Far From a Passive Observer of Media
Ron Burkle says he loves newspapers. He just doesn’t always agree with them.
The billionaire Los Angeles investor has been known to sic his lawyer on publications he thought treated him unfairly. He has battled in court to keep reporters from getting his divorce records. Most famously, in late March he set up a videotaped sting in an attempt to catch New York Post gossip writer Jared Paul Stern allegedly trying to extort more than $200,000 from him.
Some might look at that track record and peg Burkle as less than the print media’s best friend. They also might wonder why the onetime supermarket magnate is trying to buy his way into the newspaper business by bidding on papers that Sacramento-based McClatchy Co. is trying to unload.
In a recent interview, Burkle said his confrontations with the Fourth Estate merely demonstrated his commitment to the integrity of the press.
“I didn’t want to do it,” Burkle said of the Stern sting. “But I think it actually speaks to the fact that we want to see good journalism.... If I wanted to be disingenuous, I would have worked out some kind of an arrangement [with Stern] and no one would have ever heard about the whole thing.”
Burkle said he was ready to remain on the sidelines and let editors run any newspapers that his L.A.-based Yucaipa Cos. succeeds in buying from McClatchy, which put 12 Knight Ridder Inc. dailies up for sale after it agreed in March to acquire the San Jose-based chain.
“You put good people in and you let them manage,” he said. “I don’t think anyone decent in the newspaper industry will work with you if you try to meddle.”
Burkle initially bid more than $2 billion for all 12 Knight Ridder papers. MediaNews Group Inc. agreed to acquire four of the papers in a $1-billion deal announced last week, but Yucaipa and its union partner, the Newspaper Guild-Communications Workers of America, said they remained “very interested” in the eight dailies still on the block.
In the hour-long interview, his most extended discussion of his potential future as a press baron, Burkle said he saw opportunity in an industry that has taken a beating in the last year. He also reiterated his oft-repeated distaste for publicity -- even as his attempted entry into the news business invited more scrutiny -- and insisted that he shouldn’t have to give up his friendships with the rich and famous to make the attention go away.
Over the years, Burkle’s biography has been rendered in nearly folkloric terms, particularly in his native Southern California. Profiles have detailed his rise from teenage bag boy to the biggest supermarket operator in the region and described his friendship with movie stars, models and former president Bill Clinton, who now serves as an advisor to Yucaipa, the private equity firm named for Burkle’s hometown.
Along the way, some of the edges of that biography have been sanded down or reshaped a bit. The profiles, for instance, often neglect to mention that Burkle’s father managed a supermarket and had risen to head the Stater Bros. chain by the time his son was an adult.
Burkle, 53, said his experience in the grocery business (he made much of his estimated $2.3-billion fortune buying and selling supermarket chains such as Alpha Beta and Ralphs) was one reason his attention had turned to newspapers.
In recent years, the national grocery chains “were competing on who had the lowest level of services or the lowest level of benefits for employees,” said Burkle, who has reentered the industry with the purchase of stakes in the Pathmark and Wild Oats chains. “We thought that was just a bad business model.”
Although profit margins in the newspaper business average around 20% versus a razor-thin 2% or so in the grocery industry, Burkle said he doesn’t focus on margins when looking at acquisitions. Those who have worked with Burkle on his bid for the Knight Ridder papers said that he believed newspaper stocks have been the victims of panic selling and might be bargains now.
“People have said this is too tough a business or that the only way you can make this work is if you dramatically cut costs,” he said. Expectations are down, he said, and “we think that probably creates an opportunity.”
Burkle said he had faith in the future of the newspaper business, despite its recent struggles. People are always going to want information, he said. Newspapers just need to figure out better ways to deliver it.
That said, Burkle has revealed little of his strategy should he succeed in acquiring the papers. He said a confidentiality agreement prevented him from discussing his bid on the papers -- which include the Philadelphia Inquirer and the Akron Beacon Journal.
When the papers went on the block, representatives of the Newspaper Guild pursued Burkle as a financial backer. He had come recommended by leaders of the United Food and Commercial Workers Union, which represents grocery workers. The union praised Burkle, in particular, for preserving health and other benefits.
If Yucaipa wins some or all of the remaining papers, employees will be offered an opportunity to take an ownership stake by investing some of their retirement savings.
Burkle said he had no intention of making the kind of large staff cuts sweeping other media companies.
“We believe the quality of the content is critical, leading to a good return on investment,” he said, “which is why we wouldn’t have a slash-and-burn strategy.”
He declined to say whether employees would be asked to make wage or benefit concessions. But he described how his position in the supermarket business was enhanced when some of his employees volunteered to take cuts, in one case resulting in $54 million in savings.
“Most people are more concerned with the pride in where they work, particularly in [the newspaper] business,” he said, “than the last cent on their paycheck.”
Linda Foley, president of the Newspaper Guild, said wage and benefit concessions would probably be raised by any new owner of the papers but that she was “much less concerned” about givebacks under a Yucaipa-Guild partnership.
She said her confidence was based not only on the company’s track record but also on an understanding between Yucaipa and the guild that employees would get additional stock in the new company to compensate them for any givebacks.
“So they would be substitutions for the employees, as opposed to straight concessions which, God knows, they are used to giving,” Foley said.
Burkle describes himself as an avid news consumer, digesting the Wall Street Journal, the Los Angeles Times and the New York Times every morning “from cover to cover.”
He has been far from a passive observer of the media, as demonstrated most vividly when he invited FBI agents and a federal prosecutor along to observe as he met with Stern in late March.
But Burkle has fought the press before on less dramatic terms.
He has been particularly disturbed by press accounts of his efforts to keep his divorce records private, which were aided by the passage of a state law in 2004. Burkle had argued that information in the files could, among other things, put his son in danger.
The Associated Press and the Los Angeles Times have contended that divorce files should remain open, with a judge able to withhold potentially sensitive information -- which the judge in Burkle’s case had already done.
As The Times prepared to write about the dispute in late 2004, Burkle’s lawyer sharply protested as “outrageous in the extreme” any suggestion that Burkle pushed for passage of the divorce records law.
Lawyers for Burkle’s wife, Janet, had said that the more than $140,000 in campaign contributions Burkle gave to Republican Gov. Arnold Schwarzenegger and the state Democratic Party may have played a role in the law’s passage. Burkle denied any such influence.
When a Los Angeles judge later threw out the law, Burkle called the Times’ then-Publisher John P. Puerner.
Puerner recently recalled that the two had a “tense” conversation, adding that Burkle “said he was most concerned that it would be reported that he was personally involved in the legislation.”
The judge’s decision was upheld in January by a state appeals court; Burkle is appealing that ruling. A separate bill that would allow judges to edit financial and personal information out of divorce records on request passed an Assembly committee last week.
Burkle rejected the contention that he had been overly sensitive about the way he’s covered in the press. He said even seemingly trivial stories can have negative implications.
He called it plain wrong, for example, for Radar magazine to report last year that he hosted two of his famous friends -- entertainer Michael Jackson and former President Clinton -- on his yacht. Burkle said he doesn’t even own a yacht.
But it was worse, he said, when the New York Post wrote that complaints from Burkle and other “ultra-wealthy friends” caused Radar’s financial backers to shut it down.
“It’s just totally ridiculous,” Burkle said. “Maybe it shouldn’t be that big a deal, because they didn’t accuse me of a federal crime. But we work with labor. And to think that we would force a business to shut down because I was having a bad day is ridiculous. And so we say, ‘You can’t write things like that.’ ”
Kelly McBride, an instructor on media ethics at the Poynter Institute in Florida, said powerful businesspeople such as Burkle who take over newspapers “have to recognize they are stewards of an institution that serves the public and a higher good.” She praised Yucaipa’s hiring of Jim Naughton, a respected editor at the Philadelphia Inquirer for nearly two decades and a former Poynter director, as an advisor in its newspaper bid.
It’s unlikely that Burkle will find himself out of the headlines anytime soon, whether he becomes a newspaper owner or not.
He continues to be close to Clinton and wife Hillary -- the U.S. senator from New York who recently was the beneficiary of a $1-million fundraiser at Burkle’s Greenacres estate in Beverly Hills. He’s often seen in public with celebrities such as Sean “Puffy” Combs and supermodel Gisele Buendchen.
Spending less time with such tabloid favorites is one option Burkle won’t consider, even if it would help keep him out of the press.
“To not have the opportunity to spend as much time as possible with some of the most interesting people I have ever met would be crazy,” he said. “I have a very eclectic group of friends. Some of them make $50,000 a year and some of them make $50 million, $100 million, $200 million.... I like to have a good blend of people around me.”
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Times staff writer Joseph Menn contributed to this report.
