Strib sold

Hope I'm not D'Bing.

http://www.startribune.com/535/story/899047.html

 

And here's the accompanying press release:

McCLATCHY TO SELL THE STAR TRIBUNE TO AVISTA CAPITAL PARTNERS

Sale Provides Tax Advantages, Lowers Debt and Enhances Flexibility
and Competitive Position for McClatchy

SACRAMENTO, CA and NEW YORK, NY, December 26, 2006 - The McClatchy Company (NYSE: MNI) today announced that it has reached a definitive agreement to sell the Star Tribune newspaper of Minneapolis, MN to Avista Capital Partners for $530 million. In addition, McClatchy expects a future cash tax benefit equal to approximately $160 million related to the sale. The purchase covers the newspaper as well as other publications and websites related to the newspaper. The transaction is expected to close in the first quarter of 2007.

“The Star Tribune is a great newspaper with talented staff and management,” said Gary Pruitt, Chairman and CEO of McClatchy. “It is a profitable business that has generated significant returns for the company over the years. However, as we continued to analyze our business following the Knight Ridder acquisition, it became clear that selling the Star Tribune strengthens McClatchy’s competitive position. This decision will better align our portfolio for today’s changing media environment.”

Following completion of the Knight Ridder transaction, a detailed analysis of McClatchy’s portfolio identified a number of unique financial benefits associated with the sale of the Star Tribune that would serve the long-term interests of the company and its shareholders. Proceeds from this tax-advantaged sale will enable McClatchy to reduce debt, improve the company’s financial performance, and provide increased flexibility to capitalize on new opportunities in the newspaper industry, including digital investments. The company has no plans to divest further newspapers.

OhSang Kwon, a partner of Avista Capital Partners, said, "With an exceptional brand, presence in a strong demographic market, a rapidly growing internet platform and an experienced management team, the Star Tribune represents a very attractive asset among major metropolitan newspapers. We will be entering this market in a leading position and find great promise in the company’s potential for growth. Moreover, we are eager to start working with the talented people of the Star Tribune and serving the people of the Twin Cities.”

Proceeds from the sale will be enhanced by applying the tax loss arising from the transaction against the tax gains generated by McClatchy’s sales of 12 newspapers formerly owned by Knight Ridder earlier this year. The tax loss carry back is expected to yield a cash tax benefit of $160 million by 2008. Taken together with the sale price, this transaction is expected to yield total cash proceeds of approximately $690 million, which will be used to pay down debt from the Knight Ridder purchase.

“The fact that McClatchy is in a position to capture $160 million in addition to the sale proceeds because of favorable tax conditions made selling at this time compelling,” said McClatchy CFO Pat Talamantes.

McClatchy will now operate 31 newspapers in 29 markets, ranging from Anchorage to Miami with 2.76 million in daily and 3.45 million Sunday circulation. It will be the country’s third largest newspaper publisher, based on latest circulation reports.

“McClatchy is actively engaged in creating its future, building a company that meets the needs of its customers and rewards its shareholders,” Pruitt said. “Business-as-usual offers no solution in a rapidly changing environment; clear vision, sound judgment and timely execution do.

“As we said during the divestiture of select Knight Ridder newspapers after our acquisition, McClatchy is a disciplined company driven by clear-eyed strategic decisions,” Pruitt said. “We don’t shy away from the tough decisions necessary to build the foundation for overall success. In this case, the analysis was clear: McClatchy will be a stronger company, better positioned to build its future by selling the Star Tribune. Building a modern media company is a work in progress, but we believe strongly in the future of journalism and its public service role. McClatchy is proud to carry on that tradition as an industry leader.”

Pruitt added: “I’d like to thank our employees across the company and at the Star Tribune for their continued dedication to excellence in bringing the news to their communities. While the media landscape is changing, the need for fair and accurate reporting continues, and remains our primary mission.”

McClatchy purchased the Star Tribune from Cowles Media Company in March 1998 for a total of $1.2 billion, after taking into account McClatchy’s concurrent sale of Cowles’ magazine and book publishing businesses. The Star Tribune is the largest newspaper in Minnesota with daily circulation of 361,172 and Sunday circulation of 596,333, and operates the leading local online site in Minneapolis, startribune.com.

Credit Suisse Securities (USA) LLC served as financial advisor to McClatchy in this transaction. Wilson Sonsini Goodrich & Rosati served as legal counsel to McClatchy, and Davis Polk & Wardwell served as legal counsel to Buyer.

 

I'm confused. Wasn't this supposed to be bought by Singleton?

 

I think I speak for all employees of McClathey papers when I say:

Uh-oh.

 

The St. Paul Pio Press was bought by Singleton's group

 

After eight years, McClatchy sold the strib for less than half of the original purchase price (from approx. 1.2 million to $530,000).

Sorry to see you go, Stribers. The family will miss you.

 

Romenesko has an e-mail posted from Gary Pruitt to all McClatchy employees (not us, since we're not employees for long.) The most interesting graphs:

And while there were a dozen newspaper transactions associated with our acquisition of Knight Ridder earlier this year, I know this particular deal comes as an unsettling surprise. Selling an established McClatchy paper certainly is not business-as-usual for us.

Details about the deal are available in the attached press release, but I want to speak directly to you about one point: this deal came about because of very specific conditions involving the Star Tribune and today's changing media landscape. We have no plans to sell any other newspapers.

The rest is at: http://poynter.org/forum/view_post.asp?id=12155

 

Also of note, Anders Gyllenhaal became editor of the Miami paper about 10 days ago after some time at the Strib.

http://www.miami.com/mld/miamiherald/16252917.htm

 

Two questions:
1) How does this affect me, Tom Ryther? (not outing myself, but if you don't understand, you wont get it).
2) Will this mean the end of El Sid?

 

Some co-workers report that Anders told them he was talking about taking over in Miami before learning at all about McClatchy seeking bidders.

 

The AP article, also posted on Romensko, noted that by selling the Strib at a loss, the company could claim a $160 million tax credit, which could then be spread company-wide since McClatchy is looking at a massive tax bill for buying the KR papers.

 

If it does mean the end for Mr. Hartman, I doubt anyone will care.

A miserable, miserable human being.