'Seattle Times' Publisher May Get Chance To Buy Back KR Stake

By: Joe Strupp It was 1928 when Clarence "C.B." Blethen, then-publisher of The Seattle Times, was forced to sell nearly half of his operation to The Ridder Family for $1.5 million in an effort to offset a bleeding bottom line.

Seventy-seven years later, his grandson, Publisher Frank Blethen, may possibly get that piece of the family business back. With Knight Ridder on the selling block, the company's 49.5% stake in the Times company could well be available if Blethen can work the deal.

"Hopeful is not the word," he told E&P when asked about how he viewed his chances of buying out Knight Ridder's stake. "I would characterize it as interested curiosity."

Blethen said he had not been in discussions with anyone at Knight Ridder or its brokers about a buyout, adding that nothing in the arrangement between the two companies requires Blethen to have right of first refusal on a purchase. His current financial problems, in which the Times has lost money during consecutive years from 2000 to 2004, also might limit any purchase.

"We are always interested in buying back all of our equity, but only if it makes sense," said Blethen, whose company also owns six other daily papers in Washington state and Maine. "It always depends on having a willing buyer and a willing seller. Our view of what the value is has been far different from what Knight Ridder's (view) is."

Knight Ridder Spokesman Polk Laffoon said he knew of no discussions involving any separate sale of the company's Times stake. "To my knowledge, there are no pieces of Knight Ridder that are for sale separately," he said.

Another factor is the Times' ongoing joint operating agreement battle with JOA partner Seattle Post-Intelligencer. The two papers have been locked in a fight over dissolving the 22-year-old agreement since 2003. Blethen has sought to end the arrangement, claiming a provision in the agreement gives him the right to pull out after three consecutive profitless years. Blethen and The Hearst Corporation, which owns the P-I, remain in a court battle over the issue after Hearst sued to stop any change in the JOA.

Blethen admits that the JOA fight and his financial situation could make a buyback difficult. But, he adds that recouping the portion of the company his grandfather sold might be worth it. "It is not like this is something we have to have, but it is always nice to have 100% of your property," he said. "If it turns out there is an opportunity for us that works, great. Otherwise, we will go on as we have."

One thing that may make it difficult for Blethen is the likelihood that all of the Knight Ridder properties will go to one buyer, he said. "From what people (in the industry) tell us, this is going to be done as a single package," Blethen said. "What usually happens is the seller doesn't want to mess around with small transactions."

There is also a chance that Hearst may seek to buy Knight Ridder's stake in the Times company if it wishes to improve its interest the Seattle market. Currently, all JOA profits are split, 60-40, between the Times Company and Hearst, with Blethen's company receiving the larger share. Knight Ridder's stake in the company entitles it to 49.5% of any dividends resulting from those profits.

Calls to Hearst were not immediately returned Monday.

Blethen said Knight Ridder's ownership of its Times company shares does not bar it from selling to anyone and requires no approval from Blethen for a sale. "They are free to do what they want with it," he said. He declined to comment on what a Hearst purchase of the Knight Ridder shares might mean, saying only, "we haven't really thought about it."

He noted that whoever purchases Knight Ridder's stake in the Times company could then sell the piece back to him. "We don't have a real inkling," he said. "We are just waiting."