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History: Right Turn, Clyde
Economics: Long Division
International: Union Proud
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Indigenous: The year of living dangerously
Review: Lights, Camera, Strike!
Culture: News Front
The Locker Room
Grumpy shareholders are no fun. Grumpy shareholders that force the sale of a media business spark media ownership fears. And that's what's facing the second biggest US newspaper group, Knight Ridder. But the union representing some Knight Ridder journalists has a plan to continue the media company's independence.
In November, Knight Ridder, which consists of 32 daily newspapers as well as a network of websites and employs 18,000 people, said it was considering selling the company because of discontent amongst its institutional shareholders. The company has been holding meetings with prospective buyers and a second round of auction bidders are expected to circle the company in February.
Like many print media groups, profits are being squeezed. In the three months to December 31, Knight Ridder saw net income fall by 22 percent to US$8.3 million.
Shareholder Private Capital Management wants the sale. Prospective bidders include media groups McClatchy, Gannet and MediaNews, and private institutions are also interested.
But in late December, the Newspaper Guild-Communications Workers of America, the print journalists union that has 34,000 members, announced it was interested in maintaining independent ownership of eight Knight Ridder newspapers that have existing agreements with the Guild.
The Guild notes that since 1975, two-thirds of independent newspaper owners and one third of independent television owners in the US have disappeared. Only 281 of 1500 daily newspapers continue to be independently owned. While the three largest newspaper publishers control 25% of the daily newspaper circulation worldwide.
The Guild is considering creating a new company, Value Plus Media, to be the umbrella parent for the eight Knight Ridder papers. The company's ownership would be shared between one or more "worker friendly" private equity firms and the employees of the eight papers, who would participate through Employee Stock Ownership Plans (ESOP's). Although ESOP participants "own" the company for which they're working, their shares are held by a legal trust and are sold only when the employees leave or retire. The Guild would not participate in the new company.
"There is a lot of interest in our proposal among various stakeholders in the news industry," said TNG-CWA president, Linda Foley. "People who work in this business care about what's happening in journalism as a result of the current climate of consolidation and cost cutting understand that there is a need for a different ownership model. We look forward to working with anyone who shares this view."
A senior management team, one that employees have a hand in choosing, would run the ESOP. The Guild is seeking input from union members, Knight Ridder "alumni" and other newspaper industry people. A Value Plus advisory board of newspaper, media, philanthropic and community leaders is being put together to help create a pool of prospective senior management candidates.
Knight Ridder, however, has dismissed the Guild's proposal, saying it won't break up the company.
The Society of Professional Journalists (SPJ), which has 90,000 members, said last month it wants "an urgent national conversation about how to preserve public-service journalism in light of the likely sale of the Knight Ridder company.
"We acknowledge that newspapers cannot serve their domestic role unless they stay in business. But the increasing corporate pressure to squeeze additional returns out of already profitable newspapers, at rates exceeding the margins in most other industries, has skewed the balance between journalism and commerce.
"Though there is disagreement about what should happen at Knight Ridder ... there is broad consensus within journalism community that it should not be allowed to fall into the hands of those unwilling to guarantee the continuity of public-service journalism."
This article first appeared in the February/March 2006 edition of the Walkley Magazine.
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