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GOP Investors Trying to Break Up Knight-Ridder Newspapers

 
 
Reply Wed 2 Nov, 2005 06:07 pm
I consider Knight-Ridder to be one of the few remaining newspapers with their integrity in tact. In fact, I've said many times that the torch has been passed from Catherine Graham's Washington Post to Knight-Ridder. We are in big trouble if the Republicans succeed this this press coup.---BBB

GOP Investors Trying to Break Up Knight-Ridder Newspapers
By J.P. Zenger
The Daily Kos
Wednesday 02 November 2005

A group of investors from Florida, who are regular contributors to Bush and GOP National Committee, are trying to break up the Knight-Ridder newspaper chain. Knight-Ridder is one of the few truly independent mainstream news sources that provides truly independent coverage and investigative journalism. Knight Ridder includes the Philadelphia Inquirer, as well as major papers in Northern California, Miami and many other cities.

Their reporters had the rare distinction of being able to see through the Bush Administration's smokescreen before the Iraq invasion. Their stories in 2002 and 2003 predicted everything that has subsequently happened in Iraq - based upon leaks provided to them by career State Department and Defense Department staff.
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Knight Ridder Shareholder Demands That Chain Be Sold
By Richard Siklos
The New York Times
Wednesday 02 November 2005

Knight Ridder, the publisher of 32 daily newspapers including The Miami Herald and The Philadelphia Inquirer, has come under fire from its largest shareholder, which yesterday demanded that the company put itself up for sale.

The attack from Private Capital Management, a Naples, FL, money management firm, came in the form of a letter to Knight Ridder's board, which cited a 14 percent decline in the stock of the company, the nation's second-largest newspaper publisher by circulation, since board members invited Private Capital and other investors to meet with them in July.

The letter cited "limited revenue growth across the newspaper industry" and the limpness of the company's stock price despite several moves the company has made since then, including raising its dividend, repurchasing shares and selling assets. "We believe the board should aggressively pursue the competitive sale of the company," the letter said.

If Knight Ridder's board does not accede to the demand, the firm added in a securities filing, it would "strongly consider" supporting efforts by other unnamed investors to replace the board and managers, take over the company or "take other action to maximize shareholder value."

The public filing of the letter sent shares of Knight Ridder up 9 percent yesterday to close at $58, although it was not immediately clear who, if anyone, would want to buy Knight Ridder. Knight Ridder executives did not return calls to their San Jose, Calif., headquarters. Knight Ridder shares have not performed much worse than some other newspaper stocks since it held the meeting with investors on July 19. During the same period, Gannett stock has declined 11 percent and The New York Times Company is down 13 percent.

Private Capital Management, which is run by the portfolio manager Bruce S. Sherman, is a subsidiary of the brokerage firm Legg Mason. The firm has increased its holdings of newspaper stocks since 2000, a period of considerable uncertainty in the industry.

Mr. Sherman's firm holds a 19 percent interest in Knight Ridder, which is otherwise widely held.

Private Capital Management is also the largest outside shareholder in The New York Times Company and has large positions in Belo, Gannett, Media General, McClatchy, Journal Register and Lee Enterprises. With $32 billion in assets under its direction as of June 30, Private Capital Management was ranked by Nelson Information as the second-best money manager, based on its returns over 10 years.

The firm has occasionally taken activist stands on investments. Mr. Sherman declined to be interviewed.

The chief executive of Knight Ridder, P. Anthony Ridder, owns a 1.9 percent stake in the company and is the great-grandson of the founder of one of the two newspaper groups that formed the company in 1974.

The letter from Mr. Sherman praised the company for its "distinguished history of serving the public" and described his firm as a "long-term supporter."

Knight Ridder newspapers have a combined daily circulation of more than three million and produced revenue of $3 billion in 2004.

But like many newspaper companies, it has been wrestling with rising costs and declining advertising revenues. It sold The Detroit Free Press earlier this year and recently announced job cuts at The Philadelphia Inquirer, The Philadelphia Daily News and The San Jose Mercury News.

But the company has still been making acquisitions, including the purchase of Silicon Valley Community Newspapers, publisher of eight free weeklies in the region.

The company announced last month that its third-quarter earnings more than tripled, thanks to the sale of newspapers in Detroit and Tallahassee. Without those sales, its earnings from continuing operations dropped 40 percent.
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BumbleBeeBoogie
 
  1  
Reply Wed 2 Nov, 2005 06:11 pm
Shareholder Seeks Knight Ridder Sale, But Who is Buying?
Shareholder Seeks Knight Ridder Sale, But Who is Buying?
By SETH SUTEL, AP Business Writer
Published: November 02, 2005
NEW YORK (AP)

Money manager Bruce Sherman, a 19% shareholder in Knight Ridder Inc., wants the newspaper publisher to put itself up for sale. But with newspaper stocks so far out of favor with investors this year, the question arises: Who might be interested in buying it?

Sherman, who heads up the Naples, Fla.-based investment firm Private Capital Management, fired a shot across Knight Ridder's bow on Tuesday, sending a letter to Knight Ridder's directors demanding that they "aggressively pursue" a sale or face dire consequences, including a drive to shake up the board or management.

Sherman has been a longtime investor in newspaper stocks, accumulating an average position of nearly 10 percent in nine leading newspaper companies, according to a recent research report by Morgan Stanley analyst Doug Arthur. Until now, however, Sherman has remained quiet about his intentions as he added to his positions in major publishers like Gannett Co., New York Times Co. and McClatchy Co.

Being bullish on newspapers is unusual these days, going contrary to the prevailing wisdom on Wall Street that the business is in overall decline as more advertisers and readers move to the Internet. To make matters worse, newsprint prices are rising and circulation has been falling steadily for years.

As a result, newspaper stocks have suffered badly over the past year. Industry bellwether Gannett is down about 20% so far in 2005; The New York Times is down 31%; Tribune Co. is off 23%; and, until Tuesday's announcement, Knight Ridder's shares were down 20 percent.

Which leads some to wonder -- with newspaper stocks so unpopular now, who would be interested in buying Knight Ridder?

"We're all sitting here scratching our heads," said Lauren Rich Fine, a publishing analyst at Merrill Lynch. "Most people are pretty skeptical, not knowing who the buyer is."

However, other analysts were more sanguine. Both Morgan Stanley and Deutsche Bank upgraded Knight Ridder's shares Wednesday, citing the public pressure on Knight Ridder. Arthur said in a note to investors he believed newspaper stocks were undervalued and that the "market has been waiting for an external catalyst to 'shock' the stocks out of their yearlong stupor."

Deutsche Bank analyst Paul Ginocchio said in a note that he expected Gannett, Tribune and private equity investors to be interested. He said the level of the stock suggested a roughly 50-50 likelihood of a sale.

Fine, however, said that the most logical industry buyer, Gannett, might not come through since it has a newly installed CEO and its recent acquisitions have been outside of the daily newspaper area. Plus, Gannett tends to concentrate on smaller market papers apart from its national daily, the top-selling USA Today.

Even more troubling to a potential buyer, perhaps, is the fact that several of the Knight Ridder markets in have been in serious decline -- one of the reasons behind Knight Ridder's special set of difficulties.

In September Knight Ridder warned that its third-quarter earnings would slump 20% due largely to weak advertising in three of its largest markets, Philadelphia, Fort Worth, Texas, and Kansas City. Mo. A week later, Knight Ridder said it would slash 100 jobs at its two Philadelphia newspapers, The Philadelphia Inquirer and the Philadelphia Daily News.

While the shares of many newspaper companies have been suffering over the past year, Knight Ridder has also had the bad luck to be owning mainly larger-market newspapers, which have fared worse than smaller, local-market papers recently.

What's more, Knight Ridder is one of the few big newspaper companies, along with Gannett and Tribune, that does not have a separate class of stock allowing families such as the Grahams at The Washington Post Co., the Bancrofts at Dow Jones & Co., or the Sulzbergers at The New York Times to exercise voting control.

Knight Ridder could also be close to a management succession. CEO Tony Ridder, whose great-grandfather owned the first newspaper in what eventually became the Ridder group, turned 65 in September. The two leading candidates to succeed him are senior vice presidents Art Brisbane and Hilary Schneider.

After surging nearly 9% on Tuesday after Sherman's broadside became public, Knight Ridder's shares rose just $1.08, or 1.9%, to close at $59.08 Wednesday on the New York Stock Exchange. Other newspaper publishers also rose.

Sherman said in his letter that he expected other major shareholders of Knight Ridder to agree that the company's shares were significantly undervalued and to support efforts to sell the company. However, the next largest shareholders after Private Capital -- Southeastern Asset Management Inc., Harris Associates LP and Eubel Brady & Suttman Asset Management Inc. -- all declined to comment.

Both Sherman and Knight Ridder declined to comment for this story.
-------------------------------------

On the Net:
http://www.kri.com
http://www.private-cap.com
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BumbleBeeBoogie
 
  1  
Reply Wed 2 Nov, 2005 06:15 pm
Knight Ridder's Tom Lasseter Offers Voice of Truth in Iraq
Knight Ridder's Tom Lasseter Offers Voice of Truth in Iraq
Lexington (Ky.) Herald-Leader/KRT
By Barbara Bedway
Published: November 02, 2005 1:05 PM ET
NEW YORK

"Soldiers are constantly surprising me," says Tom Lasseter, 29, the longtime Baghdad correspondent for Knight Ridder. Lasseter spoke to E&P in early October, shortly after getting off a helicopter and a five-day embed with a 3rd Infantry Division sniper team. Their mission was to hunt for insurgents on the back roads and in the palm groves of Muqdadiyah, a city in Diyala province. On the way out he passed a soldier reading a book by Noam Chomsky.

"That's a little seditious, isn't it, reading Chomsky here?" Lasseter jokingly asked the soldier.

"I'll tell you what's f---ing seditious," the soldier replied. "That I've been deployed here for three years."

Soldiers tend to tell Lasseter exactly what they think -- and his ability to convey their emotions and experience in battle as well as to aggressively report the shifting facts on the ground has made his reporting among the most incisive to come out of Iraq. In October he won the Knight Ridder Excellence Award, with the judges noting he has "a history of outstanding investigative work." That history began at the Lexington (Ky.) Herald-Leader in 1999, where among other issues he covered drug trafficking and corruption. It was preparation of a sort for covering war. "If you want to go looking for danger in Eastern Kentucky," says Lasseter, "you can find it."

Turned down as an embed to cover Afghanistan -- Knight Ridder wanted only reporters with combat experience -- he volunteered to go to Iraq, and was part of a team embedded with the 101st Airborne during the initial invasion. He returned to Iraq three times, before joining the Baghdad bureau full time as a correspondent in October 2004.

His initial decision to embed at the company level instead of battalion and brigade turned out to be a fortuitous one. "I rode around in Humvees with sergeants, and it helped me out a lot later getting a sense of military rank and file," he notes. "You go out with them whenever they go out. You don't ask for special concessions. It's only human that after a period of time you learn what's going on inside of them." But he is judicious about using what he hears: "If someone said something once, and it seems out of character, I don't use it. What I use is part of an ongoing conversation, no 'gotcha' quotes."

In an interview, Lasseter can't help but note the surreal aspect of war, recalling how, during the fighting in Fallujah, soldiers hunkered down and had a cracker-eating contest in the midst of fierce urban combat. Then there was the naked man he and his driver encountered running down the road as they entered Najaf. "I'm sure the guy was mentally ill," Lasseter explains, "but he looked like he was a streaker."

Lasseter's groundbreaking reporting has gotten wide play in other publications. A story in which he managed to get two generals in Iraq, who had spoken to him on background, to acknowledge on the record that a military victory over the insurgency was not in the offing, generated front page headlines in Knight Ridder newspapers and dozens of others nationwide.

Last November, Lasseter reported from Fallujah on one of the most hellacious battles of the war while embedded with Alpha Company of the 1st Infantry Division's Task Force. He filed every day of the six-day battle that took the unit into the most intense urban combat since the 1968 battle for Hue in Vietnam. At its end he wrote an indelible account of the unit's house-to-house battles, and the loss of both its commanding and executive officers. The series concluded with one soldier saying he'd been thinking about his son: "I don't want my boy to know his daddy's a killer."

In early October, Lasseter became perhaps the first American reporter to embed with an Iraqi unit on a mission wholly independent of the U.S. military. This enabled a chillingly frank report, in which he suggested that the Iraqi unit was more akin to a Shiite militia. It featured quotes by several Shiite soldiers vowing bloody vengeance against the Sunnis.

But as vivid as his reporting has been, Lasseter still feels that "in a lot of ways, Iraq is a magazine story. You need space to convey nuance, to get what 'Sunni' and 'Shiite' means for people, how that divide is wider now and how it's affecting the fabric of society, where you had and have a lot of intermarriage."

He wryly notes that the best piece of advice he got about Iraq came from a man he met at a hotel in Amman, who told him: "No matter what you write about Iraq, the opposite will also be true."

The abysmal state of security in Iraq has made calibrating risk an oppressive if crucial part of the job. "Having been here when it wasn't nearly as difficult to report in, it's frustrating," he admits. "I spent a lot of time in Fallujah and Ramadi in the summer of '03. You could just knock on doors and interview people. It certainly wasn't the safest place in the world then, but it was a risk you could negotiate. Now you can't."

He makes a point of leaving his hotel at least once a day if he's not on an embed, covering a military press conference, or interviewing Iraqi political or military leaders. The spontaneous, man-in-the-street interviews are primarily done by Knight Ridder's Iraqi reporters. "You lose that firsthand perspective," he says, "but that's just the way it is. To push it too far is foolish and dangerous."

The danger faced daily by ordinary Iraqi citizens was tragically manifest when Yasser Salihee, an Iraqi physician working as a translator for KR who had become a good friend of Lasseter, was shot last June by an American soldier at a Baghdad intersection known as an insurgent hotspot. The night before, Salihee had stayed overnight in the KR office, working late, and had dinner with Lasseter.

Three months later, Lasseter wrote the story summarizing the U.S. military's finding that the shooting -- by a soldier in the Third Infantry -- had been within the Army's rules of engagement. The report did note that the troops' decision to leave Salihee's body "in plain view and leaving the area ... could not have had a positive impact on the local populace."

"War is such a foggy thing," Lasseter says ruefully. "It was just an example of how complicated it can be, reporting over here. But there was absolutely no connection between the sniper who killed Yasser and the guys I was with in Muqdadiyah."

In late January, Lasseter will be moving to Washington, D.C., to cover security-related issues, but will likely be back to Iraq for shorter trips. When asked if he had any plans to write a book of his time in Iraq, like so many other reporters have done, he gave an adamant, "No ... I'm concentrating on doing the next best story that I can. I feel a lot of pressure when I go out to record as much as I can.

"One thing I like about being here: I never feel I'm doing a story that's forced on me. They all feel important and immediate."
--------------------------------------------------------------------------------
Barbara Bedway ([email protected]) is a contributor to E&P.
0 Replies
 
spendius
 
  1  
Reply Wed 2 Nov, 2005 06:17 pm
How come the earth isn't shakin' then?
0 Replies
 
talk72000
 
  1  
Reply Thu 3 Nov, 2005 02:47 am
The corrupt psychopathic corporate sector need to be reined in.
0 Replies
 
Instigate
 
  1  
Reply Thu 3 Nov, 2005 03:27 am
Heh. So a money management group seeks to divest itself of an underperforming company and all the sudden!!! Its a GOP plot to destroy one of the final Bastions of Truth!!!

There is nothing unusual or sinister about someone trying to sell a failing business.
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Sun 6 Nov, 2005 09:18 am
Knight Ridder Has Hired Goldman Sachs to Explore Sale Option
Report: Knight Ridder Has Hired Goldman Sachs to Explore Sale Options
By E&P Staff
Published: November 04, 2005 11:45 AM ET
NEW YORK

One would imagine that the San Jose Mercury News, a Knight Ridder newspaper in the chain's hometown, would be on top of the new and rampant speculation spreading this week surrounding a possible sale or breakup of the company. If so, hang on to your hat.

The paper's Chris O'Brien reports Friday that a source has confirmed Knight Ridder's hiring of investment bank Goldman Sachs to study the various strategies it could pursue. "With shareholders who control more than 35% of its stock now speaking out, analysts said Knight Ridder Chairman and CEO Tony Ridder needed to seriously consider the request to sell," O'Brien wrote. "If Ridder decides against a sale, analysts say he'd need to respond quickly by offering an alternative strategy and move to build support among other shareholders.

"Either way, analysts said the company is clearly vulnerable to a takeover bid and could be facing a vicious battle that could drag on for months."

All of this action comes as three of the company's top investors press for some kind of action. They control about 35% of the shares of stock, a sizeable number.

Meanwhile, Standard & Poor's Ratings Services late Thursday placed its "BBB+ long-term and "A-2" short-term corporate credit ratings on Knight Ridder Inc. on CreditWatch "with negative implications." It said about $2 billion of debt is outstanding and cited "uncertainty" over this week's actions.

"I assure you that all over this country, there are people at media companies and private equity firms crunching numbers and figuring out where they would be on buying this thing,'' said Ken Marlin, a managing partner at Marlin & Associates, a mergers and acquisitions firm in New York.

The Mercury-News noted that experts on shareholder activism said the public declarations by Knight Ridder's stockholders required the company to seriously study the prospect for selling.

Douglas Arthur, a Morgan Stanley analyst who upgraded the stock this week, told O'Brien that he wondered whether Ridder, who is 65, had the energy for a protracted battle.

"I think to Tony's credit, he's been very shareholder friendly,'' Arthur said. "This is one of the most aggressive buyback programs in the industry. I think they get high marks for caring about shareholders. But the earnings and the stock market have not responded.''

More from O'Brien:

"If Knight Ridder rejects the call to sell, analysts said it would have to come up with an alternative plan that provides detail about its strategy to raise the stock price. In that case, the company still has options. Analysts noted the company could increase the stock buyback plan or consider deeper cuts in expenses and staffing. The board could also attempt to buy the shares of dissenting stockholders, break up the company and sell some pieces, or explore ways to take the entire company private.

"Knight Ridder could also seek out a friendly private investor or investment group -- a white knight -- to buy out dissenting shareholders.

"If dissident shareholders aren't satisfied with the alternatives, Knight Ridder is probably looking at a nasty public proxy fight leading up to its annual meeting in April. At the time, three of its 10 directors would be up for re-election and dissident shareholders would likely propose an alternative slate."

--------------------------------------------------------------------------------
E&P Staff ([email protected])

Find this article at:
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1001434386
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Sun 6 Nov, 2005 09:38 am
bad news for the chain--and all of American media.
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 -- has 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: 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.

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 ([email protected]) 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.

Links referenced within this article

[email protected]
http://www.editorandpublisher.com/eandp/columns/mailto:[email protected]

Find this article at:
http://www.editorandpublisher.com/eandp/columns/shoptalk_display.jsp?vnu_content_id=1001432946
0 Replies
 
talk72000
 
  1  
Reply Sun 6 Nov, 2005 06:53 pm
The GOP are the new Soviets trying to convert the press or media into Pravda.
0 Replies
 
 

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