Longtime editor, sales exec depart publications in wake of sale
GRAND RAPIDS — The acquisition this month of Gemini Corp.’s assets by a Southeast Michigan publisher comes amid a broader consolidation trend in the media industry.
With the deal for the Grand Rapids Business Journal (GRBJ), Grand Rapids Magazine and Michigan Blue, Troy-based Hour Media Group LLC makes its first foray into the West Michigan market.
In recent years, the publisher of Hour Detroit and DBusiness magazines has become a consolidator in the national media industry, growing its operations to encompass more than 130 regional lifestyle, business-to-business and custom content publications around country.
Hour Media executives, who did not respond to multiple requests for comment for this report, reportedly want to grow the West Michigan brands using the publishing firm’s existing platform. However, Hour Media will enter the West Michigan market without a pair of longtime Gemini Corp. executives.
Communications industry executives who have worked with Hour Media’s titles in the past noted the company is well regarded in Southeast Michigan for the writing, design and photography in its print publications.
“Those are all the things that have been important to Hour over the years, whether it’s one of their magazines or it’s a custom publishing business,” said Matt Friedman, a founding partner with Tanner Friedman, a Farmington Hills-based communications firm. “Even though it’s been a tough go for print publications, their magazines have always looked really good and read really well. I think that’s kind of a hallmark of who they are.”
To that end, local media observers note that transactions such as the Hour-Gemini deal do create some consternation for a wide variety of stakeholders, including public relations and advertising groups that count on publications to provide editorial and advertising messaging for business clients.
“The concern from the PR and the ad community: Is this still going to be a good outlet?” said Tim Penning, a professor of public relations and advertising in the School of Communications at Grand Valley State University, and a prior columnist for the GRBJ.
“By that, I mean not only that it exists, but that there’s room for covering the kinds of things we would like them to be a channel for, that we can reach the audience — whether through editorial or advertising — that we want to reach,” Penning said, noting niche B2B and lifestyle publications may have limited audiences, but offer “perfect” outlets to reach business leaders.
In announcing the deal, Hour Media offered little indication that it plans any major overhaul of the editorial or advertising operations for its new titles.
Terms of the deal between Hour Media and Gemini Corp. were undisclosed.
In an interview with the GRBJ, Hour Media President John Balardo said reporters and editors of the publications would continue to enjoy editorial independence as he takes over day-to-day operations of the titles.
“We’re not changing anything editorially; we leave that up to our local editorial team,” Balardo told the GRBJ. “We don’t want to come in and dictate. … It’s about growth initiatives for the platform in general.”
However, the Grand Rapids-based editorial team will go forward without the direction of its longtime editor, one of a pair of high-profile staffing changes implemented by Hour Media in the wake of the acquisition.
Gemini Media LLC, the Hour Media subsidiary that acquired the brands, opted not to offer employment to Carole Valade, who served as senior manager, associate publisher and editor of Gemini’s various publications for 31 years.
In a brief statement to MiBiz, Valade said the staff of editors retained by the new entity “will continue to provide this community and Michigan with the reporting and publication integrity and professionalism this region has come to expect and respect. Each of them are long-tenured leaders of each title.”
As well, Randy Prichard, Gemini Corp.’s veteran general sales manager and associate publisher, confirmed to MiBiz that he was not retained by the Hour Media subsidiary.
In all, Gemini lost more than 90 years of experience as a result of the sale, which allowed President, Publisher and CEO John Zwarensteyn to “retire and pursue other opportunities.”
Kim Mac Leod, president of Norwalk, Conn.-based Regional Media Advisors, which advised Zwarensteyn and Gemini Corp. on the deal, said that whether longtime executives retain their employment after an acquisition is largely a “structural” matter, and not reflective of past performance.
“It varies from acquisition to acquisition. … There’s nothing typical,” Mac Leod said. “It’s really a structural thing. It’s unfortunate, but sometimes the structure just doesn’t allow for it.”
The Hour Media deal comes amid a period of declining circulation for Gemini’s signature Grand Rapids Magazine title.
According to a report from the Circulation Verification Council, a third-party circulation auditor, the magazine’s circulation declined by 18 percent from the first quarter of 2017 to the first quarter of 2018, and has largely been on a downward trajectory since the end of 2016.
An April 2017 report in the Columbia Journalism Review noted that circulation for most city and regional magazines has largely remained steady in the wake of the Great Recession. Meanwhile print advertising — which makes up 75 percent to 90 percent of revenues for most titles — plummeted in 2008 “and never came back,” according to the report.
Additionally, city and regional magazine publishers face increased competition for ad buys, as new niche publications, blogs and websites further cut into their markets, CJR reported.
The market pressures have resulted in lower valuations and more bargains for consolidators such as Hour Media.
For example, Hour Media acquired four city magazine titles in Atlanta, Cincinnati, Orange Coast, and Los Angeles from Indianapolis, Ind.-based Emmis Communications Corp. for $6.5 million in February 2017, according to an SEC filing.
According to the CJR report, Emmis paid $30 million for a single title when it acquired the Los Angeles publication in 2000.
Friedman of Tanner Friedman said the need to streamline advertising functions often serves as a driver for consolidation in the media industry.
“My gut really is that this is more about a statewide advertising play than about anything else,” Friedman said of the Hour-Gemini deal. “These things are almost always driven by advertising and the ability to aggregate advertising. It would seem that major advertisers in Michigan … would be able to find value and have interest in making one buy and appearing in multiple publications with a bigger footprint. It seems to me that’s a logical part of this.”
Hour Media’s exact motivations for buying the Gemini titles remain unclear. However, Mac Leod said that deals involving media companies are largely driven by a need for scale.
“The strategy of any owner is going deep before you go wide. The greater the footprint you have in a market, the greater the competitive advantage you have,” Mac Leod said, adding that building a publication portfolio catering to a variety of niche readers can provide a company like Hour Media greater leverage over its competitors. “Hour Media now has a big footprint in the state of Michigan.”
Scale, advertising aggregation and other factors have led to a wave of dealmaking in the media sector, ranging from multi-billion dollar mega-mergers between global conglomerates down to large media entities scooping up local independent publishers, including in West Michigan.
In January 2017, Pioneer Press, a family-owned, Big Rapids newspaper and digital publisher, sold to New York City-based publishing giant Hearst Communications, as MiBiz reported at the time.
As well, Media General, the parent company of Grand Rapids-based WOOD TV8, WOTV and WXSP, was acquired in January 2017 as part of a $4.6 billion deal with Nexstar Media Group Inc.
Grand Rapids-based Fox 17 WXMI also became a target last year with Sinclair Broadcast Group Inc.’s failed $3.9 billion acquisition of owner Tribune Media Co. The deal included a plan to sell off the West Michigan station and other properties to a startup investor group in an unsuccessful bid to earn regulatory approval.
A first half 2018 report from The Jordan Edmiston Group Inc. (JEGI), a New York City investment banking firm, cited 950 deals in the media, information, marketing, software and tech-enabled services sectors that totaled almost $140 billion in value. That value represented a 43-percent increase since last year.
GVSU’s Penning notes that whenever a media company transaction takes place, a wide variety of stakeholders — from consumers to advertising and marketing professionals — often express concern about whether the acquirer will continue on with the seller’s traditions.
“There’s a fear that in the name of efficiency, there’s some erosion of editorial coverage,” Penning said. “I’m not predicting that. I’m just saying that’s a possibility.”