Moment of Truth for Media Chief
The day after Hurricane Katrina wrecked the Gulf Coast, Tony Ridder headed for Mississippi, where one of his newspapers was confronting the biggest story in its history without power, telephones or running water.
The chairman and chief executive of San Jose-based Knight Ridder Inc. reached the scene before most of the staff of the Biloxi Sun Herald had made it back to the newsroom. He brought in logistics specialists, emergency supplies and the promise to provide whatever the paper needed to tell the tale and take care of its employees and their families.
“It had a fairly electric feeling, to look up and see the chairman of your company,” said Sun Herald Executive Editor Stan Tiner. “You would be amazed at the extreme goodwill that has been engendered for the company by this.”
Three and a half months later, the 65-year-old Ridder is dealing with a storm of a different sort.
Pressure from unhappy shareholders has forced him to put Knight Ridder on the auction block. Depending on the buyer, the company that traces its roots back to Ridder’s great-grandfather could be broken up -- or at the very least lose the family-style stewardship displayed by the CEO’s emergency trip to Biloxi.
The likely sale of Knight Ridder and its 32 daily papers has sent shock waves through an industry in which subscribers and advertisers are defecting to the Internet and stock prices are languishing. How Tony Ridder and his company fare in the coming weeks may show his peers what the future holds for them.
It also may serve as a referendum on Ridder himself. Perhaps more than that of any other media chieftain, his career has been marked by the tug of war between the cost of producing quality newspapers and Wall Street’s demands for profit.
Supporters point to the journalistic contributions made by the company in cities such as San Jose, Miami and Philadelphia. Knight Ridder papers have helped send corrupt lawmakers to jail, exposed systemic police brutality and won 60 Pulitzer Prizes since the 1974 merger that created what is now the country’s second-largest newspaper chain by circulation.
But some observers say the papers have suffered in recent years as Ridder reduced staffing and cut travel and other expenses to boost earnings. The Pulitzer count has dwindled, and some top editors have resigned and publicly criticized the chain’s priorities.
For the last decade, though, Ridder has argued that such sacrifices were necessary to placate shareholders and remain independent.
Whether Ridder went too far or didn’t go far enough, it didn’t work. Knight Ridder’s stock was down almost 22% this year before the company’s biggest shareholder, a Florida investment firm called Private Capital Management, began agitating for a sale in late October.
“For a period of time, Knight Ridder and Tony in particular have been criticized in some circles for not doing enough” to improve the papers, Tiner said. “Now, people are saying there’s been too much kindness, too much generosity.”
It’s an odd circumstance for a profit-loving CEO long mocked by some of his 18,000 employees as “Darth Ridder” and lampooned by Miami Herald columnist Carl Hiaasen as a polo-playing foe of serious journalism.
At a time when newsroom budgets have been cut repeatedly, Ridder, who declined to be interviewed for this article, is known for his love of expensive cars and vacations. He received $4.6 million in total compensation last year -- down 41% from 2003 -- ranking 63rd among CEOs of California’s 100 biggest public companies.
He isn’t given to displays of warmth, and though he’s smart, even admirers say his communication skills aren’t the best.
But Ridder’s energy and competitive drive are rarely questioned, whether he’s playing golf or attacking the seafood and salad that make up much of his diet since bad knees ended his marathon running.
“He skis fast, he drives fast and he eats fast,” said brother Peter Ridder, publisher of the company’s Charlotte (N.C.) Observer. The two brothers teamed up on a Montana vacation last year and won a rodeo contest against much younger men.
Ridder’s extended family is also extremely important to him. Nineteen members of the Ridder clan are gathering this year for a Christmas holiday in Hawaii.
Tony and Peter represent the fourth generation of Ridders at the company. The fifth is represented by Tony’s son Par, publisher of the St. Paul (Minn.) Pioneer Press.
“It’s a family industry, and he feels very fortunate to have been part of that, and he wants to see that carry on,” said close friend Don Lucas, a Bay Area philanthropist and former car dealer. With all that now at risk, “he’s terribly depressed. It’s very difficult to work your whole life at something and have it dismantled.”
Ridder, the son of a Ridder Publications Inc. president, grew up in Duluth, Minn. After getting a taste of newsroom life at the Aberdeen (S.D.) American News, he left the editorial ranks behind and joined the San Jose Mercury News in 1964. Ridder was named publisher of that paper in 1977, three years after the family business merged with Knight Newspapers Inc.
Back then, the corporate leadership of Knight Ridder was split by design between veterans of the business side and the news pages. That tradition continued as Ridder rose through the ranks to reach the presidency in 1989, second in command to CEO James K. Batten, a former newspaper editor.
But Ridder didn’t install a deputy with a strong news background. The move marked the beginning of a debate that has gone on ever since about whether Ridder was willing to sacrifice the quality of his papers in return for higher profit.
Former Knight Ridder CEO Alvah H. Chapman Jr. said he didn’t think having a high-ranking executive with a deep news background would have enabled Knight Ridder to avoid its current predicament. But after Batten died in 1995 and Ridder was named CEO, many of the chain’s current and former editors said, there was no check on what they saw as their new chief’s bias toward the bottom line.
His corporate staff says Ridder is a numbers man first, one whose signal accomplishment is boosting Knight Ridder’s operating profit margin to 19.4% last year from 14.4% in 1994. (Revenue has climbed to $3 billion from $2.1 billion in the same period, but it had peaked at $3.3 billion in 2000.)
Veterans of the company said they understood the need to earn an increasing amount of money. But many said the best way to go about it would have been to work hard at increasing revenue -- perhaps by making the papers better and striving to sell more of them -- instead of cutting costs. Once it became clear that Knight Ridder wanted to keep more out of each dollar of sales, “some of us who had been at the company for a good many years were dismayed,” said former Philadelphia Inquirer Executive Editor Gene Roberts. The Inquirer won 17 Pulitzer Prizes during Roberts’ 18-year run, which ended in 1991.
A better idea, he said, “would be to deliver news on a scale that other companies and competitors couldn’t really match. And somewhere the answer became, ‘Give the readers less.’ ”
Knight Ridder isn’t the only chain cutting back. Layoffs have accelerated this year at companies including New York Times Co. and Los Angeles Times parent Tribune Co. But the San Jose company’s trials have come with their own twists.
In an unusual move, a bevy of Knight Ridder Pulitzer winners and former top editors circulated a letter last month that denounced what they called the “greed” of the company’s unhappy shareholders and pointedly declined to support Ridder. After thousands of job cuts, the signers said, they would support only “leadership that restores to Knight Ridder newspapers the resources to do excellent journalism.”
Ridder’s defenders point out that his fears of a takeover turned out to be well-founded. They note the chain’s frequent plaudits for promoting diversity in its ranks. And despite all the cuts, they say, Ridder has met the challenge of covering major news stories time and again.
“Knight Ridder sent more reporters to Iraq than anyone except the Associated Press,” said Alberto Ibarguen, until recently publisher of the Miami Herald. In 2000, after the U.S. Supreme Court halted the presidential recount in Florida, Ibarguen told Ridder that he wanted the Herald to count the ballots and “he said they’d pay for it.” Ridder kept his word even when the cost soared past the initial $500,000 estimate.
Ridder also deserves credit for identifying the Internet early on as both a threat and an opportunity, said Knight Ridder board member Kenneth Oshman. In 1995, Ridder said online classified ads would be a major headache for newspapers -- a prediction that has come painfully true.
But he has fought back, Oshman noted. A company spokesman said Knight Ridder was the first newspaper chain to post all of its stories on the Web -- now routine in the industry.
Ridder could redeem himself to some old-media true believers by keeping his company from falling into what they see as the wrong hands.
No matter what one thinks of Ridder’s tenure, columnist Hiaasen said, “you realize it probably could be worse -- they could start putting ads on the front page.”
Of the three newspaper companies considering final bids for some or all of Knight Ridder, only Sacramento Bee parent McClatchy Co. owns the sort of papers where many aspiring reporters want to work, Knight Ridder veterans said. Investment bankers don’t think McClatchy could finance a $4-billion-plus offer on its own. Also in the running are a number of buyout firms, the MediaNews Group Inc. chain controlled by deal maker William Dean Singleton, and USA Today publisher Gannett Co., the nation’s biggest newspaper chain.
Gannett is an acquisitive company and the richest in the industry. Yet in corporate-culture terms, Gannett is a near opposite of Knight Ridder -- at least the Knight Ridder that veterans fondly recall from the mid-1980s, when its papers won as many as seven Pulitzer Prizes in a single year. Except for its ability to turn a hefty profit, Gannett epitomizes everything Ridder hates about his own industry, those close to him said.
“Tony looks at Gannett and says they don’t care about journalism, they don’t care about their communities,” said one close associate. (Tara Connell, a Gannett spokeswoman, called that viewpoint “ridiculous” on both counts.)
In fact, if Ridder had his way, there would be no sale at all -- though it could bring him a personal windfall of tens of millions of dollars. As of February, Ridder and his immediate family owned about 670,000 Knight Ridder shares and held options for a million more. The board could make all those options vest immediately if the firm changes hands.
Ridder’s desire to remain independent is hampered by the fact that his family has no special class of shares that would give it true control of the company, as is the case at the companies that own the New York Times, the Washington Post and the Wall Street Journal.
Ridder wants “the preservation of what he’s created, and his forebears,” the associate said. “He is doing his damnedest to make this come out the best he can.”
(BEGIN TEXT OF INFOBOX)
Full name: Paul Anthony Ridder
Age: 65; born Sept. 22, 1940
Education: Bachelor of arts, University of Michigan, 1962
Career: Chairman and chief executive, Knight Ridder, 1995-present; president, Knight Ridder, 1989-95; president, Knight Ridder newspaper division, 1986-89; publisher, San Jose Mercury News, 1977-86
Family: Married since 1960 to Constance “Connie” Louise Meach, a lawyer. They have three daughters and a son.
Home: Woodside, Calif.
Source: Times research
Los Angeles Times