LIBERTY SOLD TO ANOTHER INVESTMENT FIRM.

The former community newspaper division of Hollinger International Inc. changed hands again last week, as the Fortress Investment Group LLC of New York City said it was merging one of its affiliates with Liberty Publishing Group Inc. of Northbrook, Ill. Terms weren't disclosed.

Liberty

publishes more than 60 dailies and more than 200 bi-weeklies, weeklies and shoppers. The average circulation of the company's dailies is 5100, and its largest daily is the Daily Telegram of Adrian, Mich., with a circulation of about 16,500. Its papers include the Chicago Suburban Newspapers, a group of 37 weekly and twice-weekly papers surrounding the windy city.

The company, which was bought from Hollinger by the leveraged-buyout firm Leonard Green & Partners of Los Angeles in 1998, put itself on the block last summer.

Unnamed analysts quoted by the Associated Press at the time said the company could fetch anywhere from $500 million to $600 million. The quarterly newsletter the Cribb Report -- published by the publication broker Cribb & Associates of Bozeman, Mont. -- said last week that the company had pulled itself off the market.

"Speculation is that a high enough bidder was not found and the company chose instead to restructure debt," said the Cribb Report. The newsletter went on to say that the company "is actively pursuing properties to purchase and appears to have returned to a growth-by-acquisition mode."

Fortress Investment calls itself "a global alternative investment and asset management firm" that manages a total of about $15 billion of equity capital, and through its private equity business manages about $7 billion "on behalf of prominent institutional investors and high net worth individuals."

Advisors to Liberty included Bear, Stearns & Co., and Dirks, Van Essen & Murray of Santa Fe, N.M., the newspaper mergers-and-acquisitions firm. The companies said the deal would close within the next two months.

Looks like the way Liberty restructured its debt was to sell itself to a much bigger investment firm than its previous owners. Fortress manages about four times as much capital as Green, so there are deeper pockets there. But it's clear that the company went begging among the newspaper industry buyers, with nobody prepared to pay a significant amount for the rag-tag group of tiny dailies and other papers.