Fidelity calls it quits

Boston Herald publisher Pat Purcell buys mutual-fund giant's 100-plus Community Newspaper chain

by Dan Kennedy

Fidelity is getting out of the newspaper business. A decade after the mutual-fund giant began amassing an empire of more than 100 newspapers in Greater Boston and on Cape Cod, the company announced on the morning of Thursday, September 28, that it intends to sell to Boston Herald publisher Pat Purcell.

"This is one of the most extraordinary things that has happened to the Boston Herald in a long time," Purcell said in a conference call with reporters.

Fidelity's Community Newspaper Company, or CNC, will become a division of Herald Media, Inc., parent company of the Herald. Neither Purcell nor the Fidelity officials who were on hand would disclose the terms of the sale, adding there would be a "blackout" on further comment until the transaction has been completed.

For the time being, at least, Purcell said he will continue to operate CNC as an independent company, retaining president Kirk Davis who, over the past couple of years, has turned millions of dollars in losses into a modest profit via a downsizing strategy that has brought criticism both from his employees and from leaders in the communities CNC covers (see "Don't Quote Me," News and Features, February 3).

The announced sale, expected to be completed in November, comes just a week after the company that owns the Quincy Patriot Ledger, the Brockton Enterprise, and a string of South Shore weeklies took those papers off the for-sale block. Purcell and CNC had both been contenders, although CNC pulled out of the running several weeks ago. Although the Herald is reportedly profitable, Purcell has been seeking for some time to expand his business beyond its narrow urban base (see "Cliffhanger," November 12, 1999).

The combination also come at a time when the Boston Globe is expanding coverage in Boston's western suburbs, overlapping with territory covered by the Worcester Telegram & Gazette. Both the Globe and the T&G are owned by the New York Times Company. It just so happens that the western suburbs are also home to CNC's strongest papers, including its flagship, the Framingham-based MetroWest Daily News (see "Don't Quote Me," News and Features," September 29).

Watch for next week's Phoenix for a full analysis of the sale and what it means.

The official announcement

What follows is the complete text of a press release sent out on the morning of September 28:

Fidelity Capital announced today it had reached an agreement in principle to sell its award-winning Community Newspaper unit, which publishes weekly and daily newspapers in eastern Massachusetts, to Herald Media, Inc., parent company of the Boston Herald.

"Community Newspapers is at a point in its growth where we believe this sale makes sense to ensure the next phase of its development and its continued ability to serve the readers and advertisers of eastern Massachusetts," said Steven P. Akin, president of Fidelity Capital, the Fidelity Investments business unit responsible for the newspapers. "We weren't in the market to sell when we were approached by Pat Purcell, president and publisher of the Boston Herald. But it became clear to us that this sale can provide the newspapers with expanded scale and flexibility to continue to grow and serve the community.

"Over the past several years, these newspapers and our online service have won numerous awards and have become a profitable business due to the hard work of Community Newspapers people," Akin said. "We have great faith in the future of these publications and are pleased that they will remain under strong local ownership."

"We think this sale would be great for the people of Community Newspapers, who have worked very hard to build a strong group of publications," said Kirk A. Davis, Community Newspapers president. "The collective strength of our newspapers creates a robust media organization that offers the benefits of both a big-city daily and local papers that appeal to local readers and local advertisers."

Akin said finalizing the sale was contingent upon completion of due diligence being conducted by the buyer, which has signed a letter of intent to make the purchase, and that a closing sale was expected by November 1, 2000.

"This is a fabulous opportunity for both the Boston Herald and Community Newspapers," said Purcell, president of Herald Media, Inc., which is the parent company of the Boston Herald and several online services, and would be the parent company of Community Newspapers. "The Herald and CNC will have a combined unduplicated readership of over 2 million, with a demographic profile superior to that of the daily Boston Globe. I look forward to working with everyone to maximize the strengths of these two great companies."

Community Newspaper Company publishes 88 weekly newspapers; four dailies comprising the MetroWest Daily News, Neponset Valley Daily News, the Daily News Tribune, and the Milford Daily News; 15 shoppers; the award-winning online enterprise Town Online; and a number of targeted specialty publications. The company's publications have a combined circulation of nearly 900,000 distributed to more than 140 communities throughout eastern Massachusetts.

The Boston Herald was purchased in 1994 by Pat Purcell, president of Herald Media, Inc., which also is the parent company for jobfind.com, bostonherald.com, homefind.com, and carfind.com. The Herald, is the second-largest daily newspaper in New England with a circulation of 266,000 and a Sunday circulation of 170,000.

Fidelity Capital is a new-business development and venture-capital arm of Fidelity Investments. It invests private equity on behalf of Fidelity Investments in a wide variety of businesses including publishing, transportation, human-resources services, and hospitality.

Kirk Davis's statement

The Phoenix has obtained the text of an e-mail that CNC president Kirk Davis sent out to his employees on September 28. The e-mail is as follows:

I want to take this opportunity to tell you about a significant positive development for the CNC organization. Later this morning, we will be making an announcement to the media that Pat Purcell, president of Herald Media, Inc. and the publisher of the Boston Herald, has signed a letter of intent to purchase CNC. We expect to complete the sale by November 1, 2000. I believe this is exciting news for our company. Joining forces with such a strong Boston institution will continue to preserve local ownership of our newspapers and bolster our competitiveness in Eastern Massachusetts.

As you know, Fidelity Capital has not been planning to sell CNC. We have only now considered a sale because after being approached by Herald Media, it became clear that this particular opportunity would provide CNC with the increased scale and flexibility necessary to ensure the next phase of our development, better serve our customers and preserve a platform for sustainable growth. The fact is that Herald Media's interest in CNC speaks directly to the strength of the organization you have helped build.

Over the past several years, our company has won numerous awards and has become solidly profitable due to your hard work. Today, CNC is one of the largest news organizations in Massachusetts and both Fidelity Capital and I are extremely proud of your accomplishments.

The combination will create a media organization that reaches over 2.1 million readers. Additionally, aligning our newspapers and online assets with the Herald creates a robust media organization that ultimately will provide advertisers with additional opportunities for precision targeting as well as broad reach capabilities.

I wanted to tell you about this development as soon as possible. I realize that this will raise many questions. As a first step in my ongoing commitment to keeping you informed, I have arranged an initial round of employee meetings (please see the attached schedule). I feel that it is important to meet with as many of you as possible to talk about this in person and, to the extent possible, answer your questions.

I am confident that you will find that joining forces with the Herald offers tremendous opportunities for both organizations. I have complete confidence in Pat Purcell's commitment to our employees, products, advertisers, and the communities we serve. All of us have worked very hard to make CNC into a very successful community news organization and we are now poised to take the next big step which I believe this opportunity represents. I look forward to seeing you.