In another chapter of the "newspaper as dinosaur" saga, the New York Times Business Page reports today that the Knight Ridder newspaper company, the nation's second largest chain, will have difficulty finding a buyer;
The story offers this possible end game; "And that is where the auction process comes into play. Perhaps private equity companies will see an opportunity to buy and break up Knight Ridder. Perhaps other media companies will bid. The quality of news provided to millions of Americans may depend on who buys the papers and how they are managed."
There is a venerable Wall Street joke featuring an investor who, having accumulated a large position in an illiquid stock, decides it is time to get out. "Yes, sir," replies the broker when he is told to sell. "To whom?"
The current situation of Knight Ridder, the owner of newspapers including The Philadelphia Inquirer and The Miami Herald, brings back that joke, albeit painfully. The investor is a hitherto successful money manager named Bruce S. Sherman, whose Private Capital Management invests money for wealthy individuals and institutions... He is the largest owner of seven of those companies, with 15 percent of The New York Times Company, publisher of this newspaper; 26 percent of Belo, publisher of The Dallas Morning News and The Providence Journal; and 38 percent of McClatchy, whose papers include The Sacramento Bee and The Star Tribune of Minneapolis...
Knight Ridder's plight also reflects the fact that Wall Street is not always nice to those who do what the Street demands. Analysts called for aggressive cost cuts and Knight Ridder complied, in some cases angering employees and creating public controversies over whether news coverage would suffer. Investors responded by sending the stock to a three-year low last month.
Anyone want to buy a newspaper? Mr. Sherman certainly hopes so.
But Knight Ridder's problems are simply today's headline. The collapse is industry-wide as these two stories in today Editor & Publisher trade magazine report;
Read the previous column on the Knight Ridder debacle "The Mating Sounds of Dinosaurs" here.
Postscript: The chain was sold in March, 2006, to McClatchy, the only bidder.