{"id":90837,"date":"2006-04-04T00:00:00","date_gmt":"2006-04-04T05:00:00","guid":{"rendered":"https:\/\/beta.pewresearch.org\/pewresearch-org\/2006\/04\/04\/the-knight-ridder-sale-and-the-outlook-for-newspapers\/"},"modified":"2024-04-14T04:16:35","modified_gmt":"2024-04-14T09:16:35","slug":"the-knight-ridder-sale-and-the-outlook-for-newspapers","status":"publish","type":"post","link":"https:\/\/beta.pewresearch.org\/pewresearch-org\/journalism\/2006\/04\/04\/the-knight-ridder-sale-and-the-outlook-for-newspapers\/","title":{"rendered":"The Knight Ridder Sale and the Outlook for Newspapers"},"content":{"rendered":"

The enduring cynicism over the Knight Ridder sale has a hollow sound. The events set in motion by the McClatchy Company\u2019s purchase can spark a chain reaction (so to speak) that would bring something close to the new economic model journalists have been wishing for.<\/p>\n\n

What an irony that would be. The clamor for liberation from the clutches of insatiable Wall Street\u2019s what-have-you-done-for-me-today demands reached a crescendo when Knight Ridder went on the block at the suggestion of institutional investors. The very idea that the nation\u2019s second largest newspaper group would go on sale, without an ounce of resistance, underscored the precarious position of publicly held news organizations.<\/p>\n\n

Plenty of journalists (me included) saw dark motivation in Private Capital Management\u2019s activism and Knight Ridder\u2019s see-how-fast-I-can-jump response, typical of KR\u2019s subservience to Wall Street during Tony Ridder\u2019s reign. Ridder did not shrug and say, \u201cIf you don\u2019t like the stock, sell it,\u201d as MediaNews Group owner Dean Singleton suggested. Ridder did not invite his newspapers to rally their communities against PCM, making the prospect of such new ownership untenable \u2013 a tactic that companies like Goodyear and the St. Petersburg Times used to fight off hostile suitors.<\/p>\n\n

It should have been bright news when Knight Ridder sold to McClatchy rather than a faceless investment firm. Instead, the cynics had new material. The $6.5 billion sale price \u2013 what McClatchy CEO Gary Pruitt called an \u201cunimaginable bargain\u201d \u2013 would vastly increase McClatchy\u2019s debt and triple its newspaper holdings. \u201cProof\u201d of the burden: McClatchy would rapidly re-sell the 12 least-efficient KR papers it just bought, leaving those dozen vulnerable once more to predators. Investors downgraded McClatchy\u2019s stock and bond status. Journalists speculated about debt-reducing job cuts and bad outcomes after the re-sale of newspapers in such prominent places as Philadelphia , San Jose , St. Paul and Akron .<\/p>\n\n

Add concern over the continuing trend of more news organizations owned by fewer corporations. Consequences to date include too-frequent turnover in the publisher and editor offices and more central control, leading to remote decision-making and conflicts of interest.<\/p>\n\n

Uncertainty guarantees worry, but for once in newsrooms, optimism should trump skepticism. The upside potential of this deal is greater than the downside risk.<\/p>\n\n

For starters, McClatchy has swiftly navigated such rivers of doubt before.<\/p>\n\n

Nearly a decade ago, when McClatchy bought Cowles Media (essentially the StarTribune in Minneapolis ) for more than $1 billion, industry and Wall Street analysts said it was a stretch. McClatchy\u2019s stock price took a beating, while newspaper executives questioned whether the California company with the low-key corporate staff was up to managing a newspaper much larger and much more editorially ambitious than any other McClatchy had ever run.<\/p>\n\n

Instead, the big move to Minneapolis only made McClatchy stronger. As had McClatchy\u2019s purchases of newspapers in Raleigh and Anchorage . Most encouraging, McClatchy did it while re-investing in news gathering \u2013 increasing demand for journalism. That\u2019s a faith in readers, news and newspapers seldom seen at Knight Ridder and too many other places the past decade or more.<\/p>\n\n

A second reason for optimism: Pruitt is confident about this deal. When someone is right as often as Pruitt has been, he gets the benefit of the doubt. In an interview with The Washington Post after the Knight Ridder deal was announced, he shrugged off the immediate decline in McClatchy\u2019s stock price. Invoking the memory of the Cowles purchase, he said, \u201cWhen we announced those deals, the market went down, and in the next year, we roared back. I\u2019ll take long-term gain over short-term decline.\u201d<\/p>\n\n

[Pruitt]<\/p>\n\n\n

Contrast that with Knight Ridder, where, in the late 1990\u2019s a KR corporate vice-president told a conclave of the company\u2019s editors that they should all but abandon scrutinizing government. \u201cNobody wants to read that,\u201d the VP said. A couple of years later, Tony Ridder added this: \u201cThe only reason people read newspapers is for the ads.\u201d<\/p>\n\n

Maybe this sequence can get the rest of us to share Pruitt\u2019s confidence:<\/p>\n\n