For those of you who needed two hands to haul your holiday-heavy Observer in from the driveway this morning, it must sound especially odd to hear that newspapers are somewhat out of favor with Wall Street.
But for more than six months, some financial analysts have shied from the stocks of publicly traded newspaper companies, unconvinced that an ink-on-paper medium can advance in the age of the Internet.
Wall Street has often been wrong, and it's wrong now about its assessment of newspapers. But before I say more about that, I should explain how these doubts could touch your newspaper.
As we have recently reported, the Observer's parent corporation, Knight Ridder, is under pressure from a segment of its shareholders to explore the sale of this newspaper and 31 others it owns across the country.
Were the Observer to be sold, it would mark the first change of ownership in more than 50 years.
Shareholders favoring a sale are led by Bruce Sherman, chief executive of a Florida-based investment firm called Private Capital Management. That firm owns 19 percent of Knight Ridder's shares. Two other institutional investors with shares totaling another 17 percent also want to consider a sale.
Knight Ridder's share price has declined from $71.07 a year ago to as low as $52.42 in October. It closed Friday at $61.25.
Sherman believes Knight Ridder is worth much more than the share price would suggest and he wants to reap that value through a sale.
Friday marked a deadline for potential buyers to identify themselves for Knight Ridder's board. At least two major newspaper companies -- Gannett and McClatchy -- reportedly expressed an interest, as did a number of private equity firms.
What that means for the future ownership of the Observer is impossible to predict.
To this point, Knight Ridder has not committed itself to a sale. And it is widely believed that any buyer of the 32 newspapers could easily resell them separately or in small chunks to still more buyers.
As a reader, does it matter to you who owns the newspaper? Absolutely, if you believe, as I do, that the quality of newspapers varies nationwide under various owners with different operating philosophies.
I have worked for Knight Ridder for 16 years and can attest to its longstanding commitment to quality newspapers that are invested in their communities. The Observer has long been that kind of newspaper.
Under present ownership, the paper has earned four Pulitzer Prizes, plus dozens of other national journalism honors. Last year, Observer columnist Tommy Tomlinson was a Pulitzer finalist. The N.C. Press Association honored Observer staffers with 31 awards -- the most given to a newspaper in the history of its journalism competition.
Charlotte and the surrounding region deserve no less than that level of excellence, going forward, regardless of who owns the newspaper.
As this story unfolds, I believe it will become clear that Knight Ridder's dissident shareholders are right about at least this: Newspapers are far more valuable than the financial markets would have you believe.
Yes, the newspaper industry faces big challenges from a growing number of competitors for both readers and advertisers. But none of those competitors approach the financial strength of newspapers in their markets.
Last year, Knight Ridder earned an average of 19.3 cents on the dollar. By comparison, companies in Standard and Poor's 500 Index of large U.S. firms made an average of 11.3 cents on the dollar.
And despite concerns about the loss of some classified advertising to Internet competitors, this newspaper and others nationwide project revenue growth in 2006. No small portion of that growth will come from the newspapers' own successful Web sites, among them the Observer's Charlotte.com.
Much has also been said about the gradual erosion of paid printed circulation of newspapers. Yet newspapers continue to reach more readers than any other local medium. This is true, by far, for the Observer. Consider:
An average of 551,150 adults read the printed Observer on weekdays. On Sundays, that number increases to 798,573.
In October, 248,000 area residents visited Charlotte.com. Overall, the number of readers on our Web site has grown by 13 percent since January.
The combined readership of the newspaper and Web site now represents 55 percent of the adults in our region.
Newspapers a dying business? The same was suggested when radio and television entered our world. It didn't happen. It won't happen now, either. Why?
Not because the people who operate newspapers are invincible. And certainly not because we are perfect. As editor, I am as painfully aware of our newspaper's faults as I am determined that we will learn from our mistakes.
But newspapers have thrived for more than 400 years for one simple reason: They have hitched themselves to a basic human need.
Communities can function as communities only if the people who live in them share a common understanding of what they are about. Communities need news, information and a place to sort out the issues uniquely important to them.
To this point, no medium has met that need better than newspapers -- initially in print, and now also online. As long as newspapers devote themselves to that role, they will remain important to the life of a community.
To be candid, this has never been more challenging than now, largely because of the difficult business environment I've outlined here. We'll make the best use of our resources in 2006 by tightening the newspaper and boosting content online to meet changing reader habits.
I'll share those plans with you as they become clearer in the weeks to come.
In the meantime, I want to thank you on behalf of everyone at the Observer for the confidence that you place in us. We treasure your trust and realize we must prove that we deserve it every day.
