A rich publisher, Gannett stock -- and a $6.5M loss

Compared to average grunts in the trenches, Gannett's newspaper publishers are a group of fat cats by far. But few rode GCI and other stocks to the pinnacle of wealth as much as former publisher William Keating of Cincinnati -- only to see millions evaporate during the stock market's nosedive over the past two years.

Keating, a former chief executive of The Cincinnati Enquirer and the Gannett-controlled Detroit newspaper agency in the 1980s and early 1990s, is now embroiled in a messy lawsuit against a former financial advisor given the job of managing a Keating family portfolio worth nearly $20 million back in 2007. That portfolio included nearly 44,000 shares of Gannett stock worth more than $2.5 million. With shares of a Cincinnati bank, GCI was one of Keating's single-biggest holdings -- unfortunately.

Keating is now suing the investment advisory firm, Sena Weller Rohs Williams Inc., in a bid to recover $6.5 million in losses he claims on the Gannett and Fifth Third Bank shares. The suit shows that as recently as summer 2007, Keating believed Gannett's glory days weren't completely over. Why else would he have waited until then to start selling the last of his GCI stake, more than three years after it peaked at $92 a share?

The suit is a window on the life of one of Gannett's richest former executives, one whose overhead runs as high as $50,000 a month for travel and other expenses, trial documents show. "We trust this note will find you in absolutely the best of health and spirits and full of adventure stories from your cruise,'' Sena Williams partner William Sena wrote in a June 2007 letter to Keating, back when relations were still rosy.

The case also illustrates the pitfalls in handing investment responsibility to professional firms that can misjudge a company's prospects. In the summer and fall of 2007, the Sena firm noted that Gannett might be sold, and that its shares were "deeply undervalued." At the time, they were trading for $58 a share; GCI is trading today for just $14.

In his complaint, Keating says the Sena firm failed to follow in a timely manner his request that all shares of Gannett and Fifth Third be sold. The bank represented nearly half of Keating's assets at the time. His 43,558 Gannett shares were near his second-biggest holding.

Keating brought the suit in December. In recent court hearings, the judge has shown signs that Keating may prevail.

Keatings, and Chiquita scandal
The Keating family has other ties to the Enquirer via the powerful Cincinnati industrialist, Carl Lindner.

Keating and his better-known brother, Charles Keating, were for many years outside attorneys for Lindner's businesses, including banana producer Chiquita Brands. In 1998, the Enquirer was forced to retract a lengthy investigative series about Chiquita after it was revealed that a reporter had hacked into the company's voice-mail system to obtain evidence for the series. Gannett paid a $14 million settlement to Chiquita. One of the mysteries about that project was why more heads didn't roll across Gannett.

(Charles Keating, it's worth noting, was an anti-pornography crusader in Cincinnati, later convicted and imprisoned over the 1989 failure of Lincoln Savings and Loan Association in Phoenix. Keating said the S&L's collapse left him penniless.)

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[Image: today's Enquirer, Newseum]