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July 2000

The Year of
Stalemate and Sitzkrieg
The Bids Come In, The Bids Go Out

Dispatches from the Front by Burl Burlingame

7/5/00 A BusinessWeek analysis of Gannett's $3.7 billion-dollar buyout of two rival chains articulated new CEO Douglas McCorkingdale's long-term strategy: Gannett's flagship metropolitan and national dailies aren't profitable enough, so instead focus on "local news" in monopolized markets where advertisers have no choice but to pay Gannett's rates, and Gannett can pare back on newsroom expenses to a bare minimum. This illuminated Gannett's possible strategy in Honolulu, and didn't bode well for the security of the Advertiser newsroom if the Star-Bulletin is killed. Or Gannett may just be trying to save its butt, now that the horse wais out of the barn. Gannett also planned to continue ignoring the Internet.
7/6/00 Other newspapers soon to be acquired by Gannett were getting nervous about the media giant's poor record in improving larger dailies, and cutbacks at smaller ones.
7/7/00 Likely thanks to problems accessing realistic data in Gannett's "data room," Judge Kurran called a meeting among the lawyers.
7/10/00 Star-Bulletin staffers met with their ESOP banking representative, Josh Wolf-Powers, who had been deep in discussions with the ESOP committee for several days already. Josh is a sharp, voluable and canny banking specialist with a particular interest in helping creating union-based stock-ownership plans. He was straight-forward about the lack of success in other parts of the country in this regard, but was also keenly aware that circumstances in Honolulu are "different." The particulars of the meeting above were kept confidential by the staff. It was good, however, for the staff to know that someone of Josh's talents was on board, and morale visibly improved after the meeting.
7/11/00 Was Gannett now sniffing around the McClatchy Co, newspaper chain? Also, the Santa Barbara News-Press, a paper of similar size and impact to the Star-Bulletin, was sold, not to a chain but to a local owner with a commitment to serving the community. This sale bucked a national trend toward faceless chain acquisitions and might serve as a model for Honolulu.
7/12/00 Gannett spin-off charity The Freedom Forum was offering $100 million for a "Newseum" site on the last developable space in Washington D.C., and the highest amount ever paid per square foot in the capitol. If accepted by D.C. officials, the U.S. Army will have to look elsewhere for its long-planned national museum. Gannett was in the midst of abandoning its offices in Arlington, VA. The Freedom Forum claimed to be devoted to the principles of the First Admendment -- also cited by Gannett lawyers as a legal right to kill newspapers.
7/13/00 Thomson passed over Gannett and chose MediaGroup to buy the last of its remaining American newspapers.
7/14/00 Judge Kurran had been talking to Gannett lawyers for three days behind closed doors.
7/16/00 The fifth-year anniversary of the Gannett-inspired Detroit newspaper strike passed with both sides bitter and demoralized, and major slippage in circulation figures. Despite the more than $100 million cost of the strike, Gannett was still showing a profit in Detroit.
7/17/00 An Editor & Publisher article about the Star-Bulletin ESOP initiative not only got my name wrong as group spokesman, it contained bizarre quotes from an Arlington "ESOP expert" about why the effort is doomed. Arlington is also Gannett's base of operations.
7/19/00 Federal magistrate judge Barry Kurran, in light of complaints from potential Star-Bulletin buyers about Gannett's unwillingness to share financial data, issued a ruling affecting the terms of the newspaper's sale. If buyers were unable to get basic financial information from Gannett, they could now turn to the court. The deadline for bids was also pushed back four days -- but the ruling still said bids are due Aug. 14.
7/20/00 Potential Star-Bulletin bidders were "outraged" as Gannett stonewalled basic financial data. It is not clear whether the court-ordered system for extracting data from Gannett will work under the tight time constraints for due diligence. In a Gannett-vetted story, publisher Mike Fisch claimed "We have provided a great deal of historical, financial and operational information and are considering requests for expanded information. The interested parties have the full financials, including line-by-line operational data and historical financial data." This straight-faced spin, stated as fact, is 180 degrees from the court's and the buyers' stated frustrations.
7/21/00 Gannett's Honolulu Advertiser once again had to make a public correction of a story about the Star-Bulletin sale.
7/24/00 Robert Giles, former editor and publisher of Gannett's Detroit News -- where he altered news coverage of the labor situation -- is named head of the Nieman Foundation over union protests. Nieman ''showed himself to be committed, not to high journalistic standards, but instead to the corporate agenda of the Gannett Co.,'' noted Newspaper Guild president Linda Foley.
7/25/00 Star-Bulletin managing editor Dave Shapiro, already on temporary medical leave, went on extended leave. The news didn't surprise staffers, but saddened many nonetheless. Formerly a loyal Gannett executive, Shapiro was thoughtlessly tossed out of the corporation in the 1992 sale of the newspaper. Since that time, under Shapiro's leadership, the Star-Bulletin has routinely bested Gannett competition. He also may be the sole reason Gannett was eventually forced to construct public handicap access in the news building.
7/26/00 Hoping to lure Gen-X readers, a Gannett corporate task force created blueprints for an alternative weekly that were distributed to Gannett newsrooms. The task force, of younger Gannettoids, was encouraged to "borrow" as many ideas as possible from other publications. In Hawaii, Gannett targeted the Honolulu Weekly for extermination.
7/27/00 In San Francisco, federal judge Vaughn Walker approved the merger of the Examiner and the Chronicle, and blasted Department of Justice interest in preventing a monopoly in the market. Although the case is substantially different than Honolulu -- where a profitable newspaper's owner was being paid off to kill his product, leaving just one newspaper to cover an entire state -- Walker's decision may embolden Gannett lawyers.
7/28/00 Bidders for Honolulu Star-Bulletin were generally not swayed by the San Francisco decision, as Gannett has never offered a subsidy for purchase of the paper -- although one might be needed to satisfy ongoing legal issues.
NEXT! August 2000
Black at the End of the Tunnel

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