The Knight Ridder Fade-out
April/May 2006 Preview
The Knight Ridder Fade-out
A once-great newspaper chain reaches the end of the line.
By Rem Rieder - Rem Rieder (email@example.com) is AJR's editor and senior vice president.
You could feel the heat. And it had nothing to do with the tropical weather.
The intensity in the newsroom of the Miami Herald, circa 1982, was simply astonishing.
The Herald had all the elements. A stunning collection of talent. A venue where you had the sense that anything could happen, and it did. And a determination to put out a kick-ass, elbow-above-the-rim newspaper that seemed to be embedded in the very walls of the building.
I don't know which I loved more: the commitment to compete on big stories anywhere in the world with everyone from the New York Times on down; the hard-hitting investigative work; or the emphatic embrace of seriously well-written narratives.
I had been in the business for 17 years, and I had never encountered anything like it.
It was an amazing newspaper company.
It wasn't just Miami, of course. The rise to greatness of the Philadelphia Inquirer after what was then Knight Newspapers rescued it from Walter Annenberg is well chronicled. And the Detroit Free Press and the Charlotte Observer and many other fine Knight Ridder dailies weren't exactly chopped liver either.
It was a newspaper company that stressed the newspaper more than the company. It really cared about the journalism. It made a lot of money, sure, but it invested enough in the product to do great work.
But as James Taylor and J.D. Souther taught us years ago, nothing lasts forever. The company became more Ridder than Knight. Times changed. The dreaded Wall Street flexed its muscles. And the chain had some of its largest papers in mature and/or complicated markets: Philadelphia, Miami, Detroit. Those 25 percent and 30 percent margins so beloved on The Street became harder and harder to come by.
So Chairman and CEO Tony Ridder fought to keep the ship afloat — with cuts. They were never enough. The Street was insatiable. Even after Bruce Sherman of Private Capital Management, who ultimately forced Knight Ridder to sell, came after him, Ridder cut some more. But sheer cuts couldn't cut it.
Dale Kasler of the Sacramento Bee wrote that Knight Ridder was done in by the fact that it couldn't convince investors that it had a long-term strategy. "It's survival by continuous amputation," he quoted Ken Marlin of Marlin & Associates, a New York investment banking firm that specializes in media deals, as saying. "Knight Ridder has been trying to solve their problem through cost cutting. You can't get there through cost cutting. You have to get there through revenue enhancing."
To be fair, Ridder warned for years that if profits didn't stay high, the company would be vulnerable to a takeover. (AJR, in its infinite wisdom, ran a piece in 2001 casting doubt on that possibility.) In 1996 Ridder told the American Society of Newspaper Editors that the new owner might well be "a takeover shark [who] would not necessarily have quality journalism uppermost in mind." But when the deal went down, the "takeover shark" turned out to be McClatchy, a company with a reputation for both quality journalism and business acumen.
This was a far better outcome than seeing Knight Ridder's papers fall into the hands of equity-fund money guys who couldn't care less about journalism or chains less concerned with quality than McClatchy is. But it was a partial victory because McClatchy is selling off 12 of the papers, including two of Knight Ridder's best, the Philadelphia Inquirer and the San Jose Mercury News. Let's all hope that they find good homes.
And let's hope the Knight Ridder Washington bureau continues to flourish under McClatchy. Howard Weaver, McClatchy's vice president for news, promised there would be no layoffs. He also said the merged bureau would be led by McClatchy Washington Bureau Chief David Westphal rather than Knight Ridder Washington Editor Clark Hoyt.
Regardless of who's in charge, the key question is whether the spirit with which the Knight Ridder bureau approached Washington survives. As AJR senior writer Charles Layton makes clear (see "White Knights," April/May preview), the bureau has been producing superb work, often outshining the big dogs. One of its strengths is that it eschews Washington's conventional wisdom, which is so often wrong. That may be in part because, as Hoyt says, the bureau's mission has been writing for "outsiders."
The bad news is that the lack of a Washington and New York audience has limited the impact of its cutting-edge, against-the-grain reporting. The good news is that writing for outsiders has made it easier to steer clear of the fog.