The Newspaper Guild has hired investment bankers to explore the possibility of putting together what probably would be a long-shot, "worker-friendly" buyout of nine Knight Ridder newspapers, including the St. Paul Pioneer Press and the Duluth News Tribune.
Knight Ridder, which owns 32 daily newspapers, put itself up for auction in November at the urging of some of its large institutional investors who are unhappy with the company's stock performance.
"We can sit back and watch Wall Street and forces unleashed by this process determine our future, or we can do something proactively," Newspaper Guild President Linda Foley said Thursday. The Guild is a unit of the Communications Workers of America.
"It's a long shot, but a long shot worth exploring," said Scott Carlson, Guild unit chair at the Pioneer Press. "It gets us to the table and gives us an opportunity to provide a different viewpoint."
Foley emphasized that the Guild has no designs to actually own newspapers, but it wants to act as a facilitator that could help put the union newspapers into the hands of buyers, including management and employees, that would be less inclined to make deep personnel cuts than others.
But the Guild's bid already has run into a possible snag.
While a Knight Ridder spokeswoman could not be reached for comment, Foley said the San Jose, Calif.-based company has told the Guild that it is planning to sell the company only as a whole, which would preclude a union-led bid for just the nine union papers. She added that the Guild would be willing to work with an eventual buyer of Knight Ridder to bid for the nine unionized papers.
Independent newspaper analyst John Morton said he thinks the Guild's prospects are doubtful. Morton couldn't recall one union or employee-led buyout of a daily newspaper group in 30 years of following the industry.
An employee group failed this year in its bid for the St. Louis Post-Dispatch. The paper, along with 13 others in the Pulitzer chain, was sold to another chain, Lee Enterprises.
"They will be stunned at how much [money] this is going to take," Morton said. "These things usually fall apart because they can't get the financing."
Knight Ridder as a whole has a market value of more than $4 billion, and it will want a premium for the company.
Besides the Pioneer Press and the News Tribune, the Guild represents newsroom and other workers at the Philadelphia Inquirer and Daily News, the San Jose Mercury News, the Akron (Ohio) Beacon Journal, the Grand Forks (N.D.) Herald, the Lexington (Ky.) Herald-Leader and the Monterey (Calif.) Herald.
The union has hired Duff & Phelps Securities of Chicago and Ownership Associates of Cambridge, Mass., to study the possibilities.
Duff & Phelps managing director Richard May said that a national network of "worker friendly" private equity firms has emerged in the past two decades and that he anticipated that a deal could be done with a combination of capital from private equity firms, management and employees.
He said the Guild was also exploring joint bids with partners that have expressed interest in Knight Ridder.
Knight Ridder is said to have drawn interest so far from Gannett Co., the country's largest newspaper chain, and from McClatchy Co., publisher of the Star Tribune. A partnership formed by private equity firms Blackstone Group, Providence Equity Partners and Kohlberg Kravis Roberts & Co. is also reportedly interested in the company.
