DAVENPORT, Iowa - Lee Enterprises Inc., which publishes newspapers in the midwestern and western United States, agreed yesterday to buy the Howard Publications chain of western and midwestern newspapers for $694 million.
Lee said in a statement that it will pay $440 million in cash and new bank borrowing for the family-owned company. The purchase is expected to add 15 cents a share to Lee's earnings in the first full fiscal year, which begins Oct. 1, the company said.
Howard, based in Oceanside, Calif., has 2,400 employees and a total daily circulation of 479,000. Its newspapers include the Waterloo-Cedar Falls Courier in Iowa; the Star-Tribune in Casper, Wyo.; the North County Times in Oceanside and Escondido; The Times in northwestern Indiana; The Times-News in Twin Falls, Idaho; and The Post-Star in Glens Falls, N.Y.
The purchase also includes Howard's half-interest in The Sioux City Journal in Iowa.
Lee owns 23 daily newspapers, including the Corvallis Gazette-Times in Oregon and The Bismarck Tribune in North Dakota. With the purchase, Lee Enterprises will own 38 daily newspapers and joint interests in six others.
The transaction is expected to be completed in the second calendar quarter, Davenport-based Lee said.
The acquisition comes as Lee tries to boost its profit amid a slump in advertising sales. The company said last month that its profit from continuing operations for its fiscal first quarter, which ended Dec. 31, fell 14 percent to $18 million, or 41 cents a share, from $21 million, or 48 cents, as employment and retail ads declined.
Chief Executive Officer Mary Junck, a former publisher of The Sun, also said that, while the acquisition offers some cost-saving possibilities in the areas of newsprint and corporate overhead, it chiefly is seen in terms of revenue potential.
Lee also plans more aggressive advertising sales at the Howard newspapers, as well as a launch of niche publications, and expansion of online services such as classified ad programs and special sections, Junck said.
She has said Lee Enterprises is looking to acquire an undisclosed number of newspapers, using money from the sale of broadcast stations to Emmis Communications Corp. last year for $559.5 million.
Lee's shares fell 59 cents yesterday to close at $35.09.