Below is a story from today’s ( 12-29-05) Lexington (KY) Herald-Leader, one of Knight Ridder’s pretty good medium-sized newspapers. The story reveals that a group of Kentucky investors—including a former local mayor and businessman—wants to buy the paper. There are also other, unnamed investors.

This story is important because it could be the launching point for a discussion about which type of ownership of newspapers best serves the needs of a community. I know the conventional wisdom is that local ownership, with greater devotion to the community, is better than corporate ownership, where the ultimate devotion is to the needs of Wall Street.

I am not certain the conventional wisdom is correct. I worked for one family owned newspaper as a reporter-photographer early in my career. Later, I was “publisher” of a 6,000 circulation daily which competed against a family-owned newspaper. In both of these instances there were sacred cows and local favorites that the local ownership protected. In the second instance, the locally-owned competition allowed—even encouraged—its journalists to hold elective public office and appointments on public boards. None of this behavior would have been tolerated then or now by any of the far more professional public newspaper companies.

In this instance the Herald Leader serves the state capital of Kentucky which means it has special government oversight responsibility. Having the paper owned by locals raises serious questions about whose view of the state government would be presented. This is especially true since some of the investors names are presently hidden from the public.

I’d be interested in the thoughts of others on this matter. You can use this comment feature on this blog.

Posted on Thu, Dec. 29, 2005
Local group wants to buy Herald-Leader
2 involved in effort concede chances of success are slim
By Jim Jordan
HERALD-LEADER BUSINESS WRITER

A group of Kentucky investors wants to buy the Lexington Herald-Leader if its owner, Knight Ridder, is broken up and sold in pieces.

The group includes Jim Gray, a former Lexington mayoral candidate and CEO of Gray Construction, and Al Smith, a former publisher of smaller Kentucky newspapers and host of KET’s Comment on Kentucky.
Gray and Smith, who declined yesterday to name other members of the group, said they have contacted Goldman Sachs, a Wall Street firm that is advising Knight Ridder, to be included on a list of potential buyers of individual newspapers.

If they acquire the Herald-Leader, Gray and Smith said, the purchase probably would occur after a major corporation or investment group bought the entire 32-newspaper chain and sold off pieces. Knight Ridder stock (KRI: NYSE) was valued yesterday at $4.24 billion.

The Herald-Leader probably would cost $250 million to $350 million, they said. “Not a problem,” Smith added. “We feel like we can raise the money.”

Knight Ridder agreed in November to consider a sale after major shareholders said the stock was undervalued, but the company has insisted that it be sold as a whole. Final bids reportedly are due in February.

“We are exploring strategic options for the whole company and we have no interest in selling individual newspapers or groups of newspapers,” Knight Ridder spokesman Polk Laffoon said recently.

Gray said he thinks his group has “less than a 10 percent chance” of buying the Herald-Leader, but the members would be ignoring their responsibility to restore local ownership to one of Lexington’s “most important civic assets” if it did nothing.

“If you don’t get up to bat, you have no chance to hit the ball,” he said.

Gray, who is an announced candidate for an at-large Urban County Council seat, said he would have no influence on Herald-Leader news or editorial policies if the group acquires the newspaper.

The group also has no plans to replace the Herald-Leader’s top managers or to change the way the newspaper is currently operated, Smith said.

“I believe there is a remote possibility (of succeeding), but it’s a chance that comes to a community once in a long time,” he added.