18.3.06

media: Who Will Buy This Paper?

The sale of the industry leader in newsroom gutting, Knight Ridder, to Mclatchy is going to affect both of the TC's main newpapers. Hopefully, it'll be a positive change, but I'm hedging my bets at this point.

When this story broke, I was buoyed by this tidbit, that the Newspapers Guild was looking to buy 12 of the papers Mclatchy is shedding in this huge business deal (including the PiPress).

Alongside powerful potential suitors like Gannett Co. and Denver-based MediaNews Group Inc., the union's vision to buy the papers and convert them to employee ownership sounded naive to many media analysts. But the Guild effort got new respect when it announced that it had secured necessary financing from a major investor. "It sounds like they have a backer, and it's always all about the money," said Edward Atorino, an analyst at the New York-based brokerage firm Benchmark Capital.

It's still too early to know anything for sure. McClatchy might sell the papers singly, all together, or in bunches. Serious haggling lies ahead, with standard price formulas putting the value for all 12 at $1.5 billion to $2 billion. Other interested parties probably will step in. Editor & Publisher, a trade publication, reported Wednesday that an advertising executive and some other investors were putting together a bid "well in excess of $100 million" for the two Philadelphia papers.

The prospect of employee ownership stirs up some big conflicts. On one hand, many U.S. workers are tired of the squeeze that Wall Street's relentless pursuit of profits puts on them. On the other hand, they're wary of betting much of their money on company stock -- after Enron famously imploded and cost many employees their life's savings.

Apart from the mention of Enron in this article, I'd love to see this happen. It would be an exciting new model for the ever-changing newspaper business. I'm doubting whether Mclatchy would sell to the union, simply because they'd probably be stiff jouralistic competition -- and might draw good journalists to the Saint Paul paper.

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