Posted by: Jon Fine on April 20, 2006
The union bid for the twelve Knight Ridder newspapers McClatchy plans to sell has gotten an awful lot of ink—and not because the guy who runs the backer, Yucaipa Cos., is the now-suddenly-very-famous Ron Burkle.
It’s gotten an awful lot of ink because having unions owning the papers is an outcome journalists, and especially newspaper journalists, salivate over. It is a lovely narrative: Unions win; employees get ownership stakes; the vicissitudes of public newspaper ownership are beaten back. The new chain rededicates itself to smart journalism; the corollary hope is that the chain becomes Exhibit A that good journalism is good business.
Take that, Wall Street!
Lovely indeed. But, it turns out, also incredibly unlikely. Last week I interviewed Robert Hall, the ex-Philadelphia Inquirer publisher who’s advising Burkle on the bid, and he shed some light on the sale process [emphasis mine]:
“It sounds as if [McClatchy] will put out individual clusters at different times to get bids from as many [different parties] as they can. Our position is, we will submit a bid for each individual paper, knowing we already have [a bid] in there for all 12.”
Red flag time. This puts a bid for all 12 papers at a grave disadvantage. Such a bidder then has to win a series of small auctions, and must square off with companies that can bid high, and selectively, for papers in adjacent cities. (The guys who own the paper down the road, or in the next county, can make it up on the back end by combining back-office functions.)
The high end of the Burkle/Yucaipa group bid was described as being around $2.2 billion. According to Hall, this was subject to being revisited once detailed financial data was reviewed.
Now. The L.A. Times reported today McClatchy is thisclose to selling one-third of the Knight Ridder papers it won’t keep. Dean Singleton’s MediaNews Group nearing a $1 billion (!) deal for the San Jose Mercury News, Monterey Herald, Contra Costa Times, and the St. Paul Pioneer Press.
Squares with what I’ve been hearing. As of last week, my understanding was that Singleton was bidding on six papers—those four plus the Philadelphia Inquirer and Philadelphia Daily News—which made him, by far, the largest bidder besides the union. The Times reports a Singleton bid for the Philadelphia papers was rejected for being too low.
So far his batting average is a lot higher than the union’s. But the bidding process favors those who are targeting a few papers, or even one, as opposed to someone who is trying to swallow the lot.
But, somehow, there wasn’t a lot written about that.