Newspapers changing hands

Dan Grech Dec 26, 2006

Newspapers changing hands

Dan Grech Dec 26, 2006


MARK AUSTIN THOMAS: Thousands of layoffs. Rising costs, falling revenue. Brand name companies in play. What troubled industry am I talking about? No, it’s not car makers, not airlines. It’s newspapers. 2006 has been a blue year for the nation’s dailies. The digital revolution and pressure from Wall Street shook up one of America’s oldest industries. From New York, Marketplace’s Dan Grech has more.

DAN GRECH: At the beginning of this year, Knight Ridder was the nation’s second largest newspaper chain. Its 32 papers earned handsome profits.

But three major shareholders weren’t pleased with Knight Ridder’s plans for the digital age. In March, they forced Knight Ridder’s sale to the much smaller McClatchy Company.

And just like that, a newspaper company with 85 Pulitzer Prizes was gone.

Eric Newton is with the Knight Foundation, a grant-giving nonprofit that outlived its namesake corporation. He says 2006 was a year when many newspapers companies found themselves on the selling block.

ERIC NEWTON: You had Knight Ridder, Tribune, Copley, Boston Globe, Los Angeles Times, either being sold or talking about being sold. For a minute there, it looked like everything was for sale. That’s part of the impact of the Web, and it’s not over yet.”

Newsprint prices are up, retail advertising is flat, circulation is way down.

And online sites like Craigslist and are eating away at classified ad sales, a pillar of newspaper finances.

After McClatchy bought Knight Ridder, it quickly resold 12 of the 32 papers it had picked up. All 12 ended up in the hands of private owners.

Brooke Gladstone is a host of the NPR show On the Media.

BROOKE GLADSTONE: There does seem to be a trend of papers that were once family-owned, bought by larger media corporations, now getting sold again to locally-based rich people who maybe will bring a slightly less bottom-line-oriented pressure to it, or so the hope goes.

But why own a newspaper in the Internet age?

Investment banker Robert Garrett is part of a group that wants to buy the Baltimore Sun.

ROBERT GARRETT: I’m a Baltimorean. I was a director of the paper for a long time and it’s appealing to think of bringing it back into local ownership.

Hollywood mogul David Geffen offered $2 billion for The Los Angeles Times. And former GE head Jack Welch, a Bostonian, wants to bid on The Boston Globe.

GARRETT: Local ownership implies a willingness to take a lower return on investment, less attention to quarterly profits and a strong community relationship.

There’s another potential group of investors: Private equity firms. They plan to break up newspaper companies, sell them in parts, and turn a quick profit.

In New York, I’m Dan Grech for Marketplace.

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