Guest commentary

Sale of Knight Ridder may be close

Lou Alexander

By Lou Alexander
Posted Nov. 23, 2005

There seems to be a flurry of speculation on Yahoo Finance that a deal is close for the sale of the company and may be announced Monday morning. I continue to think a deal will be made this year, since that is the best outcome for Bruce Sherman [whose company is Knight Ridder's largest stockholder and put the company in play Nov. 1]. And if I go into full conspiracy theory mode I can come up with a list things that would support the idea that a deal is about to be made:

[A

Bruce Sherman

list of Knight Ridder shareholders is available online in Excel]. This document is valuable because it shows very dramatically who controls the future and fortunes of Knight Ridder. The fate of KRI will be decided by people who are legally compelled to consider only how much money they can make for their shareholders. Quality journalism is not their concern.

[About the petition of famous alumni of Knight Ridder newspapers offering to nominate candidates with sound journalism instincts to KR's board:]

This is an interesting development. It is good to see the names of many old colleagues and I am impressed that so many stars of the journalism world are working together on this critical issue.

But, there is the nasty little fact that over 90% of the voting stock is in the hand of institutional investors who have a legal obligation to maximize return for their shareholders.

Beyond that, people who join the board cannot legally make it a priority to restore “to Knight Ridder newspapers the resources to do excellent journalism.” The Knight Ridder CORPORATE GOVERNANCE GUIDELINES state without equivocation that “The directors of Knight Ridder are elected by the Company’s shareholders to oversee the affairs of the Company for the benefit of its shareholders.” This is a 10 page document (when copied to Word) and the words “excellent journalism” are not part of the Guidelines.

Also, the criteria for membership speak volumes: “The board selects director candidates who represent a mix of backgrounds and experiences that will enhance the quality of the board’s deliberations and decisions. The board is particularly interested in maintaining a mix that includes, but is not limited to, active or retired chief executive officers and senior executives, and particularly those with experience in operations, finance/banking, technology, marketing and international business, as well as leading entrepreneurs and academics. Diversity in its broadest sense, reflecting, but not limited to, geography, gender and ethnicity is also highly desirable.”

But to quote Otter from that great philosophical work of the 1978 Animal House “this situation absolutely requires a really futile…gesture be done on somebody’s part.” And to paraphrase Bluto’s reply: These are just the guys to do it.

Lou Alexander spent 20 years in the advertising department of the San Jose Mercury News, rising to the top jobs in both display and classified before retiring in 2004. Before turning to the business side, he was a journalist for eight years. He lives in San Jose.