The first question that comes to mind reading Katherine Seelye’s account of the newspaper version of “Who Killed Cock Robin” is how many other companies are being urged behind the scenes to take major moves that aren’t considered worth mentioning during frank financial chats. Granted, not every possible move can be discussed with analysts but did Tony Ridder have to be so darn optimistic when he knew what kind of pressure the company was under from dissident shareholders? Yes, he thought he could assuage Bruce Sherman and friends with some payroll slicing, share buybacks and the sale of the Detroit Free Press. No go. Within months, Ridder was in the odd position of having a company with a profit margin others might envy even though it was dinged by payout packages and, as Seelye explains, at the same time signaling defeat by giving into a sale. The lengthy story is worth it when you can find the time. A few highlights:
— Adman Brian Tierney, who led the group that bought the Philadelphia papers and is now running them: “He gave up. I’m sure he could have found investor bankers who, if they saw the fight in your eye, they would have said, ‘You have a chance.’ But it’s like someone getting a bad report from the doctor and not trying to beat the disease.”
— Merrill Lynch analyst Lauren Rich Fine told KR she thought it could fight by saying margins would go down while the company retrenched and reorganized. She also thought new management would have been a plus.
— Ridder’s big lesson: “For those who have two classes of stock, don’t ever give them up.” Seriously, that explains all.
You can track the saga in our Knight Ridder archive.
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