Three factors in Knight Ridder's downfall
March 2006
Three factors in Knight Ridder’s downfall
Tue, Mar. 14, 2006
- The company was heavily dependent on big-city papers such as The Philadelphia Inquirer. That made Knight Ridder vulnerable because competition for advertising dollars is so much more intense in big cities, said Tom Bolitho, president of a newspaper brokerage firm called National Media Associates.
- It failed to convince investors it had a long-term strategy for growth at a time of increasing competition from television, the Internet and other sources. “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,” said Ken Marlin of Marlin & Associates, a New York investment banking firm that specializes in media deals.
- It lacked the two-tier stock structure that’s enabled McClatchy and several other publicly traded newspaper companies to keep the quarter-to-quarter demands of Wall Street at arm’s length.
The McClatchy family, for instance, owns only 56 percent of The McClatchy Co. but controls 93 percent of the voting power, although the terms of the Knight Ridder deal could change those percentages.
At Knight Ridder, company insiders owned just 4.2 percent of the shares, while the real power rested almost entirely with outside, unsentimental shareholders.
— The New York Times News Service