By: Jennifer Saba Banc of America analyst John Janedis thinks the implication of the Newspaper Guild-Communications Workers of America's latest move to jump in on the Knight Ridder bidding process is vague.
"It remains unclear how the union would be able to raise capital and what concessions they may have to make with any financial/strategic partner," said a brief note released by the research firm on Thursday. "Overall we don't believe this option is necessary for a transaction to take place."
The Newspaper Guild announced yesterday that it was going to seek "worker friendly" investors to bid for nine Knight Ridder union newspapers: The San Jose (Calif.) Mercury News, the Philadelphia Inquirer and Daily News, the St. Paul (Minn.) Pioneer Press, the Akron (Ohio) Beacon Journal, the Duluth (Minn.) News Tribune, the Lexington (K.Y.) Herald-Leader, the Monterey (Calif.) Herald, and the Grand Forks (N.D.) Herald.
According to Banc of America, about 28% of Knight Ridder's workforce are represented by unions, or about 5,000 full time employees. Knight Ridder has 13 unionized markets that represent roughly 40% of revenues -- the nine markets the Newspaper Guild has identified accounts for the majority of those revenues.
Banc of America maintains its "neutral" rating on Knight Ridder because of the "sluggishness" in the larger markets. And despite the shareholder activism, the research firm believes "prospect bidders are limited."
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