Pruitt 'Peppered with Angry E-mails' From 12 KR Papers

By: E&P Staff A frank report in the McClatchy flagship newspaper, the Sacramento Bee, reveals the pressure and uncertainty still facing the company's CEO Gary Pruitt, in the days after his big Knight Ridder purchase was announced.

McClatchy's stock fell nearly 7% last week to $49.60 a share, barely above its 52-week low. "The decline likely would have been worse," writes the Bee's Dale Kasler, "except that investors sold in recent weeks in anticipation of the purchase."

Then he quotes Barry Lucas, an investment analyst at Gabelli & Co. in Rye, N.Y., who attended one of Pruitt's presentations last week: "He certainly conveys an enthusiasm about the business. (But) this dark cloud just continues to hang over the industry."

While Pruitt has pulled off a major deal before, 2006 isn't 1998, Kasler observes: "Newspapers are losing subscribers and advertisers to the Internet, cable television and other media. McClatchy's 20-year streak of companywide circulation gains was snapped last year. Skeptics are questioning the future of newspapers as never before."

While Pruitt testifies that he's received "an outpouring of interest" from potential buyers of the 12 Knight Ridder papers he is now peddling, "the only way to eliminate that (investor) skepticism is to execute," he adds.

Kasler also reveals that this "spinoff scenario brought Pruitt some of his worst moments of his chaotic week. Employees at the 12 papers, who looked to McClatchy as a white knight devoted to quality journalism, peppered Pruitt with angry e-mails when they learned McClatchy wasn't keeping them, he said." This wasn't helped when Knight Ridder Chairman Tony Ridder told The New York Times that he tried to talk Pruitt into keeping most of the papers.

"I got some very nice and some nasty things said about me," Pruitt tells Kasler. "You get to the point where you can't let either of those things affect you."

Now another week begins: How will The Street, and potential buyers of the 12 Knight Ridder orphans, respond?

"We're not hyping anything," he said by phone after a reception in Chicago with representatives of an investment fund. "We're telling the story of the deal and why it's good for McClatchy long term."