Florida investor aims to be America’s largest newspaper publisher

David Hoffmann, the latest billionaire plunging into the newspaper business, may be the most ambitious one yet.

A lifelong newspaper fan who made his fortune with an executive recruiting firm, Florida-based Hoffmann heads a sprawling business network that began buying newspapers in 2022.

That accelerated last fall. A trust in his wife’s name began buying shares of Lee Enterprises, the nation’s third-largest newspaper chain, in hopes of acquiring the Iowa-based company with newspapers in 72 communities in 25 states.

Hoffmann, 72, told me that he aims to become America’s largest newspaper publisher, overtaking even the giant Gannett chain within a few years.

“If all goes according to plan, we’ll probably surpass Gannett as the largest newspaper” publisher, he said by phone.

Although the industry has been on a downward trajectory for two decades, Hoffmann believes it will endure. He sees opportunity in both its digital evolution and the printed newspaper, which he believes “is part of the fabric of America.”

“I just can’t believe America is going to be a place where people aren’t interested in local news,” he said.

People may look for local news on sites like Instagram “but I think the local outlets will win out because of the integrity of the reporting and professionalism and independence of the journalists, which I think is very important to continue in the country,” he said.

The newspaper foray began when Hoffmann acquired Florida Weekly, a group of nine papers, and hired its co-founder, Pason Gaddis, a former Gannett business manager, as CEO of Hoffmann Media Group.

Gaddis shared the bigger ambitions at the time, telling Gulfshore Business that the group was “actively seeking opportunities throughout Florida and the U.S.”

“Through economies of scale, we can work together to maintain these essential news sources so many small communities rely on,” he said.

Now Hoffmann’s also looking at big communities. Simultaneous with its move on Lee, the trust started buying shares of The Dallas Morning News parent company.

Gaddis and Hoffmann told Florida’s Business Observer in November that they believe the newspaper business reached its low point and they’re betting on its return.

 “A lot of smart people think the newspaper industry is dead. I don’t. We think the newspaper industry, which has been beaten down, can be profitable again,” Hoffmann told the publication.

Hoffmann now owns just under 10% of Lee. The company has policies in place to prevent a hostile takeover but Hoffmann believes they can negotiate a deal.

In a possible sign of confidence, he’s acquiring a press in Missouri that could publish Lee’s flagship St. Louis Post-Dispatch. Lee closed its press in January and outsources production to Gannett.

“It’s tied to another newspaper that’s private and we’re buying that either way,” Hoffmann said, adding that it’s a relatively new press that’s “better than anything they’re doing with Gannett or anything they were doing, it’s more efficient in a number of ways.”

I wonder if Hoffmann’s also trying to buy the McClatchy newspaper chain, which is now owned by New Jersey investment firm Chatham Asset Management. It owns The Kansas City Star, which sold its press in 2020.

“Yeah, I can’t, you know, I’m sure you appreciate confidentiality agreements,” Hoffmann said when I asked about McClatchy. “And we’ve just got to be careful on what we comment on and when we’re pursuing papers.”

I couldn’t get a comment from McClatchy before deadline. Lee directed me to a March statement that it’s trying to “work constructively with Hoffmann” and entered into a confidentiality agreement so he can make a proposal and detail financing.

Hoffmann said publishers are reaching out, especially after his Lee bid received national coverage.

“I’d love to tell you about the one in Missouri but I can’t, but I can tell you this: I think anybody that’s had an interest in selling their newspapers called us,” he said, “and right now I’d say we’re the most popular game in town within the newspaper industry.”

Lee seems like a bargain, if you believe newspapers still have potential. With a market cap at $53 million on Thursday, that values its newspapers at around $700,000 apiece on average. Not counting around $450 million in debt.

Hoffmann said his current papers have a 25% profit margin. Keys to success include profit-sharing with senior employees and emphasizing coverage of school sports, he said.

Hoffmann’s not the only buyer. Last year saw a record number of newspaper sales, said Tim Franklin, senior associate dean at Northwestern University’s Medill School.

“We’re going to see even more of it this year because of the economic pressures that the industry is facing,” Franklin said.

Other buyers include CherryRoad Media, a project of New Jersey tech entrepreneur Jeremy Gulban, and Carpenter Media, the Southern chain that acquired Sound Publishing last year.

Then there’s former TV newsman Chuck Todd, who told The New York Times recently that he and a bank may invest up to $2 billion in a network of local-news sites, also emphasizing youth sports.

These are different moves than the purchases of iconic newspapers, like wealthy investors have done in Los Angeles, Boston, Minneapolis and Washington, D.C.

They are instead betting on the enduring value of local news in mostly smaller cities and communities.

Surveys say most Americans trust and value local news but many independent, local publishers are struggling. The big chains are deeply indebted to, or owned by, financiers and cut newsroom jobs to reduce costs.

That’s my biggest question for Hoffmann, especially if he comes to own the largest share of America’s newspaper industry.

Other buyers, including Carpenter and McClatchy, acquired newspapers that were already thinned out and cut them further. That’s left their local papers with few resources to do investigative journalism or even thoroughly cover government and institutions.

Will Hoffmann buy ghost newspapers and further cut costs? He replied by pointing to what’s happened at newspapers he’s bought.

“So far in the 21 newspapers we’ve not laid off anybody that we bought,” he said. “That’s counter to our culture. We have 16,000 employees worldwide. We had a modest layoff during COVID. We had zero salary lost by any of our employees worldwide.”

Hoffmann continued:

“I think being private and big is an advantage sometimes and we don’t believe in layoffs and we certainly don’t believe in salary reductions.”

What about Lee newsrooms that have almost no reporters and local editors left? They may be profitable but they’re low-quality. Would he run them as-is or do they need more investment?

“Well, I’m a big believer in journalistic integrity and journalistic independence,” he said. “And so I think that if you want to have a good newspaper you’ve got to have good reporters and journalists. And so, yeah we do that, and we take a hard look at that, but we’re not fearful of investing in individuals and talent to make that happen. We don’t hesitate to do that.”

By now we should all be wary of promises from Florida billionaires.

Local ownership of newspapers is also preferable to further consolidation.

But you can’t be too picky when more layoffs, closures and a recession are looming.

If Hoffmann’s commitment to saving local news and journalism jobs is sincere and enduring — and he doesn’t demand 25% margins — perhaps these limping newspaper chains can thrive again.