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PHILADELPHIA - The anticipated sale of The Philadelphia Inquirer and Philadelphia Daily News spells opportunity, according to a smaller rival.
"It must be pretty tough working for Knight Ridder right now with the uncertainty, not knowing who your boss will be," Robert M. Jelenic, chief executive of the Trenton, N.J.-based Journal Register Co. chain, told a Bank of America investor conference Thursday.
Journal Register publishes five daily newspapers with a combined circulation of more than 136,600 in Pennsylvania's Chester, Delaware and Montgomery counties. The Inquirer and Daily News have a combined daily circulation of more than 478,700.
During a question-and-answer session, Jelenic said Journal Register has plans to take advantage of the opportunities he says will arise if a new owner closes the Daily News or scales back other local Knight Ridder operations.
Though he didn't offer specifics, those plans could include extending the coverage and reach of the tabloid Daily Times into Philadelphia.
He added that Journal Register believes its Philadelphia-area operations enjoy higher profit margins than the Inquirer and Daily News.
"We're making some gains now. I expect to make bigger gains depending on what happens going forward," Jelenic added. Journal Register shares closed at $12.08, up 3 cents for the day but still close to their five-year low of $11.80 on March 21.
But, after a rocky winter, things are looking up for The Inquirer and Daily News, publisher Joe Natoli said in a memo Wednesday. Classified ads rose more than 10 percent in March; real estate ads were up nearly 50 percent; and ad sales were up 20 percent in newly reorganized suburban territories that compete with Journal Register papers and other small dailies.
Speculation continued on who will most likely buy the papers, which McClatchy Co.'s advisers are offering for sale along with 10 other Knight Ridder papers that McClatchy doesn't plan to keep when it acquires Knight Ridder this summer.
"As soon as we sign definitive agreements to sell a paper or papers, we will announce them," said Christina Stenson, a spokeswoman for McClatchy.
The San Jose Mercury News said Thursday that MediaNews Corp. of Denver would bid for the Philadelphia papers, but did not name any sources for that claim. MediaNews has said it wants the Knight Ridder papers in Contra Costa County and San Jose, Calif., but has not confirmed an offer for Philadelphia.
MediaNews President Joseph Lodovic said earlier this week that he expects the process will take weeks, and that he'd like to see more recent financial information.
The bidding process has frustrated other would-be buyers, including Yucaipa Cos., whose bid to buy all 12 papers has the support of the Newspaper Guild labor union.
Guild leaders said last week that McClatchy's investment bankers have failed to give them access to financial information that MediaNews and other earlier bidders obtained when they considered buying all of Knight Ridder last winter.
Some investment bankers have said they're surprised by McClatchy's apparent unwillingness to provide Knight Ridder data to the "dozens" of would-be owners it says have expressed interest. But others say the company has little incentive to give out too much information too quickly.
"McClatchy is trying to balance getting the best price possible for the group of assets they're looking to sell, with trying to run an efficient and quick process," said Susan Casey, senior vice president in the media group at Houlihan Lokey Howard & Zukin Investment Banking Services in Los Angeles.
It's not surprising that McClatchy would turn first to companies such as MediaNews that already expressed interest in the whole chain, Casey added. "If they're not happy with those bids, they reserve the right to go out and provide a little more information to (other) bidders," she said.
"Some information could be potentially damaging if (bidders) shared it" with newspaper unions, advertisers, and other interested parties, Casey added. "I imagine their advisers are working with them in deciding what's safe to share. They can share more as their comfort level gets higher."
Casey said a bidder should be given 30 days' access to insider data before being expected to make a decision. "Yucaipa is signaling they're willing to work hard and they're willing to work fast. That should be attractive to McClatchy."
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(c) 2006, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune News Service.
