Posted on 12/27/2006 3:31:24 AM PST by shrinkermd
...This likely comes as a surprise to each of you," Publisher Keith Moyer acknowledged during a late-afternoon staff meeting.
"These are indeed challenging times for newspapers, especially larger ones, such as ours," Moyer said.
Speaking to the Star Tribune staff Tuesday, an Avista executive said the firm was drawn to the Star Tribune by its dominant market share in the Twin Cities. The Star Tribune, which has been in operation under different names and owners for nearly 140 years, had 40 percent of the Twin Cities advertising market in the third quarter.
"I'm here today because my partners at Avista and I believe unequivocally that the Star Tribune is one of the great newspapers in the country and that the Twin Cities is one of the great markets," said Chris Harte, a member of Avista's executive advisory board and a former Knight Ridder publisher, who will act as chairman of the board of directors at the Star Tribune. Moyer will become a member of the board, as will Avista partners James Finkelstein and OhSang Kwon.
Moyer will continue as the Star Tribune's publisher, and Avista said the newspaper's management team will remain in place.
Star Tribune Editor Anders Gyllenhaal recently took a new post as executive editor at the McClatchy-owned Miami Herald. Gyllenhaal said Tuesday he was asked to take the Miami job before he learned that a Star Tribune sale was pending
(Excerpt) Read more at startribune.com ...
Things are not altogether ducky and they allude to that below:
McClatchy, in explaining its decision, said the Star Tribune had been underperforming in recent years.
"The Star Tribune did very well for a few years, but recently it has lagged in performance," McClatchy CEO Gary Pruitt said. "Large metro papers have underperformed smaller ones because they've been more dependent on classified ads, which have been most affected by the Internet. The Star Tribune suffered from that."
While the sale price is far less than McClatchy paid in 1998, the company will also realize $160 million in tax benefits as a result, making the total benefit to McClatchy closer to $700 million
"... While layoffs and other staff reductions have occurred among a number of the papers that have been bought by private groups this year, Avista officials said they are not eyeing major staff reductions or a quick sale.
...."You don't buy a paper that's involved in intellectual property and strip it," said Avista partner James Finkelstein. "There'd be no point. All you're selling, all you have, is your intellectual property. You want people to read."
Come back, say on 27 January 2007 and see if the above held true.
December 26, 2006
Strib Goes In A Half-Price Fire Sale
The Minneapolis Star Tribune got sold by its owner, the McClatchy Company, for half of what McClatchy spent to buy it. A private investment group with other media interests will take over its operations in the next few months:
A private equity firm has reached an agreement to buy the Star Tribune from the McClatchy Co., publisher Keith Moyer announced today.
Avista Capital Partners, an investment group focused on media, health care and energy companies, will pay $530 million for the newspaper, which Sacramento, Calif.-based McClatchy bought from Cowles Media Co. in 1998 for $1.2 billion. Avista has offices in New York and Houston.
The deal is expected to close formally sometime in the early spring. Chris Harte, a member of Avista's advisory board, will serve as chairman of a board overseeing the Star Tribune. Harte is a former publisher of newspapers in Akron, Ohio; Portland, Maine and State College, Pa.
The value of McClatchy management can be measured in the substantial loss the company took to unload the Strib. It lost $670 million on a $1.2 billion purchase, making the Avista group the beneficiary of a half-off sale.
McClatchy CEO Gary Pruitt claimed that the sale benefits his company because it can then take the loss against its taxes. He said that the newspaper had generated a billion in revenue over its eight-year period of ownership, and that the Strib was the only newspaper it could see for a large loss at a time when McClatchy needs the tax relief. However, it's difficult to understand why any company would dump an asset that generates an average of $125 million per year for essentially four years' worth of revenue, taxes or not -- and he didn't explain why the Strib's value tanked so badly during their stewardship.
Avista hasn't learned from McClatchy's experience, at least not so far. They have so far insisted that they will keep the current management team intact, minus Anders Gyllenhaal, who leaves at the end of the month for the Miami Herald. Bear in mind that this management team took the paper from a $1.2 billion outfit to a $530 million K-Mart blue-light special. Not much can be gleaned about their intentions from their website, but if they stick with the same management as before for very long, one can assume that Avista might need the same kind of tax breaks that McClatchy just got. (h/t -- CQ reader and good friend L)
Addendum: L reminds me that McClatchty had to sell the St. Paul Pioneer Press when it bought Knight-Ridder chain back in March, due to antitrust concerns. That decision looks rather foolish now, doesn't it? Especially since one of the reasons that they have to sell the Strib now is to pay down the debt from the purchase of KR.
Incidentally, this can't be blamed on the general decline of the newspaper industry. Certainly one might expect that the value may have declined over the last few years, but the industry has not lost over half its valuation. This fire sale comes as a result of the mismanagement and editorial disaster that the Strib has become. Despite having some talent, the Strib's editors have turned it into a laughingstock as an objective journalistic endeavor. The sale price confirms the embarrassment that our local newspaper has become
McClatchy sells Star Tribune sold for $530 million
By JOSHUA FREED, The Associated Press
Dec 27, 2006 1:25 AM (4 hrs ago) Current rank: # 819 of 13,131 articles
MINNEAPOLIS - Nothing sums up the tough times in the newspaper industry like these two numbers: $1.2 billion, which is how much The McClatchy Co. paid for the Star Tribune in 1998, and $530 million, the price Avista Capital Partners will pay for McClatchy's flagship newspaper.
The newspaper industry has long been fighting circulation declines. More recently, classified advertising - a pillar of the newspaper business model - has come under attack by cheap or free Internet ads for jobs, cars, and homes. The Star Tribune has been no exception... Rest of Article here
Wow! Ahem...let me...er...(slight cough...slight cough) er...wow!
(Harte's interior monologue while delivering speech) "Must see doctor after speech to suture tongue I've almost bitten through to keep from laughing while making ludicrous claim."
Yes, it is hard to imagine them doing nothing when their predecessors lost half of their investment in 8 years.
It gives a new way to look at, "going down with the ship" as a means of self-affirmation.
Oh well, it is their money if they think they will make a bundle operating the same way as the Strib has, then it won't be long they will sell as well.
If this group is only one click to the right of the CPUSA it will be an improvement.
Guess I don't have a head for business. I would think it's better to make money and pay taxes than loose money and get tax "benefits".
By E&P Staff
Published: December 27, 2006 9:55 AM ET
NEW YORK Early Wednesday, Goldman Sachs became one of the first newspaper industry analyst firms to analyze the shocking announcement of the pending sale of the Star Tribune of Minneapolis by McClatchy Co. to a private equity firm. In its heading, Goldman stated it plainly: "Minneapolis valuation a Bearish signal for newspaper industry."
While McClatchy will "generate a tax benefit of about $160 million," Goldman observes, it is also taking a hit on the sale price, having paid $1.2 billion for the paper in 1998, now selling it for $530 million.
"The substantial loss on the sale is a vivid reminder of the industry's declining fortunes ove the last several years," Goldman declared. "While we are intrigued that a private equity firm is showing interest in the newspaper sector, the 7.4x estimated EV/EBITDA valuation is not a Bullish indicator for the sector given a current newspaper group average 2007E valuation of about 8.7x."
But it added: "We believe the company's strategic rationale for the sale is straightforward," as it "eliminates one of its slowest growing markets, reduces the proportion of its workforce that is unionized, and acelerates debt repayment." Its overall rating of the company remains "neutral."
The buyer is Avista Capital Partners of New York City. McClatchy bought the paper from the Cowles family in 1998. -- See links at right for other E&P stories on the Star Tribune sale.
"tax loopholes for the rich" !
how ironic.
Great Take by Fraters "Libertas:http://www.fraterslibertas.com/2006_12_01_archive.html#116718837627783798"
Alienated newspaper lovers all over town may have been given a late Christmas present with the announcement that the Star Tribune is being sold off. Direct from the horse's mouth:
A private equity firm has reached an agreement to buy the Star Tribune from the McClatchy Co., publisher Keith Moyer announced today.
Whether that means the days are numbered for front page agenda journalism, PC blinders on important stories, insult editorials, unchecked casual plagiarism, and the willful arrogance of a self-aware monopoly is anyone's guess. But it sure wasn't going to endunder current ownership, so with this change, at least there is hope.
It looks like the current owners couldn't get away from their flagship publication fast enough. They sold it for less than half of what they paid for it eight years ago:
Newspaper publisher The McClatchy Co. said on Tuesday that it will sell its flagship newspaper Star Tribune to a private equity firm for $530 million, a sharp drop from the $1.2 billion it paid to acquire the newspaper just eight years ago.
Apparently taking a loss on this deal was necessary, and perhaps the primary reason for the sale. McClatchy sold 12 other papers for high profit in the aftermath of its acquiring Knight Ridder and it needs a large volume of red ink on the books to stave off the tax man. Which I'm sure is true. But I've seen no speculation stating that the Star Tribune is being sold at a bargain price. It's worth less than half of what it was less than 10 years ago. And that certainly correlates with the esteem it is now held by a large portion of the potential readership.
There are some dispiriting early reports that having new ownership will mean nothing to the operations of a business entity that lost half its value in less than a decade. Current and apparently continuing publisher Ken Moyer characterized the new owners (Avista) as:
They are progressive, very smart, good-hearted people who believe that no other media platform can reach a local audience as effectively as newspapers
Past on their own back and self-serving liberal euphemism is certainly business as usual for them. More ominously:
Moyer said he will remain as publisher, reporting to [Avista Board Member Chris Harte], and that the newspaper's management team will remain intact.
Maybe they're trying not to spook the herd before the deal is finalized, or they're going to make change with, or despite, the present staff. Either way, I'm sure this statement from the new boss sent some chills down a few spines:
You and I and everyone who works with us will have to listen carefully to our readers and our advertisers and make sure we provide them with the information and advertising they want, when they want it, how they want it.
Ah, were that it were true.
UPDATE: Hope ebbs with some cursory research on the new boss's campaign donation history.
This line is ridiculous. It's the smaller, conservative papers taking the harder hits, since they can't diversify as much and hide the losses like these larger ones.
The big leftie papers just don't like to admit that it's their bias that causes them trouble, not just the overall literacy decline.
Interesting point to note is that Chris Harte will be holding the reins at the top.
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