Like many newspaper lovers, Larry Jinks is wrestling with mixed emotions as Knight Ridder Inc's shareholders prepare to vote tomorrow on the company's US$4.5 billion sale to McClatchy Co.
Jinks takes comfort knowing most of Knight Ridder's 32 daily papers will be turned over to a well-regarded publisher like McClatchy, where he sits on the board of directors.
But as someone who spent most of his career working for Knight Ridder, Jinks sympathizes with journalists and readers mourning the loss of the second-largest US newspaper publisher -- a company long admired for its community service and enlightening stories.
While the US Department of Justice has requested more information about the sale of two newspapers involved in the Knight-Ridder deal, McClatchy spokeswoman Sarah Lubman said this week that the shareholder vote is still on track for tomorrow.
"I am sorry to see it going away," said Jinks, who joined the McClatchy board in 1995 after retiring from Knight Ridder, where he served stints as executive editor of the Miami Herald and publisher of the San Jose Mercury News. "I have been involved in newspapers since 1950, and the last year has been the most tumultuous of any that I can remember."
Knight Ridder's demise may foreshadow more sobering times ahead for newspapers if advertising continues its shift to the Internet, intensifying pressure on publishers to cut costs to satisfy investors who continue to demand higher profits despite the industry's eroding revenue and readership.
Those tensions buried San Jose-based Knight Ridder, which spent much of the past decade fruitlessly trying to please Wall Street. Knight Ridder's papers have a combined daily circulation of 8.1 million, down from 8.5 million in 2001.
The relentless pursuit of more profit became an uphill battle as the company tried to offset its diminishing revenue by eliminating 3,500 jobs, or 16 percent of its workforce, over the past five years.
The purge weakened Knight Ridder's newsrooms when it should have been bulking up to cope with the online revolution, said Jay Harris, who quit as Mercury News publisher in 2001 because he didn't want to make deep cuts at the Silicon Valley paper.
Shareholders weren't placated because management still could not deliver on its promise to bring the company's profits in line with the rest of the industry.
Last year, Knight Ridder's operating profit margin stood at 16.4 percent compared with the industry average of 19.2 percent, industry analyst John Morton said.
And it was backpedaling faster than its peers. In 2004, it posted an operating profit margin of 19.4 percent compared with 20.5 percent for the industry, Morton said.
Investors took out their frustrations on Knight Ridder's stock, which plunged from a high of US$80 in 2004 to a low of US$52.42 last year. Shares dropped 0.8 percent on Friday to US$60.96.
Exasperated with the firm's performance, the company's three largest shareholders confronted the board last year. That rebellion led to the McClatchy sale, a cash-and-stock deal initially valued at US$67.25 per share when it was announced in March.
If shareholders give their approval, Knight Ridder plans to close the sale on Tuesday, ending the existence of a company with roots dating back to 1892, when Herman Ridder bought a German-language paper in New York.
In 1974, Ridder Publications Inc merged with Knight Newspapers Inc, which began in 1903 in Ohio.
The newspapers owned by Knight Ridder and its predecessor companies have amassed 85 Pulitzer Prizes, rewarding a corporate culture devoted to the public's right to know.
Knight Ridder "represented a collection of people who were really passionate about journalism and its proper role in society," said Dan Gillmor, a former reporter and columnist at the Mercury News as well as a Detroit paper formerly owned by Knight Ridder. "It was a place for talent, passion and doing it right."
The sale to McClatchy will splinter a group of newspapers that includes the Miami Herald, the Philadelphia Inquirer, the Kansas City Star, the Charlotte Observer, St. Paul Pioneer Press, Fort Worth Star-Telegram, Contra Costa Times and Mercury News.
McClatchy is keeping 20 of the daily papers and selling the rest. Sacramento-based McClatchy already has reached agreements to sell 11 papers to seven different buyers for more than US$2 billion combined. It's still looking for a buyer for the Times-Leader of Wilkes-Barre, Pennsylvania.
"This is a tragedy for journalism and for the communities that were served by Knight Ridder's newsrooms," said Harris, currently the Wallis Annenberg Chair in journalism and communication at the University of Southern California.
Knight Ridder CEO P. Anthony Ridder declined to be interviewed for this story.
Selling the company against his will was something Ridder, 65, feared since he became Knight Ridder's CEO in 1995. Unlike several other publicly held publishers, Knight Ridder never had a layer of elite stock to help insulate the firm from dissident shareholders.
"Tony felt a great deal of pressure because he knew if just one institutional investor got really unhappy, it could bring the company's downfall," Morton said.
As Ridder scrambled to please investors, the personnel in Knight Ridder's newsrooms grew more disillusioned. Some critics even vilified him as "Darth Ridder."
Although he didn't harbor any animosity toward Ridder, former Mercury News business editor Peter Hillan was among the talent that defected rather than watch the dismantling.
"We had been playing in the big leagues so it was going to be tough to stick around to see it brought down to [the minor leagues]," Hillan said. "I thought they could have found a better middle ground between being a strong journalistic outlet and a strong business outlet."
But Jerry Ceppos, who oversaw Knight Ridder's news operations under Ridder, believes his old boss got a bum rap.
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