The bids could decide who gets the 12 newspapers McClatchy chose to leave behind. The Sacramento-based company said the growth prospects at Knight Ridder papers like the Duluth News Tribune, Grand Forks Herald, and Philadelphia Inquirer weren't high enough to justify keeping them. McClatchy, which owns the Minneapolis Star Tribune, said antitrust concerns would force it to sell the Pioneer Press.
The only known bid for all 12 papers will come from Yucaipa Group, the investment company of a California billionaire also known for his donations to the Democratic Party. Yucaipa is the financial muscle for the Newspaper Guild and Typographical Union. The Guild imagines an employee buyout, where workers at all 12 papers would buy shares in the company from Yucaipa after the deal has closed.
But the proposal has run into trouble. "We have not been able to look at all the financial and operating information that some of the other bidders that were a part of the Knight Ridder bidding process had access to," says former newspaper publisher Bob Hall, who is coordinating the Guild-Yucaipa bid.
Hall is not willing to say the Yucaipa bid has been actively undermined by McClatchy. He calls it "a flaw in the process." He says Yucaipa will submit a preliminary bid today, with a request for information and another 30 days to fill in some of the blanks.
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It is a distraction because you don't know what the future is going to hold. Most of us have lived our journalism careers in a certain state of stability.
"I do think that McClatchy wants to maximize the bids, and because they do, I'm hopeful that when they see that we have a credible bid they will choose to have a due diligence period in order to fine-tune this bid," Hall says.
McClatchy did not return a call to discuss the Yucaipa situation. The company is under no obligation to honor Yucaipa's request for an extension, according to Larry Grimes. Grimes is president of W.B. Grimes and Company, which structures financial deals in the newspaper industry.
He suspects deals for some of the 12 papers were already in the works even before McClatchy's deal to buy Knight Ridder was announced: "It may that some people made calls to McClatchy and said, 'Look, we're not interested in bidding on the whole thing, but if you're the winning bidder would you consider selling this, this, and this?'"
Those calls might have come from the nation's largest newspaper publisher, Gannett, or MediaNews Group, which owns 40 daily papers including the Denver Post.
Gannett owns a TV station in the Twin Cities and can't bid on the Pioneer Press, but might snap up Duluth or Grand Forks. The CEO of MediaNews Group toured the Pioneer Press a month ago, much to the dismay of employees aware of his reputation as a cost-cutter. MediaNews has not returned calls for comment.
Grimes believes there's yet another player in the Twin Cities: American Community Newspapers owns 44 weekly papers around Minnesota, like the Stillwater Gazette and Stearns Morrison Enterprise. Officials with the Eden Prairie company were unavailable for comment.
But Grimes, who structured an acquisition deal for American Community Newspapers as recently as February, says they're interested. "I believe that they're terrific operators," Grimes says. "They've got a strong attention to local news."
It's not clear if American Community Newspapers could afford a Pioneer Press purchase price Grimes estimates up to $150 million. But he says with the paper, the company would be a major force in Minnesota, with total circulation approaching 700,000 -- larger than the Sunday circulation of the Star Tribune.
The speculation can't end soon enough for many newspaper employees. Eleven-year Pioneer Press reporter David Hanners says recent weeks have been nerve-wracking. "I haven't noticed anyone looking for open windows they can jump out of yet," Hanners says. "But it is a distraction because you don't know what the future is going to hold. Most of us have lived our journalism careers in a certain state of stability."
The bids may answer some questions. But with new newspaper owners on the way in St. Paul, Duluth and Grand Forks, stability may yet be some ways off.