Newspaper Guild Eyes Partial Knight Ridder Purchase

All Things Considered, December 29, 2005 · Unhappy investors have forced the Knight Ridder newspaper company to put itself up for sale. Profits are healthy, but level. Now, the Newspaper Guild of America is exploring whether it can put together deals to purchase as many as nine of the company's newspapers.

A day or so ago, someone opined (tongue-in-cheek) that as newspapers became extinct, there might be a push for a quasi-government takeover of newspapers (like Public Broadcasting) to preserve them for "the greater good."

I heard this broadcast just moments ago, and lo and behold, the newspaper unions are apparently looking at trying to keep the meteor from hitting...

One person mentioned that the Philly Inquirer might be bought by the Pew Charitable Trust and that would be good, since "they wouldn't be concerned too much with the profit motive."

Once again, we here at Free Repblic are ahead of the curve. We saw it coming...

For Immediate Release
Thursday, December 22, 2005

For More Information
Jeff Miller
CWA Communications, 202-434-1168
Or call 202-434-1261

“Worker Friendly” Buy-Out of Knight Ridder Newspapers Under Consideration

WASHINGTON, D.C., December 22 – One of the largest unions representing workers in the newspaper industry, the Newspaper Guild-Communications Workers of America, today announced a response to the possible sale of the Knight Ridder newspaper chain. Newspaper Guild President Linda Foley has retained two advisory firms; Duff & Phelps Securities, LLC, of Chicago and Ownership Associates, Inc. of Cambridge, MA, that will work with the union to attempt a “worker friendly” buyout of certain properties of the Knight Ridder newspaper chain. On November 14, The Knight Ridder chain formally announced that it was exploring “strategic alternatives” that include the sale of all of its 32 newspaper properties. A first round of offers for the second largest chain in the nation were received by the firm’s investment bank on December 9.

“Standing still is not an option,” Foley remarked. “Each of the 8 properties our advisory team has identified is profitable. We think there are solid business opportunities out there. We are going to go after those properties and we are going to attempt to persuade others in labor, management and the investment community to join us. We have formally requested that Knight Ridder open the process to include our bid.”

The newspaper properties specified by Duff & Phelps Managing Director Richard May and Ownership Associates, Inc. President Christopher Mackin include the San Jose Mercury News, the Philadelphia Inquirer and Daily News, the St. Paul Pioneer Press, the Akron Beacon Journal, the Duluth News Tribune, the Lexington Herald-Leader, the Monterey Herald and the Grand Forks Herald.

“There is a national network of 'worker friendly' private equity firms that has emerged over the past two decades,” Richard May said. "We anticipate that a combination of private equity capital, management capital and employee capital will make possible the purchase of a select number of these newspaper properties. We are also open to exploring joint bids with other strategic and financial partners that have expressed similar interest in the Knight Ridder chain.”

A new acquisition corporation, ValuePlus Media Corporation (VMC) will be formed according to advisor Christopher Mackin. The first order of business for VMC will be the naming of a senior management team. This team will decide upon the number of media properties to be acquired, the price to be paid for those properties and the finalization of a corporate business plan. “Fortunately, there is no shortage of talent to draw upon from the newspaper industry,” Mackin commented. “We are in discussions with industry leaders that have established records in both digital and print media.”

Regular updates will be posted at www.knightridderwatch.org

The Newspaper Guild-CWA represents 35,000 workers in the United States, Canada and Puerto Rico, and CWA overall represents 700,000 workers in telecom, IT, journalism, broadcasting, manufacturing, airlines and other sectors.

Guild Still Seeking Investors for Knight Ridder Purchase
Knight Ridder spokesman Polk Lafoon IV has said the company will not be broken up.

By Joe Strupp

Published: December 29, 2005

NEW YORK The Newspaper Guild plans to continue gathering investors for a potential purchase of several Knight Ridder properties despite the assertion this week by a company spokesman that the newspaper chain would not be sold in pieces.

Linda Foley, guild president, said she remained hopeful that an effort to purchase the nine Knight Ridder newspapers with guild representation could succeed. "We believe, as we have all along, that we will enhance shareholder value," Foley said Thursday. "We believe that eventually Knight Ridder will entertain a bid from employees. This is a company that has had a history of valuing employees and being a family company."

Foley's comments came a day after Knight Ridder spokesman Polk Laffoon dismissed the idea of a partial purchase. "There is no interest here in selling the company piecemeal," Laffoon told the San Francisco Chronicle in Wednesday's editions. "Knight Ridder is for sale, to the extent it is for sale, as a whole and not as a piecemeal thing.''
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Guild officials launched the idea of a partial buyout last week with the announcement that the union had retained two advisory firms -- Duff & Phelps Securities, LLC, of Chicago and Ownership Associates, Inc. of Cambridge, MA -- to "work with the union to attempt a 'worker friendly' buyout of certain properties of the Knight Ridder newspaper chain."

Knight Ridder has been seeking buyers for several weeks following complaints from its largest shareholders that the chain was "undervalued."

Guild officials had hoped to bring together investors to buy the nine Knight Ridder papers that are represented by the guild. The company owns 32 newspapers, as well as a Washington bureau. Those guild papers that were targeted include: the Philadelphia Daily News, Philadelphia Inquirer, San Jose Mercury News, St. Paul (Minn.) Pioneer Press, Akron (Oh) Beacon Journal, Duluth (Minn.) News Tribune, Lexington (Ky.) Herald-Leader, Monterey (Ca.) Herald, and the Grand Forks (N.D.) Herald.

"We are still out there reaching out to equity partners," Foley said. When asked if the union could organize enough investors to purchase the entire Knight Ridder chain, she said, "I don't think that is realistic."

But the guild president said Knight Ridder could always change its mind and allow a break-up purchase. "We think the bid for the nine papers is still viable," she said. "They are saying that at this time they are only entertaining bids for the entire property. But, at some point, Knight Ridder would be foolish not to entertain other configurations of a sale. Otherwise, they do not get maximum value."

Laffoon could not be reached for comment Thursday due to vacation, his office said.

If Knight Ridder is sold in its entirety to one buyer, the guild group could possibly buy from that entity as well, Foley said. "We are hopeful," she added.
Joe Strupp (jstrupp@editorandpublisher.com) is a senior editor at E&P.

"Guild President Linda Foley has retained two advisory firms; Duff & Phelps Securities, LLC, of Chicago and Ownership Associates, Inc. of Cambridge, MA, that will work with the union to attempt a “worker friendly” buyout of certain properties of the Knight Ridder newspaper chain. On November 14, The Knight Ridder chain formally announced that it was exploring “strategic alternatives” that include the sale of all of its 32 newspaper properties. A first round of offers for the second largest chain in the nation were received by the firm’s investment bank on December 9.
“Standing still is not an option,” Foley remarked. “Each of the 8 properties our advisory team has identified is profitable. We think there are solid business opportunities out there. We are going to go after those properties and we are going to attempt to persuade others in labor,"

Do the math. The Newspaper Guild's message to the Guild employees of the other 24 Knight-Ridder newsrags -- "Go **** yourselves."

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