Newspaper Sale Stirs Up Local Moguls' Ambitions

By James Rainey and Joseph Menn

March 28, 2006 12 AM PT

Times Staff Writers

MONTEREY, Calif. —

Nader Agha has gambled before and won. When others looked at the town of Soledad, they saw a farming burg that shared a ZIP Code with a state prison. The Syrian immigrant saw opportunity.

Today, properties that Agha snapped up on the cheap over more than two decades have sprouted some 1,500 homes, with thousands more in the works. And Agha -- who arrived in this affluent region in 1965 “with $17 in my pocket” -- has gained enough credibility that community leaders are taking notice as he prepares to make another play against even greater odds.

He wants to own the local newspaper.

“I am not interested in the newspaper because I am a developer,” said Agha, who’s putting together an investment group to bid on the Monterey County Herald. “I am interested because I can make a difference. I can return it to the people.”

McClatchy Co.’s recent announcement that it planned to sell the Herald and 11 other Knight Ridder Inc. newspapers as part of its $4.5-billion acquisition of the San Jose-based chain has led to a burst of interest by local businesspeople and groups in buying several of the publications. The company has asked that bids be submitted by today.

To succeed, the locals will have to buck a four-decade trend toward out-of-town ownership by regional and national chains. Less than 1 in 5 American dailies are owned by publishers who don’t own at least one other newspaper.

The would-be press lords -- many of them businesspeople and politicians -- will also have to contend with skeptics who believe they would be too ready to tilt news coverage to their own benefit.

In Philadelphia, the Daily News has drawn interest from a Pennsylvania state senator. A prominent advertising and public relations executive has brought together a dozen investors who say they have more than $200 million to bid on the rival Inquirer. Publishers in St. Paul, Minn.; Aberdeen, S.D.; and Grand Forks, N.D., said they have heard from local business leaders and investors interested in buying the papers.

Agha, 62, and about half a dozen others in Monterey have begun to assemble a group to make an offer for the Herald, which they estimate is worth somewhere between $30 million and $45 million.

The avuncular businessman declined to reveal his net worth, but the banker who has helped finance many of his previous endeavors said the home builder has the wherewithal to anchor the deal. Charles Chrietzberg, president and chief executive of Monterey County Bank, said he was ready to commit his own money as well.

A little more than half a century ago, independent publishing families owned 1,300 of the nation’s 1,785 daily newspapers, according to a Harvard University scholar.

But as newspaper profits soared during the 1960s, higher gift and estate taxes persuaded many owners to sell out to Gannett Co. or one of the other publishing companies formed in the late ‘60s and early ‘70s, rather than pass the papers on to the next generation.

Today, just 19% of the nation’s daily papers are held by individuals or companies that don’t own any other newspapers. Monterey’s Herald has been no exception to the trend.

The newspaper was founded in 1922 by Col. Allen Griffin, who for more than half a century used the daily and his front-page column to become a key power player on the Monterey Peninsula. He sold it in 1967 to the Block family, owners of a Midwest newspaper chain, who in turn passed the paper to Scripps Howard, which sold to Knight Ridder in 1997.

Knight Ridder does not reveal financial information for individual newspapers. But a person familiar with the company put the Herald’s revenue at $26 million annually. After maintaining stable circulation for most of the last decade, the paper saw weekday and Saturday sales fall almost 9% over the three years ended Sept. 30, to 32,003.

Executive Editor Carolina Garcia said she has pushed in her three years at the helm for more local content in the newspaper, but on many days the Herald is still filled largely with wire-service stories from around the nation and world.

At the Britannia Arms pub in downtown Monterey one recent night, several patrons said they would like more coverage of the Monterey Peninsula.

“I don’t want another giant media conglomerate to get the paper and give me more stories from Afghanistan. I can go to other venues for that,” said Ed Hyer, an atmospheric scientist at the Naval Research Lab. “I think local ownership can serve a purpose, if you want more local coverage.”

Agha and his prospective partners agree with that assessment. They also have expressed a frustration, not uncommon among businesspeople in many communities, that the local paper is needlessly combative or unfair to local interests.

“It’s considered a liberal, left-wing situation,” said Chrietzberg, the banker. “They are just not in the mainstream. This is an area that is much more conservative than they would indicate.”

Editor Garcia said such comments make her concerned that local ownership, potentially “a really interesting experiment,” might also be fraught with management meddling.

“There’s a need to understand the role -- the objectivity and independence -- of the newsroom,” she said. “I’m not sure if they have a complete and total understanding of a newspaper’s role in the community.”

Potential conflicts could also be an issue in Philadelphia, where businessman Brian P. Tierney is heading up one local bid. (Among the group’s “heavy hitters,” he said, is Bruce E. Toll of Toll Bros. Inc., a national home construction company based in Horsham, Pa.)

Tierney’s public relations company represented the Catholic Archdiocese in Philadelphia, which battled with the Inquirer over reports about the closing of churches in inner-city neighborhoods and about a multimillion-dollar church fundraising campaign.

State Sen. Vincent Fumo, who is contacting potential investors about buying the Daily News, has feuded with the Inquirer over its coverage, which included stories about the $73,000 in state funds he spent at a local restaurant.

Tierney said his consultations with some of the community’s top journalists would ensure that the group would “protect the integrity of the product.” Asked whether Fumo wanted control of the competing Daily News to counter negative coverage of him in the Inquirer, the senator’s spokesman, Gary Tuma, replied: “That doesn’t come into it at all.”

Agha and his allies -- including veteran newspaperman Lewis A. Leader, a former editor at both the Herald and the Los Angeles Times -- give similar assurances of objectivity.

Sitting in one of two antiques emporiums he owns here -- overflowing with armoires and statuary -- Agha said in his satin-smooth voice that he wanted to bring a broad array of investors into the partnership to demonstrate that “it’s going to be in the best interests of anybody and everybody in the community.”

“When I sell a piece of jewelry or something here, I don’t ask people their [political] position,” Agha said. “I don’t ask them, ‘Are you Chinese or are you Democratic or Republican?’ “If we start to separate people,” he said, “it doesn’t work.”

McClatchy Chief Executive Gary B. Pruitt said early last week that he was “open to any and all offers,” adding of the local-ownership bids: “More power to them.”

But when it comes to price, big operators like Gannett typically can offer more than a local, independent buyer can. They know they’ll be able to save money by consolidating administrative jobs and Internet operations and through bulk purchasing -- particularly of costly newsprint, analysts said.

“We often hear during these big deals of the possibility of a local group putting together an offer,” said John Morton, a veteran newspaper analyst based in Silver Spring, Md. “It’s not that it can’t happen. It can. But usually they just can’t come up with enough money.”

Agha himself has doubters, in part because of the array of proposals -- each bucking the status quo -- that’s he’s made of late.

In a region that has fought endlessly about water but done little to increase its supply, he bought a coastal site and wants to build a desalination plant. In bed-and-breakfast-friendly Pacific Grove, he proposed a 300-room hotel, big enough for conferences. And as the county struggled to bail out a failing public hospital in recent weeks, Agha made yet another play -- saying he would buy Natividad Medical Center for $75 million.

“He offers to do a lot of things,” Herald editor Garcia said, “but not a lot comes to pass.”

His bid to become a newspaper owner should not be underestimated, Agha said.

“I believe if we, all of us as a group, march toward this,” he said, “we have a very good chance of accomplishing it.”

Rainey reported from Monterey and Menn from San Francisco. Times staff writer David Zucchino in Philadelphia contributed to this report.

(BEGIN TEXT OF INFOBOX)

Buyers wanted

Knight Ridder newspapers that McClatchy intends to sell and their location and weekday circulation as of September

Philadelphia Inquirer, Philadelphia: 357, 679

San Jose Mercury News, San Jose: 249,090*

St. Paul Pioneer Press, St. Paul, Minn.: 184,497

Contra Costa Times, Walnut Creek, Calif.: 182,834*

Akron Beacon Journal, Akron, Ohio: 128,949