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On ‘harvesting’ the Pioneer Press … and remembering Strib writer Kristin Tillotson

The tricky, unknowable facet of any deal for the PiPress is the reaction of the paper’s remaining subscriber base.

MinnPost photo by Corey Anderson

The fate, which is to say the imminent demise, of the St. Paul Pioneer Press has been a staple of speculation for so long there are no doubt people too young to remember when there wasn’t talk of it going under.

No one that young may be reading the PiPress — or any paper, for that matter — but the topic, with all the “whys” and “wherefores” (including conjecture about Star Tribune owner Glen Taylor buying it), continues with funereal regularity.

Strib business columnist Lee Schafer​ added his voice to the conversation with a column Wednesday describing and decrying the PiPress’s parent company’s undisguised plan to “harvest” what profit it can from the paper, or as Schafer says, “what’s left of it.”

To his credit, Schafer had the decency and good sense not to gloat. A greatly diminished, or even deceased PiPress, offers no guarantee of better health for the Strib. What is guaranteed by the final “harvest” of the PiPress is the loss of another couple hundred not­-so-­bad middle class jobs, people with families who are professional peers and often friends of Strib employees.

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Referring to Alden Global Capital, the New York hedge that controls the PiPress and other Digital First Media companies (Digital First itself being a re­branding of the Denver-­based Media News Group; feel free to diagram the family tree if you care), Schafer says, “Hedge funds aren’t in the practice of discussing their private investments, but the goal in any harvesting strategy is to maximize the cash that can be wrung from the business, ‘dis­investing’ with the plan of collecting enough cash quickly that it won’t matter if there’s not much of value left to sell at the end.”

In a situation like this, where only a very select few really know anything and aren’t talking for fear of impacting stock or sale prices (Alden didn’t talk to Schafer), there are only a few facets — upscale barroom conjecture really — to add to the somber drum beat.

For example: Last week, down in the Tampa Bay area, the privately owned, once remarkably prosperous and stable Tampa Bay Times (formerly the St. Petersburg Times) bought its long­time rival, the Tampa Tribune, for an undisclosed sum. The deal effectively closes the doors on a 128-year­-old paper, save a twice-weekly local section inside the Times for one county to be labeled (for a while anyway): The Tampa Tribune.

As for what the Tampa Tribune might be worth today, it’s worth noting that the last time it was sold, to a hedge fund in 2012, the price was $9.5 million. That for a paper with a daily circulation of 226,000. Perhaps more revealing of the absurdly low valuations for daily papers, especially the second paper in a market, is that the hedge fund then turned around and sold (i.e. harvested) the Tribune’s building … for twice the value of the paper.

Point being: Perpetual speculation about Strib owner Glen Taylor buying up and closing down the PiPress could … could … follow a similar scenario, with Taylor likely paying even less than that $9.7 million figure, considering the PiPress’s smaller circulation and four additional years of attrition.

As Schafer and other informed observers of the situation point out, the tricky, unknowable facet of such a deal is the reaction of the PiPress’s remaining subscriber base, often thought to be uniquely loyal to the paper as a badge of differentiation from the slicksters across the river. Frankly, I’ve never seen or even heard of any reliable metrics on that loyalty, beyond comments to stories about the PiPress’s demise by self-described subscribers who would — wait for it — “never buy the Strib.”

The game Taylor would likely play with that unassessable loyalty in mind would/could be very much like what the Times will be doing with the Tribune local section down on Tampa Bay. Namely, for a handful of years at least he could make an effort, a show, with a dedicated “Pioneer Press” section inside the Strib, sustaining a fervent focus on the east metro, probably by retaining x­-number of PiPress reporters and the paper’s most well-read personalities. Again, speculation.

The Tampa Bay Times expects to lay off “in excess of 100” Tampa Tribune employees, arguing that the number overall, between both papers, would be “far worse” without the consolidation.

This reality leads to another, more mercenary discussion: How many current PiPress reporters, editors and photographers would be need to be retained to maintain credible coverage of the east metro?

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What truly counts as essential to east metro loyalists? It’s an aging-­to-­aged crowd with plenty of roots in the turf between the Mississippi and the St. Croix. Does an absolute-bare-minimum Pioneer Press, on its own or as a bought-­out section within the Star Tribune, need duplicate coverage of local pro sports? What part of the features section is absolutely unique to the east metro and therefore essential? State government beat coverage? The op­-ed page?

One perhaps cruel estimate, argued from a “harvesting” hedge fund’s perspective, is that you might be able to continue to publish something called the St. Paul Pioneer Press with as few as two dozen to three dozen newsroom employees. A takeover by a local owner like Taylor might look at similar numbers.

The implicit point of Schafer’s column is well-taken. It is that hedge funds have never had anything like a commitment to the communities served by the papers they own. Their sole purpose is Return On Investment, and in a distressed business climate acceptable returns are possible only by the kind of de-contenting and denuding the PiPress has been subjected to now for over a decade.

One valuable addition to Schafer’s piece is a walk down memory lane, recalling the damage wrought by “activist investor” Bruce Sherman on the Knight­Ridder corporation when it owned the PiPress a dozen years ago. Sherman grievously overestimated the growth potential remaining in newspapers, promising his investors numbers the market could no longer bear. Determined to save himself, he demanded and got: first, waves of lay­offs and budget cutbacks; then the outright sale of Knight­Ridder properties. The “harvesting” game is nothing all that new.

It is a different story though with a local owner like Taylor. For the moment, at least, he has made the kind of investments necessary to both sustain and enhance the value of his product. What he or his heirs think 10 years from now is an entirely different and unknowable story. 

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Kristin Tillotson
Star Tribune
Kristin Tillotson

On another newspaper-related note, this one a sad one, Strib features writer Kristin Tillotson passed away suddenly Wednesday evening after brief illness. I knew her, and in several ways she was a classic newspaperwoman. She had a razor­-sharp wit that would have made Dorothy Parker proud — and blush. She was a resolute feminist, forever prepared to take the battle to boorish misogynists and any male clumsy enough to offend the sisterhood. To that society, she was a true “gal’s gal,” a terrifically loyal friend and patient confidant. In sum, she was great company and conversation; savvy, impertinent and empathetic. RIP Kristin.