Newspaper Guild Says Its Knight Ridder Plan Still In Play

By: Jennifer Saba The Newspaper Guild's "worker friendly" plan to buy nine Knight Ridder papers is still in the works even as the deadline for bids looms.

However, don't expect the Newspaper Guild to be named tomorrow as a possible buyer, said Linda Foley, the Guild's president, in a prepared statement released this afternoon. "While we have had substantial discussions with each of the potential bidders, we have not, nor did we expect to, reach an agreement with any of the bidders prior to March 9th."

The Newspaper Guild is positioning itself as a sidecar to those other players making bids for the nation's second largest newspaper chain. McClatchy, MediaNews Group, Gannett, and a group of private equity firms lead by Thomas H. Lee Partners are reportedly interested parties. Knight Ridder executives have said they will not break up the company in a sale most probably due to capital gains taxes.

"Our continuing conversations with bidders will likely intensify after the March 9 Knight Ridder announcement," Foley said.

The Guild has lined up the Yucaipa Companies to finance a deal to help employees buy nine Knight Ridder papers through an Employee Stock Ownership Plan (ESOP). If the Guild were successful, the deal would probably be structured with Yucaipa fronting some of the money for the papers.

"When it comes time to the Guild's participation, money talks," said industry analyst John Morton about the possible success of the Guild's plan. "It really becomes a question of what sort of corporation the Guild is willing to engage in."

He cites Gannett, for example, as being hostile to unions: "They might not welcome the Guild as a partner."

The nine newspapers affected by the Guild's plan are the Akron Beacon Journal, the Duluth News Tribune, the Grand Forks Herald, the Lexington Herald-Leader, The Monterey County Herald, The Philadelphia Inquirer and Daily News, the St. Paul Pioneer Press, and the San Jose Mercury News. The papers have a combined employment of 7,000 people.