Hollinger International Inc., the parent company of the Chicago Sun-Times, said Friday it will expand its extensive Chicago-area newspaper presence by purchasing the Post-Tribune of Gary from Knight-Ridder Inc.
Terms of the sale were withheld.
Chicago-based Hollinger said it expects to take control of the 88-year-old daily in early January. In a 30-minute meeting with journalists in Gary, Hollinger officials declined to respond to questions regarding staffing levels at the 300-employee newspaper, saying it’s too soon to say.
Hollinger–which owns 106 newspapers in the United States, 58 in Canada and publishes the Daily Telegraph of London and the Jerusalem Post–was viewed as the most likely buyer of the Post-Tribune. In addition to owning the Sun-Times, Hollinger owns the Daily Southtown and 68 suburban newspapers that form a crescent around Chicago.
Buying in northwest Indiana, newspaper analysts said Friday, is logical.
“This adds to their Chicago-area presence,” said John Morton, president of Morton Research in Silver Spring, Md.
“It’s Gary, Indiana, it’s geographically close to Chicago; they believe they can make some hay by doing more regional advertising and basically fold the paper into the Chicago region,” said Steven Barlow, who follows Hollinger for Credit Suisse First Boston in New York.
Besides Hollinger, the only other identified bidder was a group of Post-Tribune employees, who proposed an employee stock ownership plan to buy the paper.
The Post-Tribune was among five newspapers put on the block by Miami-based Knight-Ridder in June because, the company said, it was not making enough money. Where Knight-Ridder saw underachieving, Hollinger saw opportunity.
“Given our company’s already substantial holdings in the region, we view this acquisition as highly additive to our market presence and this, we believe, will greatly enhance the Post-Tribune’s standing and competitive edge in northwestern Indiana,” said F. David Radler, Hollinger’s president and chief operating officer.
Hollinger has a reputation in the industry of buying depressed properties, updating them with new technology, cutting back production costs and operating in a tight-fisted manner.
Knight-Ridder terminated the Gary Newspaper Guild’s contract last month in anticipation of a sale. The future of labor relations at the paper is uncertain. Joseph Conn, a Post-Tribune reporter and president of the Gary Newspaper Guild, said the employees “will try to have a dialogue with them. . . . We want to have labor peace and a smooth transition. We’ll have to wait and see.”
Hollinger, with its 1994 purchase of the Sun-Times being a notable exception, tends to buy in non-competitive markets. The Post-Tribune will be another exception for Hollinger.
Paul Healy, Hollinger’s vice president for investor relations, said the purchase is not a departure from the company’s practice of “buying quality assets. If we didn’t think it would be profitable in the long run, we wouldn’t buy it,” Healy said.
