Cox to sell many papers and Valpak

Cox enterprises announced their intention to sell most of their portfolio of papers and Valpak. Given current valuation trends and the continued write downs of similar assets, its hard to imagine what these properties will be able to garner on the market, or who a likely buyer will be. AH Belo would make some sense for many of the Texas properties, but they have frequently stated their desire to neither buy nor sell newspaper assets. They also came up in relation to San Diego and denied interest there. Most of the other properties are quite small and located in North Carolina or Colorado, and might fit with other nearby publications. The rich community leader is also a frequent possibility, but that would involve selling them piecemeal rather than either through geographic clusters or as a complete package. No preference has been stated on how the transaction is likely to proceed.

More startling is the proposed sale of Valpak. Direct mail may not be sexy, but it is a very effective alternative to newspapers for the distribution of coupons. Most newspapers developed total market coverage products for advertisers which fill in their gaps in distribution with products just like this, and most were considered a lucrative way to increase revenue outside of the paper. This may be for precisely the opposite reason as the newspapers. Where newspapers are beaten down and unlikely to recover for the foreseeable future, Valpak may have excessive value unlikely to be realized any time but now. A further reason to beleive this may sell at a high valuation is the fact that different investment bank is handling the transaction from the newspaper operations.

We'll keep our eyes on this for both prospective buyers and valuation levels. Both are likely to be interesting.