Reading between the lines, however, it sounds like Gannett may be afraid Santa Monica is too serious about entering the Tucson market. I note Hadland's reference to GCI's failed attempt to gain sole control of the then-lucrative Honolulu market, during a switch of the joint operating agreement there, in 2000."Over the past few months," Hadland told the Tucson paper, "I've found the Citizen to be a much-beloved newspaper, much like the Honolulu Star-Bulletin. David Black has done a good job making that a viable paper. The same can be said for the Citizen."
In 2000, Hadland was a bidder for the Honolulu Star-Bulletin. At the time, the paper was owned by Liberty Newspapers, which published the daily in a joint operating agreement with Gannett's Honolulu Advertiser. Liberty tried closing the Star-Bulletin in exchange for $26 million from Gannett. The federal government intervened and forced a sale of the paper instead. Black, a Canadian publishing magnate who recently became part-owner of the San Diego Union-Tribune, was the buyer.Bottom line: Black was the spoiler in Honolulu, and I bet Gannett fears Hadland & Co. would do the same in Tucson. Gannett's rejection of Santa Monica's bid is another sign this Citizen auction is just a sham.
Gannett publicist Tara Connell did not return e-mails or phone calls about the situation, the Citizen says.
Paper stays alive -- for now
The Citizen says it expects to continue publishing into next week. The 139-year-old six-day afternoon paper, Arizona's oldest daily, has been publishing on a day-to-day schedule while sale talks continue. Gannett originally threatened to close the paper by March 21 if a viable buyer didn't emerge. The U.S. Justice Department later intervened. Gannett next waived the deadline indefinitely after at least two bidders emerged at the 11th hour.
Gannett has owned the newspaper paper since 1977. It is the weaker partner published in a joint operating agreement that GCI controls 50-50 with Lee Enterprises. The two share circulation and other business functions, but maintain separate, competing newsrooms; the Citizen's employs 65 employees. Gannett would continue to collect its share of the JOA's profits once the Citizen is gone.
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I don't get why Gannett would still get to collect a single penny if they closed the Citizen. This keeps getting shadier and shadier.
ReplyDeleteAnyone know if Scripps is still collecting in Denver after closing the Rocky?
I am no expert but I think I have an idea here.
ReplyDeleteLee and Gannett own 50% of the partnership. Star is biggest property, Citizen the small one.
Gannett selling Citizen, not its interest in the partnership. They could, and maybe they will, but for now, just selling assets of Citizen.
It's like selling the shed on the back of your property. Property may be worth $100,000, shed $10,000 of that. They are selling the shed, and keeping the rest.
If people are offering $1,000 for the shed, they probably won't sell. If they offer something close to $10,000, they will. THe shed has tools in it, and those tools are worth something more than $1,000.
Okay, so a bad analogy. But that's how I see this. Unless Gannett gets more than $1,000 for the tools and shed it doesn't make sense to sell. They could just sell the tools for salvage value, more than the $1,000 in this example.
That's why, 1:32
If they're really interested in the market and Gannett truly is disinterested in the offer, then take that money and start anew...using many of the tools in the shed who'd be losing their jobs anyway.
ReplyDeleteThey'd obviously need to know the money side well, but I suspect that a lot of people, advertisers and long-term goodwill could be generated to help keep that paper. And, since GCI still owns 50% of the partnership they'd be obligated to cover losses too.
Funny, at one-time more than a few competitors where a bit intimidated by Gannett's deep pockets, now it appears to be an advantage in that Dubow's pulled them inside out.
Given the fact that the Lee-owned AZ Daily Star is swirling around the drain too, it makes sense that Gannett wants to retain the JOA interest.
ReplyDeleteGet ready for the Tucson edition of the Gannett-owned AZ Republic.
Anon 1:22:
ReplyDeleteThis has been SOP since JOAs first began folding the weaker paper in the 1980s: St. Louis, Miami, etc. Unless the JOA expires, as it did in Cincinnati, that's the way it works and Justice signs off on it.
At least the G-men are learning from past history. Honolulu is a huge sore spot. Not only did it go from one of Gannett's most profitable papers to the second to the last, the Star-Bulletin stole all the top sales executives from them.
ReplyDelete