeles, where he once owned the Lakers basketball team and the Forum where they play. Cooke said he will continue to live in Virginia and does not plan to get involved in the newspaper's daily operations.
"This is the first of what I hope is a series of acquisitions of media properties," Cooke, 73, said yesterday in a telephone interview. "They could be other newspapers or television stations. I am keen, I am eager and I want to get back into the newspaper business."
Cooke was unsuccessful in bids earlier this year to acquire Detroit-based Evening News Association and South Carolina's Multimedia Inc., although he made millions of dollars by selling his Multimedia shares back to the company. His winning $176 million offer for the Daily News topped those submitted by several other interested parties, including Dallas-based A. H. Belo Corp., which owns the Dallas Morning News, and a group of Daily News executives.
Tribune is selling the newspaper to Cooke to comply with Federal Communications Commission regulations that prohibit ownership of a newspaper and television station in the same city, and to raise cash to help finance its $510 million acquisition of Los Angeles independent television station KTLA-TV. It is also for these reasons that Tribune Co. said it has agreed to sell the nine cable television systems to Englewood, Colo.-based Jones InterCable Inc. for $237.5 million.
Jones is the nation's 17th-largest cable system operator, with 69 systems in 21 states. The cable systems it has agreed to acquire include Tribune's Alexandria cable operations. Tribune made no announcement yesterday regarding the planned sale of its remaining six cable systems, including those in Gaithersburg and Montgomery County.
Since the Daily News was acquired by Chicago's Tribune Co. in 1973 for less than $20 million, the newspaper has been transformed from a four-day-a-week free paper into a rapidly growing publication with circulation in excess of 150,000 daily and 169,000 Sunday. It is the dominant suburban daily in the rapidly growing San Fernando Valley area of Los Angeles. Tribune said the newspaper's primary circulation area has a population in excess of 1.8 million, which would make it the nation's 10th-largest population center if it were measured separately for census purposes.
Newspaper analyst John Morton said the Daily News had 1984 revenue of about $95 million and cash flow of about $15 million. Morton said Cooke's winning $176 million bid, about 12 times cash flow and about $1,100 per subscriber for the suburban daily, is a "good deal" for Tribune Co. and toward the high end of the range of recent newspaper acquisitions.
Morton said bidders also had to consider a potential capital investment of between $30 million and $40 million to upgrade the Daily News printing plant. He said new printing facilities will be needed to compete with a new suburban plant recently built by the Los Angeles Times and to expand production capacity as the San Fernando Valley continues to grow. The L.A. Times is the city's largest newspaper, with circulation in excess of 1 million.
"We did a thorough analysis of this Daily News and determined it would sell for something north of $150 million," Cooke said. "We were satisfied it was worth more than $150 million. The Daily News is the fastest growing paper in southern California and has what I believe to be one of the better publishers in America in Byron Campbell. He has brought the paper to the position it is in today."
Cooke said one of the reasons he was attracted to the newpaper was the rapid growth of the San Fernando Valley. "When I left there six years ago, in 1979, the area was bursting at the seams, and it apparently is continuing to burst," Cooke said. "The demographics are startling. I am very happy with this. I'm lucky as the devil."
In addition to the Redskins, Cooke owns the Chrysler and Kent buildings in New York, a thoroughbred breeding and racing farm in Kentucky, a company that provides video services at special events such as the Olympics and extensive real estate in Virginia. Earlier this year, he sold substantial downtown Phoenix real estate.