Monday, November 07, 2005

Is Knight Ridder the First Domino?

In the time since I wrote Plotting a Course for Newspapers (Part 1), there have been a few moves that have sent shockwaves through the Newspaper publishing world. I’m referring to major investors Private Capital Management, Harris Associates and Southeastern Asset Management calling for Knight Ridder to be sold. In explaining their rationale, they point to “limited revenue growth across the newspaper industry”. This indicates that Knight Ridder is the first, but probably not the last newspaper company to face such pressure. Knight Ridder has responded by hiring Goldman Sachs to explore a possible sale.

I have followed the travails (including declining circulation) of the newspaper industry in this blog for some time now, so this clearly comes as no surprise. Knight Ridder owns 84 newspapers (31 dailies and 53 non-dailies). I doubt that the new media barons (Google, Yahoo, MSN, AOL) are interested in shelling out $6B to buy KRI, only to cannibalize the papers with their online offerings, but who knows.

Alternately, the company could be broken into pieces and sold, but that doesn’t solve the underlying problem. What can newspapers do to retain relevance in an increasingly Internet-age?

I don't know who will buy KRI, but since the entire newspaper industry is suffering from lack of revenue growth, is KRI the lead domino that will set-off a chain reaction?