Posted on 12/26/2006 2:13:09 PM PST by MplsSteve
The Star Tribune is being sold to a private equity firm for $530 million, the companies involved announced in a press release today. The sale to Avista Capital Partners comes eight years after The McClatchy Company purchased the Star Tribune from Cowles Media Company for $1.2 billion. The text of the press release follows.
The Star Tribune is being sold by The McClatchy Company to private equity firm Avista Capital Partners, McClatchy and Avista announced today. The companies say they have a definitive agreement to sell the Star Tribune for $530 million to Avista, which has offices in New York and Houston.
(Excerpt) Read more at startribune.com ...
The Red Star is being sold to a private equity group.
I kinda like this. Maybe the markets will now have a say in how news is reported by this rotten excuse for a wish wrapper.
I really really hope there are deep staff cuts - starting with the editorial board (yes, you Jim Boyd!) and columnists like Nick Coleman.
Oooooh, I got my fingers crossed!
WELCOME TO FREE REPUBLIC'S MINNESOTA PING LIST!
64 MEMBERS AND GROWING...!
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Bump! I'm with you...Merry Christmas everyone!
They lost 700 million dollars in eight years????
ping
I thought you meant "fish wrapper", but I like "wish wrapper" even better.
Think about it for a minute.
*Or maybe I'm the last to catch on.
Buy high and sell low. Ouch!
Purchased eight years ago for 1.2 billion, selling price now...530 million...
It's called the "Reverse Hillary Cattle Futures" syndrome.
No newspaper is worth that much.
Looks that way. In absolute terms. And when you factor in inflation... the real dollar loss has to be well north of a billion.
Find a large business that's tanking and you have usually found an oasis of liberalism that is drying up.
Great news. Anybody is better than being owned by Knight-Ridder/McClatchey.
I hope the new people are reasonably smart, and change toe Red Star for the better. If not, I hope they lose their whole investment promptly, and go out of business.
Congressman Billybob
Don't be so sure.
Newspapers are hugely profitable assets and very cash rich. I'd wager the Star-Tribune is sitting on at least $100 million in liquid assets and is generating a return of 20% on sales -- an enormous profit margin.
Newspapers railed at "bloated oil company profits" this summer. But their profits as a % of sales are typically 3 or 4 times what Exxon earns...and over ten times what Walmart is making.
They don't want you to know that, of course...
Wow. I never would have thought this after their hideous election coverage. I wonder if there are lots of nervous people in the Red Star's newsrooms.
Question: How you make a small fortune in the newspaper business?
Answer: Start with a large fortune.
Good news. More layoffs on the way after the purchase is finalized.
http://www.philebrity.com/?p=2460
The Skinny: Avista Capital Holdings L.P., a private-equity firm in New York with murky ties to European bankers. The group is fronted by Christopher M. Harte, a former Knight Ridder exec with an expressed love of the Inquirer. Since leaving Knight Ridder in the early 90s, Harte briefly helmed the Portland Press Herald/Maine Sunday Telegram before moving into private equity investment. His shares of the family business — Harte-Harke Inc., a San Antonio-based publishing and direct mail concern — is said to be worth $15 million.
Rich but firmly a Democrat. Harte used to co-own Spy and he got the Gene Roberts seal of approval, which is sorta like Obi-wan telling you you’re Jedi material. Roberts is the man who lifted the Inquirer out of disgrace and left it a house of Pullitzers. The Knight Ridder bean counters have been slowly dismantling it ever since.
also:
’08 Christopher M. Harte of Austin, TX is assistant secretary and chair of the Governance Committee of National Audubon Society. Mr. Harte is a former trustee of Maine Audubon Society and the Maine, Texas and Florida chapters of The Nature Conservancy. He is the former publisher of the Centre Daily Times, Akron Beacon Journal, and Portland Press Herald/Maine Sunday Telegram. Mr. Harte currently serves a director of Harte-Hanks, Geokinetics and Mincron Software. Mr. Harte is a member of the Audubon Texas advisory board.
'04 CHRISTOPHER M. HARTE of Portland, Maine,
is an investment manager. He is a former trustee of the Maine Audubon Society, a current trustee of the Maine chapter of The Nature Conservancy and former trustee of the Texas and Florida chapters. Since 1989 he has been restoring prairie on a 900-acre ranch 30 miles west of Austin. He is a graduate of Stanford and has an MBA from the University of Texas. He was a management consultant at McKinsey & Company and was publisher of the Centre Daily Times in State College, PA, the Akron Beacon Journal, and the Portland Press Herald and Maine Sunday Telegram. He is a director of Harte-Hanks, Mincron Software, Geokinetics, and Crown Resources. He was elected to the Board in March of 1998 to fill a vacancy, elected by the members in December of 1998 and re-elected in 2001.
Memo to Avista: Keep Katherine Kersten (who probably has more readership than the other editorial columnists combined), replace at least half of the monolithic op-ed board, sign up a few more conservative syndicated columnists, and generally make a bona fide effort to achieve a modicum of journalistic balance. No telling how much money you could make if the Strib ceases to be a DFL house organ.
Internal email memo just posted on Poynter Online
http://poynter.org/forum/view_post.asp?id=12154
View Forum Post
Topic: Miscellaneous items
Date/Time: 12/26/2006 5:40:04 PM
Title: Star Tribune publisher's message to employees
Posted By: Jim Romenesko
** High Priority **
Star Tribune Being Sold
By Keith Moyer
Publisher and President
The McClatchy Company, our parent corporation, has reached a definitive agreement to sell the Star Tribune to Avista Capital Partners, a private equity firm. The sale will close in early spring.
McClatchy, based on the reevaluation of its strategy, has been conducting a confidential sale of the Star Tribune over recent weeks, and Avista was the successful bidder.
We understand that this is surprising news and that you will have many questions, which we will address as best we can in the days and weeks to come. [We have prepared answers to what we believe will be the most frequently asked questions, and that document is available on Stribnet.]
This much I can tell you with certainty today: Avista is a company that believes in the future of newspapers and is strongly committed to the success of the Star Tribune.
Avista also is committed to keeping the Star Tribune's management team intact. And your leadership team, to a person, is committed to the Star Tribune and its employees. We very much look forward to working with Avista in the years ahead to make our already market-leading company even stronger -- despite the current challenging and changing media environment.
Avista's overarching strategy is to invest primarily in media, healthcare and energy companies. And, through its impressive team of investment and industry experts it seeks to partner with management teams to add value to well-positioned businesses such as the Star Tribune.
I have had the opportunity to get to know Avista leadership quite well recently, and I can say this without hesitation: They are progressive, very smart, good-hearted people who believe that no other media platform can reach a local audience as effectively as newspapers and their product extensions.
I'm sure you are wondering what prompted McClatchy to sell the Star Tribune. In making the announcement, McClatchy President and CEO Gary Pruitt, said: "The Star Tribune is a great newspaper with talented staff and management. It is a profitable business that has generated significant returns for the company over the years.
"However, as we continued to analyze our business following the Knight Ridder acquisition, it became clear that selling the Star Tribune strengthens McClatchy's competitive position. This decision will better align our portfolio for today's changing media environment."
McClatchy, in its public announcement, says a detailed analysis of the company's portfolio identified a number of unique financial tax benefits associated with the sale of the Star Tribune that would serve the long-term interests of the company and its shareholders.
I want to thank Gary and all of those at McClatchy for their investment in the Star Tribune since buying the newspaper in 1998. Their steady, forthright stewardship has been appreciated and has made the newspaper, its web site and other interests better. We wish them nothing but the best going forward.
After the sale closes, the Star Tribune will be run by a board of directors appointed by Avista. I will be on the board.
Chris Harte, a member of Avista's executive advisory board, will serve as Chairman of the Star Tribune, and I will report to Chris.
Chris is a highly experienced newspaperman, who served as publisher of Knight Ridder newspapers in Akron, Ohio and State College, Penn., and was publisher of the Guy Gannett Company newspaper in Portland, Maine.
In his remarks to Star Tribune employees today, Chris said:
"The Star Tribune has proven to us that it can change, diversify and grow in the face of changing market conditions.
"You have strong management, hard-working and talented employees, a strong market and a powerful brand that you know how to leverage. That, in a nutshell, is why we found this acquisition so attractive.
"Avista Capital Management is a company that prides itself on creating long-term value by supporting strong management teams and finding new strategies for growth. We are patient investors who look to the future*
"We have not only invested in an exceptionally strong brand but also in the people in every department of this company who make it what it is.
"We at Avista look forward to working with you in making the Star Tribune grow and prosper."
I am truly excited by the prospects of working with Chris and Avista and know you will be too.
Going forward, it will be business as usual during the transition from McClatchy to Avista. We'll put out a great newspaper tomorrow, and we'll continue to do so every day of every year to come -- and I know all of you can be counted on to make sure of that.
And starting today and throughout the transition, we'll be telling you more about Avista and its other holdings and we'll be providing you with answers as they become clear to your likely questions concerning this change of ownership. Go to Stribnet for regular updates on the transition.
Thank you.
McClatchy CEO Gary Pruitt speaks:
http://poynter.org/forum/view_post.asp?id=12155
Topic: Miscellaneous items
Date/Time: 12/26/2006 5:48:18 PM
Title: McClatchy CEO Pruitt on Star Tribune sale
Posted By: Jim Romenesko
December 26, 2006
To: McClatchy employees
From: Gary Pruitt, CEO
Many of you will have heard or read by now that McClatchy has agreed to sell the Minneapolis Star Tribune to Avista Capital Partners. We expect the deal to close in the first quarter of 2007.
And while there were a dozen newspaper transactions associated with our acquisition of Knight Ridder earlier this year, I know this particular deal comes as an unsettling surprise. Selling an established McClatchy paper certainly is not business-as-usual for us.
Details about the deal are available in the attached press release, but I want to speak directly to you about one point: this deal came about because of very specific conditions involving the Star Tribune and today's changing media landscape. We have no plans to sell any other newspapers.
In fact, we struck this deal to make the company stronger overall. While it is painful and difficult to say farewell to talented and hardworking colleagues at the Star Tribune , we know that McClatchy will be in a stronger position going forward as we work with you in building the news company of the future.
Following the sale and the debt repayment it allows, McClatchy will be in better shape to navigate through changing conditions. It will improve our operating performance, increase operational flexibility and give us freedom to make investments to extend our growing online operations.
This sale might lead some to conclude that McClatchy has doubts about the direction of our company or that the Knight Ridder acquisition has proved ill advised. Both conclusions are wrong. Thanks to the Knight Ridder additions, our portfolio of newspapers and related enterprises has never been stronger. We are not complacent about the future, but we are very confident. We are not waiting for events to overtake us; we are actively building our future together instead.
Our mission remains unchanged: to bring the benefits of independent, public service journalism to the communities we serve. It has animated this company for nearly 150 years, and it animates us still.
If you have questions about this deal or what it means to you, please talk with your supervisor, or write to us directly at questions@mcclatchy.com. We have much hard work ahead of us, but we can approach the future more confidently as a result of the sale we have announced today.
That would be the buyers' first mistake.
Isn't buying a newspaper today like buying a slide-rule manufacturing company in 1972?
I hope this liberal newspaper just dies.
This paper and its ilk have done enough damage to my country, thank you.
DIE, MSM, DIE! MAY THE FREE MARKET DRIVE A STAKE THROUGH YOUR ROTTEN BLACK HEART!
Sold for less than half its purchase price ... Not many businesses can afford to lose half a billion dollars in value in 10 years.
LOL, that's what the buyers of the Philadelphia Inquirer said when they bought that paper. Within months the new owners poked the union in the eye, provoking a strike, and then announced massive layoffs.
http://biz.yahoo.com/ap/061226/star_tribune_sale.html?.v=7
Newspaper industry analyst John Morton found the sale "inexplicable and disappointing."
"The Minneapolis Star Tribune has a good reputation, has always had a good reputation. It is the kind of newspaper that you would have hoped a company like McClatchy would continue to own," he said.
"Clearly what is happening to McClatchy is that they are much more concerned about their overall financial performance than they are about publishing newspapers, the way I read it," Morton said.
This would explain the recent hasty departure of Anders Gyllenhaal.
That's a good sign.
Good analogy.
So another dinosaur bites the dust.
The first thing new management will do is always the OPPOSITE of what they SAY they will do.
IOW, there will be massive layoffs, the paper will lose its traditional readership, and down the tubes it will go.
Let's see.... these leftist morons managed to evaporate around 1/2 of the market value of the paper in just 8 years, so it's time to sell out for a fire sale price. Will the new owners prove any less idiotic in their "Airhead America" approach to the news business?
btw, what's happening with "Airhead America"..... have they found any new Soros-type backers or are they going down the tubes for good?
Maybe Al Frankenstein can return to his beloved home of MN to take over editorial duties at the Red Star Tribune..... he would be the perfect editor for a rabid left-wing band of non-entities.....
The coming collapse and rebirth of newspaper journalism
Circulation revenue at newspapers has also been falling in recent years due to price cuts and competition, further squeezing margins.
...
Digg.com, with less than 20 employees, has more Web traffic than The New York Times, according to Alexa.com. Other popular mainstream publications are even farther behind.
...
So here's where the spiral begins. Newspapers' profitable classified advertising business will be all but gone in 10 years, a victim of the vastly superior results and economics of search-driven online advertising. Display advertising will be under intense pressure from alternative media, including not just Web sites but an emerging class of small print publications and supermarket advertisers that serve local audiences (print publishing is getting cheaper, too). The department stores and cell phone companies that sustain newspapers' display advertising business will apply intense pressure on papers to bring down their prices.
Newspapers will be forced to lay off staff in order to maintain margins. Cuts in services will lead to cuts in editorial coverage, making papers less relevant to subscribers. As circulation declines, advertising rates will have to come down to remain competitive. This will put more pressure on margins, leading to more layoffs, more cost cuts, more circulation declines and more pressure on margins. Once this spiral begins, it will accelerate with breathtaking speed. And it has already begun.
Only that they are very profitable...for now.
And that they don't want you to know it...
Philadelphia paper publisher says layoffs needed
... "Without immediate and dramatic changes to the business, in 2007 we will not only miss our performance requirement, but we will also not have enough cash to make our interest payments."
Damn straight!
I'd like to see the entire editorial board (Boyd, Sturtevant, etc) given pink slips and told they have 30 minutes to pack their shit up and get.
Sorry Admin Moderator, I had to swear when speaking about the Red Star's editorial board.
Well I guess we now know the reason for this.
Gyllenhaal become Miami Herald executive editor (Editor Leaves Minneapolis Star and Tribune)
Poynter Online ^ | 15 December 2006 | Jim Romenesko
http://www.freerepublic.com/focus/f-news/1754117/posts
Posted on 12/15/2006 2:41:27 PM CST by shrinkermd
After almost five years at the Star Tribune, our editor, Anders Gyllenhaal, has been called to a new challenge: to be the executive editor of the Miami Herald, another McClatchy newspaper and the paper where, earlier in his career, he earned a good many of his journalistic stripes.
(snip)
Will the new owners be just as journalistically stupid?
Probably.
He's already back here, and getting ready to run against Norm Coleman in 08.
Happy Happy Joy Joy.
Staffers at 'Star Tribune' Struggle to Understand Sale
By E&P Staff
Published: December 26, 2006 9:25 PM ET updated 11:00 PM ET
NEW YORK It must have surprised its own newsroom as much as it did news operations and media observers across the country.
After reports surfaced Tuesday that the Star Tribune in Minneapolis would be sold by McClatchy Co. to a private equity firm called Avista, a columnist at the paper, Doug Grow, said workers there -- like everywhere else -- were scurrying around the Internet trying to find out anything about Avista.
"Everything we've heard from McClatchy recently is 'Hey, we're all in this together. We don't do layoffs.' Blah blah blah BS," he told the Associated Press.
The 1998 sale by Cowles Media Co. ended decades of family ownership for the Star Tribune, the AP report continued. "As much as you hated the idea of local ownership disappearing, which it did, and ending up as part of a chain, at least it was a chain in the newspaper business," Grow added.
The New York Times on Wednesday notes: "The sale caught most employees at the paper off-guard and angered some newsroom employees, who expressed concerned that Avista Capital Partners, which owns no other daily newspapers, could make severe staff cuts."
Nick Coleman, a metropolitan columnist for the paper, told the Times, “It was like, who? Everyone knows the whole industry is in play and that just about anything could happen, but nobody thought we could get sold. There’s a real sense of betrayal....
“At a fire sale,” he said, “people get discounted, so we’re very concerned, worried and anxious.” But he added, “maybe it takes someone from outside the newspaper business to see the way forward.” The new owners said there would be no layoffs.
So was buying the Star Tribune nearly a decade ago a mistake for McClatchy?
Pruitt said it wasn't, the AP reported: "He said Avista paid an attractive price for the paper, and that the Star Tribune was the only paper it could sell at a loss to get a tax benefit at a time when McClatchy needs one. And he said McClatchy has collected more than $1 billion in cash flow from Star Tribune operations during those years. 'But there is no doubt we're selling the paper for less than we bought it for,' he said. 'The Star Tribune had several good years, where profits increased, and then in recent years it has lagged as revenues have underperformed.'"
The paper's union contracts will remain in place.
So how did the Star Tribune report its sudden purchase?
Late Tuesday, it produced the following mini-profile of the chairman of the board who will now oversee the paper -- Chris Harte, who comes from Avista:
"Christopher Harte has ink in his blood.
"His father and grandfather were newspaper executives, and Chris Harte has been a publisher for Knight Ridder in Akron, Ohio, and State College, Pa.
"Harte was president of the Portland Press Herald and Maine Sunday Telegram from 1992 through 1994. He was publisher of the Centre Daily Times in State College, Penn., from 1986 through 1989, and also served as publisher at the Akron Beacon Journal from 1989 through 1992. He was an executive with Knight Ridder newspaper chain in 1985-86, and with the Miami Herald from 1983 through 1985.
"Harte, 59, has a B.A. from Stanford University and an M.B.A. from the University of Texas. He lives in Austin, Texas. As the Star Tribune's chairman, he said, he's looking to ensure that Minnesota's biggest newspaper remains a leader. 'I certainly am in this because I love this industry,' Harte said Tuesday in Minneapolis. 'I love the power of a newspaper to do good things for its community.'"
The paper's Web site also posted a general story, written earlier in the evening, by reporter John Reinan. It includes a tough-minded quote from newspaper analyst John Morton, who had spoken earlier to E&P for a story we posted late Tuesday afternoon.
It follows.
*
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 printed daily newspaper "will be the core of our business well into the future," Harte told hundreds of employees gathered in the Star Tribune's largest assembly room. "But it won't be the overwhelming majority that it is today many years from now.
"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," he said. "By doing that, the Star Tribune will continue to be the dominant medium in the Twin Cities."
Moyer said he will remain as publisher, reporting to Harte, and that the newspaper's management team will remain intact.
Earlier this year, McClatchy completed the acquisition of the former Knight Ridder chain, becoming the nation's second-largest newspaper company. The Star Tribune sale will knock the company back down a notch to No. 3.
Immediately after announcing the $4.5 billion Knight Ridder buyout, McClatchy began selling a dozen of its newly acquired papers in what the company said were slow-growth markets or, in the case of the St. Paul Pioneer Press, raised anti-trust concerns.
In a statement Tuesday, McClatchy said that "a detailed analysis of the company's portfolio identified a number of unique financial tax benefits associated with the sale of the Star Tribune that would serve the long-term interests of the company and its shareholders."
McClatchy CEO Gary Pruitt, in an interview Tuesday, called the deal "a very difficult decision, a tough one for McClatchy to make. But we believe the company will be strong and that it won't affect our other newspapers very much."
In the wake of the sale, Pruitt said, he expects the financial performance of McClatchy to improve. He said the company will use the proceeds from the Star Tribune sale to pay down debt incurred in the Knight Ridder purchase.
"The Star Tribune did very well for a few years, but recently it has lagged in performance," as have many of the nation's largest newspapers, Pruitt said. "Large metro papers have under-performed 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."
He said it "remains a profitable, strong newspaper . . . the market remains a good market and the Star Tribune remains one of the best newspapers in the country. That's one reason this is such a difficult decision." He said there are no plans to sell other newspapers in the chain.
The timing "might look suspicious, the day after Christmas and all. It was unfortunate, but we wanted to announce as soon as possible," Pruitt said. McClatchy's board of directors reached a decision to sell in November "and we've worked as quickly as possible ever since. We signed the agreement today and legal obligations [under federal security laws] meant we had to announce in short order."
Newspaper analyst John Morton told the Associated Press that the sale was "inexplicable and disappointing."The Minneapolis Star Tribune has a good reputation, has always had a good reputation. It is the kind of newspaper that you would have hoped a company like McClatchy would continue to own," Morton said.
"Clearly what is happening to McClatchy is that they are much more concerned about their overall financial performance than they are about publishing newspapers, the way I read it," he said.
Earlier, in a memo to company employees, Pruitt called the Star Tribune deal "an unsettling surprise. Selling an established McClatchy paper certainly is not business as usual for us."
Moyer thanked McClatchy for its "steady, forthright stewardship" and said the new owners are "progressive, very smart, good-hearted people who believe in the future of newspapers and in a bright future for the Star Tribune, specifically."
Harte told employees that newspapers need to change quickly as readers and advertisers face a growing number of alternatives for information and selling products and services.
"I think it's a fascinating and exciting time to be in this business," he said. "Some think of it as scary, but I don't, and I hope you don't either.
"We have tremendous opportunities, and it's a great time to be in the news and advertising business."
E&P Staff
Links referenced within this article
Find this article at:
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003525248
I'd like it if we could just get a decent paper in town. The Pioneer Press sucks, and the Strib isn't much better.
http://online.wsj.com/article/SB116717230686359894.html?mod=mm_media_marketing_hs_left
McClatchy's Minneapolis Sale Aids Web Efforts Tax Benefits Play Big Role; Private-Equity Buyer Avista Aims to Specialize in Media
By SARAH ELLISON
December 27, 2006; Page A3
One of the biggest believers in the newspaper field sold its largest paper yesterday, as McClatchy Co. agreed to sell the Minneapolis Star Tribune to private-equity firm Avista Capital Partners for $530 million.
The price is less than half of what McClatchy paid for the paper in 1998, when it bought the Star Tribune from Cowles Media for $1.2 billion. The value of papers has declined as they face declining readership and a fragmented media environment.
"This was not an easy decision to make, but we're still confident about the future," said Gary Pruitt, McClatchy's chief executive, in an interview. "The industry is going through a downturn but this deal has more to do with a long-term view." Mr. Pruitt said the sale of the paper would improve McClatchy's performance and give the company more flexibility to pursue Internet investments. He cited a $160 million tax benefit the company would reap.
Avista was founded last year. While newspapers are considered a sunset industry, partners at Avista say that the Star Tribune is attractive despite the fact that its circulation is lower today than it was five years ago. "It is a great brand in a great market," said OhSang Kwon, one of Avista's partners.
The firm is placing Chris Harte, whose family is among the owners of San Antonio-based direct-marketing firm and publisher Harte-Hanks Inc., as the chairman of the paper's holding company, but the firm said it is planning no other management changes. The Star Tribune sale was disclosed after trading ended yesterday; McClatchy's shares were up 81 cents, or 1.9%, to $43.07 at 4 p.m. in New York Stock Exchange composite trading.
- snip -
http://www.nytimes.com/2006/12/27/business/media/27paper.html?ref=business
December 27, 2006
Equity Firm Buys Paper in Minnesota
By KATHARINE Q. SEELYE
In an unexpected move, the McClatchy Company, the newspaper publisher, said yesterday that it was selling The Star Tribune of Minneapolis to a private equity firm, Avista Capital Partners, for $530 million, citing the lagging performance of the paper and the tax advantages from the sale.
McClatchy said in a statement that the sale of the newspaper, which it bought for $1.2 billion in 1998, would help reduce its debt after the purchase of the Knight Ridder chain for more than $4 billion.
In addition to the $530 million, McClatchy said it would receive a tax benefit of $160 million from the sale, yielding total proceeds of $690 million.
The sale caught most employees at the paper off-guard and angered some newsroom employees, who expressed concerned that Avista Capital Partners, which owns no other daily newspapers, could make severe staff cuts.
The chief executive of McClatchy, Gary B. Pruitt, said yesterday in an interview that the company decided to sell the Minneapolis paper after re-evaluating its holdings following the acquisition of newspapers in the Knight Ridder chain.
Of The Star Tribune, he said: “It was a drag on the bottom line and we felt we would do better without it. We could also pay down debt and be more flexible to make digital investments, the quality of the other papers could be improved and the price we would get would be enhanced by this unique tax position it was in.”
- snip -
Although with the lib mentality of most newsrag people it won't happen, going conservative might save the Star-Trib. Because conservatives read more than libs. The lack of readership is probably due to the growing numbers of libs who can't or don't read. I'd gladly pay a buck for a rag that published the news fairly even without an ideological slant. But maybe, given the internet, the days of big city rag domination are over whatever the ideological slant.
At present, I'm better advised to save that buck for a cup of McDonald's coffee; our choices run from left field to loony-left lunar orbit: USA Today, Pioneer Press, and Star Tribune.
As a resident of western Wisconsin, all three rags are available to me on a daily basis. I usually purchase the Press for the NY Slimes crossword puzzle, but now that I do Sodukos, I'm reconsidering that. The Press's Sudokus are too easy. But you are right, even reading all three rags would still not give the average person enough decent news. And all three sin not just by what they print, but like all other lib rags and media organs, what they leave out. Which in most cases is the truth.
http://www.sacbee.com/103/story/98981.html
McClatchy is selling Minnesota newspaper
By Dale Kasler - Bee Staff Writer
Published 12:00 am PST Wednesday, December 27, 2006
The McClatchy Co. is selling its largest newspaper -- at a loss -- saying the paper had turned into an underperformer.
By selling the Star Tribune of Minneapolis to a private-equity firm for $690 million, including a $160 million tax benefit, Sacramento-based McClatchy acknowledged it's now being hurt by the paper that made it a big-league operation eight years ago.
Like many metropolitan papers, the Star Tribune is proving more vulnerable to Internet competition than other McClatchy papers, and the slide was worsening, said Gary Pruitt, McClatchy's chairman and chief executive.
"I don't feel good about the paper being sold," said Pruitt, who engineered the purchase of the Star Tribune in 1998.
But shareholders and most analysts said it was smart for McClatchy to unload a struggling paper with uncertain growth prospects.
Pruitt said the cash from the sale to New York-based Avista Capital Partners will be used to help repay the hefty $3 billion McClatchy borrowed to buy Knight Ridder Inc. six months ago.
McClatchy, which owns The Bee, bought the Minneapolis paper for $1.2 billion, one of the largest prices ever paid for a single U.S. daily.
The paper did well for McClatchy at first and generated $1 billion in cash flow since 1998. But it became "an underperforming paper in recent years," Pruitt said. "It's been a mixed record."
The paper's daily circulation is 361,172; it was about 387,000 when McClatchy bought it.
- snip -
This just in...
http://www.marketwatch.com/News/Story/Story.aspx?guid={BDCBAE26-1E73-4B6E-9B1E-2B1B58E022BB}&siteid=mktw&dist=nbi
- snip -
"The deal was somewhat of a surprise," said Wachovia analyst John Janedis in a note to clients. "However, we note that the paper was underperforming, is heavily unionized and has high exposure to classifieds and national advertising."
Janedis added that although McClatchy will take a loss on the asset, he thinks it demonstrates the company is willing to make difficult business decisions.
Goldman Sachs analyst Peter Appert said the deal was a bearish signal for the newspaper industry.
"The substantial loss on the sale is a vivid reminder of the industry's declining fortunes over the last several years," Appert wrote. "While we are intrigued that a private equity firm is showing interest in the newspaper sector, [the deal valuation] is not a bullish indicator for the sector."
- snip -
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