Sale of Stake to Bass Produces Tension at St. Petersburg Times

Nelson Poynter always took great pains to ensure that the independent voice of his Florida newspaper, the St. Petersburg Times, would not be unduly swayed by the businesses or other powerful institutions around it.

Since he took over in the 1950s, the Times has avoided all debt, fearing that such obligations might interfere with its ability to write impartially about lenders. The paper has barred reporters from taking any free meals, transportation or entertainment, to avoid a perception that they might write more favorably about gift givers.

And Poynter took the ultimate step when, before his death in 1978, he put control of Florida’s second-largest newspaper in the hands of a nonprofit educational foundation, hoping to ensure its independence indefinitely.

So it has been with chagrin that the Times employees learned last week that their company is now partly owned by one of the most influential of businessmen, billionaire investor Robert M. Bass. No less than the Times’ archrival, the Tampa Tribune, broke the news that the publicity-shy Texan had bought a 40% voting interest in the closely held company from two of patriarch Nelson Poynter’s nieces.

“It’s felt very secure here for many years, as we’ve watched other business in turmoil,” said Andrew Barnes, who replaced Eugene Patterson only last week as chairman of Times Publishing Co. and the Poynter Institute for Media Studies. “We felt immune. And now we’re feeling the shock of knowing that we’re part of the business world, too.”

Most unsettling has been speculation that Bass might shake up--or break up--the company to bring the kind of returns he has so often wrung from his diverse interests in the oil, broadcasting and real estate businesses. Times Publishing includes not only the highly profitable liberal newspaper but regional business magazines in Florida, Georgia and Arizona; Congressional Quarterly, which covers Congress, and Governing, a magazine for state and local officials.

Times Publishing will post revenue of about $200 million this year, including $160 million from the newspaper, Barnes said.

Barnes insists that Bass has no intentions of breaking up the company and that, in any case, he could not challenge the control of the Poynter Institute, a nonprofit foundation set up to advance the education and ethics of journalists.

In three brief telephone conversations, “Bass has been most courteous and direct, and given no reason for us to think he plans anything like that,” Barnes said. He added that he had consulted with “the full range of experts . . . and they have confirmed that our position is invulnerable.”

David Bonderman, chief operating officer of Robert M. Bass Group, was quoted in last Friday’s St. Petersburg Times saying that his company sees Times Publishing as “an extremely well-run newspaper. We like the newspaper business, and we plan to be a long-term shareholder.”

Bonderman said Bass has “no present plans” to challenge the control of the Poynter Institute. On Monday, the executive declined comment.

But knowledgeable industry officials said they believe that while Bass officials are pleased with the newspaper’s financial performance, they want changes in the magazine operations, which are far less profitable. They say Bass officials may press the Poynter Institute to voluntarily change Times Publishing’s two-tiered stock structure--there are both non-voting preferred and voting common shares--which they contend is unfair to holders of the common stock.

If Barnes and other board members won’t go along, they may threaten to go to court over the company’s preferred stock dividend arrangement, or even the nonprofit foundation status of the institute.

Dividends Paid

When Nelson Poynter gained control of the company from his father, the company called in all the preferred stock that wasn’t directly owned by Poynter or his immediate family. Times Publishing’s charter allows the company to call in the remaining preferred stock at a price of $106 a share, or $318,000.

But the company has instead continued to pay dividends on the preferred stock, which is 87% held by Poynter Institute, to fund the institute’s operations. Last year, those dividends came to $2.6 million, far more than the cost of calling in the preferred stock.

Industry officials believe that Bass might argue in court that paying the dividends rather than calling in the stock is a breach of Poynter’s fiduciary duty. They said Bass might challenge the Poynter Institute’s tax-exempt status by arguing that it is not a true educational institution under Internal Revenue Service guidelines.

Value Could Soar

Bass paid about $50 million for his block of common stock, analysts have estimated. The block, which has 40% voting control of the company, represents only 6% of the total shares of the company, including the preferred stock. Analysts have estimated that Times Publishing would be worth about $650 million on the open market.

The value of the common stock could increase enormously if Poynter called in the preferred stock or if there are fundamental changes to increase the profitability of the magazine operations, industry officials noted.

Some industry analysts said they did not understand why Bass would buy a minority share in a closely held company and take a passive role. “I don’t know why this block would seem desirable to Bass, unless he had some way to control the situation,” said Peter P. Appert, analyst with C. J. Lawrence & Co. in New York. “There must be something here that isn’t evident on the face of the situation.”

The newspaper dominates its market, reaching about 67% of homes. Circulation has recently averaged about 330,000 copies daily and about 418,000 copies on Sunday. In February, 1987, the paper began a push into the Tampa market, where it is now selling about 14,000 copies daily and 17,500 copies on Sunday. The drive into Tampa has set off a fierce and expensive competition with the Tampa Tribune, which is owned by the Media General chain, based in Richmond, Va.

Industry officials believe that Bass is not interested in changing the editorial content of the St. Petersburg paper, which has generally been strongly liberal. They note that despite his conservative politics, Bass has not tried to influence editorial content at his three network-affiliated television stations or at the firm’s three radio stations.

Impact at Disney

Bass has been known to remain a passive investor in some cases but to intervene to make management and strategic changes in other cases. Last year, Bass played a major role in the breakup of Cincinnati-based Taft Broadcasting, which was widely considered to have weak management.

In 1984, he intervened at Burbank-based Walt Disney Co., installing the management team led by Chairman and Chief Executive Michael D. Eisner.

Whether the Bass presence means that conflict is ahead for the Poynter Institute, the presence of the new shareholder is likely to prove unsettling for the Times staff. For one thing, Bass’ Disney holdings mean the important new shareholder has an interest in Disney World, about 100 miles away in Orlando.

The newspaper has criticized Disney World--for demanding too much in concessions when it was built and in offering freebies to journalists. Of this potential conflict of interest, “I can’t believe that Nelson Poynter would be too pleased,” said Robert Haiman, who is a Times Publishing director and president of the Poynter Institute.