Knight Ridder Reporter Warns of Hostile Takeover--with Political Twist
As reports swirl that KR could or should be sold, under new pressure from what he calls a "pro-GOP" big investor, a longtime Philly Daily News scribe charges that this would be "bad news" for the chain--and all of American media.
By Will Bunch
PHILADELPHIA (November 02, 2005) -- As you probably know if you're a newspaper junkie, and may not know if you're a normal human being, a Florida-based investment group -- with zero fanfare -- this summer bought up 19% of the stock of Knight Ridder, Inc., the owners of the Daily News and the Philadelphia Inquirer, not to mention the Miami Herald, the San Jose Mercury News, and a bunch of other big names in the dead-tree world.
And now, apparently unaware that newspaper readership has been dropping steadily for a half-decade and that advertisers are starting to follow readers to this new-fangled Internet thingee, the investors -- named Private Capital Management -- are shocked, shocked to learn that they aren't getting the greatest return on their investment.
And so their solution, having been around for all of four months: They want to sell the company.
This is probably very bad news, for a couple of reasons. And even if you're one of the many people who thinks that newspapers are dinosaurs and believe it doesn't matter whether they live or die, you should pay attention to this.
No. 1: Are you concerned about pro-GOP Big Business taking over America's media business? Then you should be concerned about this deal.
My initial research shows that top executives of Private Capital Management donated $112,000 in late 2003 and early 2004 to help President Bush and Dick Cheney get re-elected. On Nov. 6 and 7, 2003, in what would appear to be a coordinated effort, six PCM executives each gave the maximum of $2,000 to Bush-Cheney '04.
Then on the same day, April 8, 2004, the head of PCM, Bruce Sherman, and company executive Gregg Powers gave $50,000 each, or $100,000 total, to the Republican National Committee. Company executives gave no money to Democrats during the 2003-04 cycle, according to the Political Money Line database.
Say what you will about Knight Ridder's business practices, but when it comes to journalism, they do a remarkably good job of getting out of the way. Thus, the liberal editorial voice of the Daily News and the Inquirer, and the amazing work by Knight Ridder's Washington bureau, which was one of the few media voices casting doubt in 2002 and 2003 on whether Iraq had WMD and posed a threat to America.
Now, big-time Republican donors want a piece of the action? Interesting.
No. 2: According to one Wall Street expert, the potential outcomes of the Knight Ridder turmoil may be good financially for some of the players, but not so good for the practice of journalism.
According to a report sent this morning to clients by analyst Stuart M. Rossmiller and his colleagues, Knight Ridder faces a 40% probability "that a strategic buyer [most likely Gannett] steps forward with a cash offer" of "up to $80/share" to buy Knight Ridder. And a 15% probability Knight Ridder will be purchased by private investors, increasing debt that would probably force the buyers to sell some newspapers.
Gannett, as newspaper junkies know, is notorious for stressing the bottom line over investigative reporting. And a sale to either Gannett or the Tribune Co. would create a journalistic monolith that would seek "synergy" by slashing reporters (well, the jobs -- hopefully not the actual reporters) from Washington to Baghdad.
The other two outcomes both involving increasing debt -- simply put, that means that money that could go for aggressive reporting will be wasted on paying bankers instead.
We only see one good solution here, and it's a long-shot -- but I'm going to throw it out there. It's clearly possible that some Knight-Ridder papers could be sold off individually. Wouldn't it be great if the stock in a new Philadelphia Daily News Corp. were owned by the non-profit Pew Charitable Trusts?
Something like this had been done in Florida, where the St. Petersburg Times is owned by the non-profit Poynter Institute. And it sounds like a win-win situation to us:
If our owner demanded profits be twice as high as they are, it would inevitably cut into our ability to hire enough people and buy enough newsprint to really tell you what is going on in our communities. We run a nicely profitable business so we can be an excellent newspaper; all too many companies print newspapers so they can make a lot of money.
The price of our paper is low. We keep it that way so all citizens can be informed, not just the well-to-do. We believe our democracy depends on informed citizens.
We give away money to local charities. We support political debates. We support dozens of scholarships annually. We believe it is our duty and privilege as citizens to do so.
These new developments aren't just a business deal -- they're important for a free media, and important for democracy.
Wake up, everybody.
--------------------------------------------------------------------------------
Will Bunch (letters@editorandpublisher.com) is an award-winning reporter for the Philadelphia Daily News and now also runs the Attytood blog at the newpaper's Web site, where this piece first appeared today.
Link Here
By Will Bunch
PHILADELPHIA (November 02, 2005) -- As you probably know if you're a newspaper junkie, and may not know if you're a normal human being, a Florida-based investment group -- with zero fanfare -- this summer bought up 19% of the stock of Knight Ridder, Inc., the owners of the Daily News and the Philadelphia Inquirer, not to mention the Miami Herald, the San Jose Mercury News, and a bunch of other big names in the dead-tree world.
And now, apparently unaware that newspaper readership has been dropping steadily for a half-decade and that advertisers are starting to follow readers to this new-fangled Internet thingee, the investors -- named Private Capital Management -- are shocked, shocked to learn that they aren't getting the greatest return on their investment.
And so their solution, having been around for all of four months: They want to sell the company.
This is probably very bad news, for a couple of reasons. And even if you're one of the many people who thinks that newspapers are dinosaurs and believe it doesn't matter whether they live or die, you should pay attention to this.
No. 1: Are you concerned about pro-GOP Big Business taking over America's media business? Then you should be concerned about this deal.
My initial research shows that top executives of Private Capital Management donated $112,000 in late 2003 and early 2004 to help President Bush and Dick Cheney get re-elected. On Nov. 6 and 7, 2003, in what would appear to be a coordinated effort, six PCM executives each gave the maximum of $2,000 to Bush-Cheney '04.
Then on the same day, April 8, 2004, the head of PCM, Bruce Sherman, and company executive Gregg Powers gave $50,000 each, or $100,000 total, to the Republican National Committee. Company executives gave no money to Democrats during the 2003-04 cycle, according to the Political Money Line database.
Say what you will about Knight Ridder's business practices, but when it comes to journalism, they do a remarkably good job of getting out of the way. Thus, the liberal editorial voice of the Daily News and the Inquirer, and the amazing work by Knight Ridder's Washington bureau, which was one of the few media voices casting doubt in 2002 and 2003 on whether Iraq had WMD and posed a threat to America.
Now, big-time Republican donors want a piece of the action? Interesting.
No. 2: According to one Wall Street expert, the potential outcomes of the Knight Ridder turmoil may be good financially for some of the players, but not so good for the practice of journalism.
According to a report sent this morning to clients by analyst Stuart M. Rossmiller and his colleagues, Knight Ridder faces a 40% probability "that a strategic buyer [most likely Gannett] steps forward with a cash offer" of "up to $80/share" to buy Knight Ridder. And a 15% probability Knight Ridder will be purchased by private investors, increasing debt that would probably force the buyers to sell some newspapers.
Gannett, as newspaper junkies know, is notorious for stressing the bottom line over investigative reporting. And a sale to either Gannett or the Tribune Co. would create a journalistic monolith that would seek "synergy" by slashing reporters (well, the jobs -- hopefully not the actual reporters) from Washington to Baghdad.
The other two outcomes both involving increasing debt -- simply put, that means that money that could go for aggressive reporting will be wasted on paying bankers instead.
We only see one good solution here, and it's a long-shot -- but I'm going to throw it out there. It's clearly possible that some Knight-Ridder papers could be sold off individually. Wouldn't it be great if the stock in a new Philadelphia Daily News Corp. were owned by the non-profit Pew Charitable Trusts?
Something like this had been done in Florida, where the St. Petersburg Times is owned by the non-profit Poynter Institute. And it sounds like a win-win situation to us:
If our owner demanded profits be twice as high as they are, it would inevitably cut into our ability to hire enough people and buy enough newsprint to really tell you what is going on in our communities. We run a nicely profitable business so we can be an excellent newspaper; all too many companies print newspapers so they can make a lot of money.
The price of our paper is low. We keep it that way so all citizens can be informed, not just the well-to-do. We believe our democracy depends on informed citizens.
We give away money to local charities. We support political debates. We support dozens of scholarships annually. We believe it is our duty and privilege as citizens to do so.
These new developments aren't just a business deal -- they're important for a free media, and important for democracy.
Wake up, everybody.
--------------------------------------------------------------------------------
Will Bunch (letters@editorandpublisher.com) is an award-winning reporter for the Philadelphia Daily News and now also runs the Attytood blog at the newpaper's Web site, where this piece first appeared today.
Link Here
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