A private investment group bought the Star Tribune this week for $530 million. Avista Partnerships has offices in Houston and New York and its mission statement focuses on three sectors: Energy, Healthcare and Media. I’m guessing the investors don’t see a gem in the rough. I think they bought the Star Tribune to clean house, bust the unions and then flip it to a bottom feeder company like MediaNews Group, or a wealthy ill-informed local MN group of investors. Never mind their press releases, that “they want to provide excellent content.” So how will they do that, hire more journalists covering a small city in the tundra?
“The Star Tribune is one of the best newspapers in this country,” Pruitt said in 1998. “The Twin Cities is one of the most attractive newspaper markets in the country. And it was a near-perfect fit in terms of values and traditions.”
Things change. It appears that some of the editors in the McClatchy chain may have been going to night school for some Management Accounting and Economics 101.
What’s wrong with the content right now? A lot of pictures of snow and shots of bundled up shoppers packing the Star Trib’s advertisers’ parking lots?
McClatchy management washes their hands of the union busting, and remains on good terms with the Democrat Progressives they support every day with their bias.
Avista may make a good deal of money on the transaction about a year from now. They are not in the business and have no concerns about being labled union bashers. They don’t have any ties to the newspaper business.
A citizen journalist who wants to remain anonymous sent me the memo from McClatchy. It just got a little colder in Minneapolis.
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
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
firstname.lastname@example.org. We have much hard work ahead of us, but we can
approach the future more confidently as a result of the sale we have
McClatchy says they want to sell the papers in “non-growth areas. ”
But now we see the real reason. McClatchy doesn’t want papers with strong unionized work forces in a labor towns, yet they want to remain on the Democrat Progressive team.
The facts: McClatchy is led by CEO Gary Pruitt in Sacramento, Calif.
Its largest paper was the Star Tribune in Minneapolis-St. Paul until earlier this year when they bought Knight-Ridder’s 32 papers for $4.5 billion plus the
assumption of a $2 billion debt. McClatchy spent most of 2006 selling 12 papers
for a estimated $1.4 billion. Which? Those with “slow population
growth (not in the fast growing, non-union southern and western states).”
Among those they’ve kept:
The (Boise, Idaho) Statesman, The (Bradenton, Fla. ) Herald, The
Charlotte (N.C.) Observer, The (Olathe, Kan. ) News, The (Lexington, Ky. )
Herald Leader, the Center Daily Times (State College, Pa.), and Kansas
Not exactly union hot beds.
Among those the sold:
The Philadelphia Daily News and Inquirer, the San Jose
Mercury News. Guess what? McClatchy has sold all the Knight Ridder
papers with newsroom unions and now one of their gems in MN.
The Mercury News isn’t afraid to speak out. Columnist
Mark Schwanhausser asks: Since “eight of the 12 papers to be sold are
union shops, is it a referendum on unionized papers?”
Nineteen of the 20 papers McClatchy is keeping are non-union.
In his blog, Attytood, Will Bunch of the Daily News reports, “McClatchy is said
to flat-out HATE unions. ” NPR says that “McClatchy intends to sell all
the Knight Ridder papers with newsroom unions. They’re considered more
costly to run. ”
“McClatchy would never put it this way, but basically they’re getting
rid of all the union” papers, including San Jose, two papers in
Philadelphia and Akron, Ohio, said James M. Naughton, retired president of the
Poynter Institute, a school for journalists, who once worked at the
And the Democrat party will keep receiving loyal support and glowing editorials from the newspapers sold down the river by McClatchy and by those kept by the McClatchy chain.
The Guild/CWA will continue to send all their journalists’ political support to the Democrats. But they will have thousands fewer dues paying members.
The common stockholders of newspaper-centric media companies, who’s capital has been wasted on more newspaper acquisitions must be wondering how long to hold on. Especially troubled must be those who have investments with McClatchy and the New York Times, where their common stock has virtually no voting rights.
Standard & Poor’s Rating Services on cut the rating on New York Times Co.’s long-term corporate and senior unsecured debt this week.
“While New York Times will benefit from the planned debt reduction with proceeds from the sale of its broadcast media group, the company’s financial profile is expected to remain weak for the new ratings while it completes two major capital projects in 2007 and 2008,” S&P said.
In September, the company said it would sell its group of nine network-affiliated TV stations in order to concentrate on its newspaper and digital businesses.
S&P now rates the long-term corporate and unsecured debt at “BBB+,” down from “A-.”
S&P affirmed its “A-2” short-term rating for the company’s corporate credit and commercial paper.
The Times had about $1.5 billion in debt outstanding at the end of September, the ratings agency said. That debt load will be a bit more expensive now.
New York Times shares fell 8 cents to $23.81 in recent trading on the New York Stock Exchange. Let’s watch how the Times’ PR staff spins this news.