Writings and observations

Upending K-R?

Washington and Idaho just finished a major newspaper ownership transfer, one of the biggest in a generation. Is it about to see a new one?

Knight RidderThe national backdrop is the decline in newspaper circulation, following a quarter-century of ever-tighter squeezing of profits out of newspapers. That is something the recent newspaper swap between Gannett Corporation and Knight-Ridder, which left the latter with the Boise Idaho Statesman, the Olympia Olympian and the Bellingham Herald, in addition to the 49% of the Seattle Times it already owned, did not address. But now Knight-Ridder’s largest single shareholder is hitting it head on.

He – as head honch at Private Capital Management – is Floridian Bruce Sherman, a major figure in Wall Street circles, and expert in the game of buying low and selling high. Knight-Ridder’s stock prices, in which Sherman is heavily invested, have been on a general decline for some years. Sherman has been bullish on newspapers in large part because they maintain a heavy cash flow as well as (generally speaking) excellent profits; but what will the future bring? His solution (hello, Albertsons!): Put up the pieces or the whole at auction, sell it off. From the perspective of stock prices, at least, Sherman appears to have a point: K-R’s numbers took an uptick after he pitched his point.

Consider this from the Seattle Times piece on Sherman:

The contrarian Sherman likes newspapers: He has trebled his newspaper holdings since early 2003 to total some $4.5 billion worth of stock across nine companies, according to Deutsche Bank.

When he targets a company, he meets management and employees and gives the place the once-over. “The company visit is half of it,” he said.

Once Sherman decides to invest, he goes in big. He aims to be one of the three largest shareholders in order to have some say-so over management.

Say hello to one of the influential people in Northwest media. From his home base in Florida.

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