Worst newspaper in US destroys value

The McClatchy Company, recent purchaser of the Knight-Ridder chain of newspapers, is taking a huge loss on its 1998 purchase of the Minneapolis Star-Tribune, considered by many to be the worst, most politically correct newspaper in the United States. According to an article in the Star-Tribune, quoting a parent company/purchaser joint press release:
The Star Tribune is being sold by The McClatchy Company to private equity firm Avista Capital Partners, McClatchy and Avista announced today. The companies say they have a definitive agreement to sell the Star Tribune for $530 million to Avista, which has offices in New York and Houston. ...

McClatchy bought the Star Tribune from the Cowles Media Company in 1998 for a net price of $1.2 billion, after selling off Cowles' magazine and book publishing businesses.
That's a whopping 56% loss in 8 or so years. Even worse than New York Times Company stock.

The press release goes on to say that the purchaser plans to keep existing management and staff intact:

Harte said he expected the Star Tribune management team to remain intact, with current Publisher and President Keith Moyer continuing to lead the newspaper and also serve on the newspaper's board.

"We are excited to be partnering with the strong management team at the Star Tribune," Harte said. "We believe there is a great future for newspapers like the Star Tribune that produce an excellent local product for their communities and are focused on what readers want. Furthermore, the Star Tribune does a terrific job of making its content available over the Internet and in other forms."
This is rather strange, given the miserable track record of management in destroying shareholder value.

The Minneapolis-St. Paul metropolitan area has a very healthy economy and a rapidly growing population, almost unique among frostbelt metropolises. Its educated population should be able to support an excellent and profitable local newspaper. Yet the Star-Tribune has continued to insult the intelligence of area residents with highly biased coverage. Local websites like Powerline and Captain's Quarters have gained large national audiences in part by debunking the serious deficiencies in local newspapering.

There is no way to put a good face on the disaster that the Star-Tribune has been for McClatchy despite the cheery tone of the press release. I cannot believe a smart investor would come in and plan no changes. Stay tuned for what should be an interesting story.

Hat tip: Drudge