Philadelphia Inquirer, April 12

Bidders for PNI hire high-profile advisers

By Joseph N. DiStefano
Inquirer Staff Writer

Like political parties in a heated election, bidders battling for control of The Inquirer and Philadelphia Daily News have hired veteran campaigners to advise them in their fight.

A group of Philadelphia investors organized by public relations executive Brian P. Tierney has hired former Knight Ridder vice president for marketing Jerome Tilis, former Inquirer and Daily News labor relations head Louis William Sabatino, and investment banker Andrew Buchholtz of Veronis Suhler Stevenson in New York as consultants and advisers.

And former Inquirer executive editor James M. Naughton said April 11 that he was joining former Inquirer and Daily News publisher Robert Hall as an adviser to Yucaipa Cos. in its effort to buy the newspapers and 10 other Knight Ridder dailies that the McClatchy Co. is offering for sale.

McClatchy plans to acquire the rest of Knight Ridder this summer, after announcing buyers for the 12 newspapers it does not want later this spring.

"I've joined [Tierney's group] as an adviser, not an investor," Buchholtz said April 11. He said he would guide Tierney's group through the auction of the Philadelphia newspapers, which is being managed by the Credit Suisse First Boston investment bank. "I'm helping them make a judgment as to whether they should buy the property."

Sabatino said Tierney called on him for advice in managing the Philadelphia newspaper workforce of 2,800, the majority of whom are members of the Newspaper Guild and Teamsters union. Asked if he expected the newspapers would need major changes to staff levels and work rules, he said: "You don't make any cuts unless you first analyze what impact it's going to have on the business -- each and every thing."

Tilis called the newspaper business "a calling," and called Tierney "a very credible guy." Tilis retired from Knight Ridder in 1997 to keep his family in the Miami area when chief executive officer P. Anthony Ridder moved the company headquarters to San Jose, Calif.

The Yucaipa effort is supported by the Guild union, which represents advertising, newsroom, circulation, and some other workers at the newspapers.

Naughton said he was recruited April 10 by former publisher Hall, who joined the Yucaipa effort last month. Naughton said Yucaipa wanted his advice "on editorial and newsroom issues, and quality. They show every effort of wanting to strengthen quality newspapers in these communities. It's encouraging that they have the wherewithal to buy all 12 papers."

Naughton retired as president of the Poynter Institute, a nonprofit journalism training center in Florida.

The Philadelphia Guild's board decided April 11 that it would wage a public campaign in support of the Yucaipa bid. President Henry J. Holcomb said the local would buy advertising in the Daily News, among other efforts.

The Philadelphia local has been less vocal than Guild affiliates in California, Minnesota and Ohio, which have set up Web sites, publicly lobbied politicians, and been hosts to rallies in support of a labor-friendly buyer.

Holcomb said the issues in those communities were different from those in Philadelphia. For example, supporters of the St. Paul Pioneer Press have been pressing local politicians to urge McClatchy to sell to a buyer that will keep the Minnesota market competitive; they fear that, because McClatchy owns the rival Minneapolis Star Tribune, the company may be tempted to choose a weak competitor as owner of the St. Paul paper.

Besides Yucaipa and Tierney, others known to have shown interest in the Philadelphia newspapers include a group of private-equity investors linked to former Knight Ridder executive Christopher M. Harte, and MediaNews Group Inc. of Denver.

There may be other bidders who have not made their efforts public. An adviser for a group of private-equity firms said Monday that his clients had been trying to make bids for all 12 newspapers, and that brokers handling the sale of six smaller, mostly Midwestern papers in the group had been asking for an aggressive price -- more than 14 times cash flow. McClatchy, which agreed to pay 9.5 times estimated cash flow for all of Knight Ridder, has declined comment on the progress of the sale.

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