How much can Rupert get for fish-wrappers?

Now that Rupert Murdoch has confirmed our prediction that News Corporation would sell off the Ottaway Newspapers group after it pays over five billion bucks for Dow Jones & Company, how much will the cash from those small market newspapers return to the News Corp. coffers? Newspaper broker Larry Grimes of W.B. Grimes & Co., pictured, tells RBR/TVBR that while the ad marketplace is generally soft for newspapers, the Ottaway papers are in good markets. "I wouldn't be surprised if the Ottaway newspapers commanded 11 to 12 times cash flow," he said. If analyst estimates are correct that Ottaway has about 50 million in CF, that could mean a price of 550-600 million. Grimes said multiples for daily newspapers peaked at 14 times a few years back, but are now generally in the 9.5-11 range.

The Ottaway group is not concentrated in a single geographic region, so "there is not one buyer who would just pop to mind," Grimes said. He thinks the papers might bring more sold off piece by piece, rather than as the whole. Ottaway is strong in New England, has one of its largest newspapers in Stockton, CA, and also has newspapers in Oregon, New York and Pennsylvania. Potential bidders could include Gannett, Gatehouse Media, Media News Group, Community Newspaper Holdings and American Consolidated Media, Grimes suggested.

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