Knight Ridder: One way out?
Mercy. While I was on vacation, things have heated up in the discussion about newspaper chain Knight Ridder's financial and journalistic future.
Tim Beyers at The Motley Fool has a perfectly practical solution: Knight Ridder should take itself private.
That wouldn't create a perfect world, of course. The company has about $2 billion in long-term debt outstanding (against $4.5 billion in assets) and going private would certainly involve additional debt. And those bond payments would have to be made somehow ... probably by shedding some assets and laying off more employees, albeit fewer than a public takeover would cost.
But going private, even by incurring more debt, would give the company (and its struggling large newspapers) a bit more breathing room in terms of profit margin, which in turn would buy its papers a bit more time to make up for the company's overall slowness to respond to the challenges of the Internet. That, in turn, would make layoffs less likely in the future.
The News & Record is owned by privately held Landmark Communications. I don't own stock, so I'm not privy to our financials. And Landmark certainly is a for-profit business. But my sense is that its margins aren't quite as high as the 20 percent or more that is common in publicly held papers. My gauge is this: We've now been through two recessions in my 18 years here without laying off any News Department employees, and with only one round of buyouts, in 1993. I don't know many publicly held newspapers that can say that. Indeed, particularly at KR and Tribune Co. papers, buyouts are continuing as we speak.
If there's a real-world "least bad" scenario for the nation's second-largest newspaper chain (and employer of some of my friends and relatives), perhaps this is it.