The Buyer Will Have Deep Pockets, All Agree.
It has been less than a week since Leonard Stern announced his intention to auction off the Village Voice and his other six AAN papers , so it’s a virtual certainty that his investment bankers have yet to field the first bid. Nevertheless, that hasn’t stopped folks in the alternative newspaper business and others in the media from speculating wildly about likely buyers.
The names that have been tossed around like confetti include America Online, AT&T, Barry Diller’s USA Networks (owner of TicketMaster Online-CitySearch), Canadian newspaper magnate Conrad Black’s Hollinger International, investment group Evercore Partners (headed by former Deputy Treasury Secretary Roger Altman and owner of the National Enquirer and the Star), Knight-Ridder, Microsoft, Times Mirror and Yahoo!. The New York Post even suggested that investment banking firm Kohlberg Kravis Roberts of “Barbarians at the Gates” fame is “expected to be [interested in bidding].”
Of course, anytime a major-market alternative newspaper is put up for sale, New Times, Inc. is probably sniffing around. And according to a piece in Salon penned by Washington City Paper Editor David Carr, a “New Times source said the company will be in the mix.” Someone better tell that to Stern Publishing President David Schneiderman, who told staffers in an e-mail obtained by AAN News that “Leonard Stern has asked me to pass this along to all of you: Under no circumstances will the company be sold to New Times.” Carr’s New Times source doesn’t buy it: “Stern will sell to the highest bidder, period,” he predicted.
In any case, with a sale price estimated to be in the $150-250 million range, whoever buys the Stern papers is guaranteed to have deep pockets. And that has some in the alternative newspaper business worried.
“Alternative weeklies are so hot that they’ve been priced out of the reach of the people who love them for their own sake — and into the realm of those who view them as simply another acquisition,” says Westword Editor and AAN President Patty Calhoun. (Westword is owned by New Times, Inc.) “In Stern’s case, fortunately, that hasn’t been a problem, but it’s hard to know what his successor will do. The irony is that we once viewed daily newspapers as the ultimate evil purchaser and now they seem like the least of our worries.”
Willamette Week Publisher Richard Meeker worries that the acquirer will be highly leveraged and that its paramount concern will be the cash flow needed to service the debt. “If you publish a newspaper, you’re going to get pressure from advertisers,” he says. “And if you have a voracious need for cash flow, you’re more likely to respond to these pressures by planting favorable coverage and shying away from controversial stories that entail the possibility of litigation and increased insurance rates.”
Stern’s motivation for selling was another source of speculation in the industry. Although the official line is that he decided to cash out because his children aren’t interested in running the business, Meeker says, “It’s clear that there’s more to it. I assume someone has told him that this is the best time to get a premium.”
Nevertheless, there is evidence to suggest that Stern’s public explanation may be more than a red herring: Daughter Andrea, his only scion actively involved in the business, earlier this year stepped down as publisher of the Long Island Voice to take a position as creative marketing director of the flagship Manhattan paper.
Putting whys and wherefores aside, Meeker says, “There’s nothing about this sale that I view as particularly positive. It appears that someone who may have more money than all the rest of us combined wants to get out of our business.”
Despite the questions raised by outsiders, the pervading sentiment among Stern employees is cautious optimism. For instance, Village Voice Editor-in-Chief Donald Forst thinks Stern could ignore the highest bid if there’s another buyer with a greater commitment to good journalism. Forst says Stern “never asked me to put anything in the paper and he never asked me to take anything out. An editor can’t ask for anything more.”
Moreover, it is in the next owner’s best interest to maintain the status quo, argue the other Stern employees we talked to. “There were many [owners prior to Stern] who dabbled in the Voice and none of them succeeded,” says Voice Senior Editor Wayne Barrett. “If someone finds the Village Voice an attractive property, even if a large company buys it, they will want to maintain it. [However] we’re unlikely to find another Leonard Stern. I can’t say that we’re sailing on untroubled waters here. These are difficult times for the paper.”
Meanwhile, it’s dÈj? vu all over again for City Pages staff writer Beth Hawkins, who worked at the Minneapolis weekly when it was first sold to Stern Publishing nearly three years ago. “We’ve been speculating about which would be a better owner: a media company or a company with no knowledge of journalism. Frankly, we had those fears when Stern bought us. We had been locally owned by someone with a stake in the local community. We worried that a tycoon in New York wouldn’t be as interested in our editorial independence as our local owner had been.
“Last time, our fears didn’t come true,” says Hawkins. “That’s not to say that they won’t come true this time. But having just been through this less than three years ago, we are not wasting our time worrying.”
Changing hands is also old hat for the LA Weekly. “Change is always unsettling; it has us all a little nervous.” says Sue Horton, the paper’s editor. “But on balance, I’m quite optimistic. Five years ago, weeks after I was hired at the Weekly, I learned that the paper was for sale. We went from being owned by a small group of investors to being owned by someone hoping to build a chain of alternative weeklies. A lot of people felt this was the beginning of the end, that we would lose our independence and autonomy, that we’d become a satellite of the Voice. But that’s not what happened.
“So I’m nervous about a new owner, but I also have a fairly high degree of confidence that anyone looking at the paper and looking at our numbers is going to understand that we should be allowed to continue doing what we’ve been doing,” she says.
OC Weekly Editor Will Swaim agrees: “These are very successful papers. In the case of the OC and LA Weeklies, for example, they’re successful largely because the publisher — Mike Sigman — knows how to play the game and because David Schneiderman let Mike have a pretty free hand in running the papers. I can’t easily imagine someone putting up millions of dollars to buy the papers, only to turn around and screw with what’s been a successful formula. My guess: whoever has enough money to buy the papers probably has enough business sense to keep things as they are. My worst case scenario is someone who comes in and wants to make a political statement; I want someone with a lot of money and a good head for business.”