A CEO’s Passion for Papers
Gary B. Pruitt says that he would have been perfectly happy to remain in his former career as a 1st Amendment attorney -- fending off libel suits and arguing for the public’s right to know on behalf of the Sacramento Bee and other McClatchy Co. newspapers.
Even after taking the helm of the McClatchy chain a decade ago, Pruitt maintained his everyman image -- chatting with journalists about his beloved Rolling Stones, eating in the employee cafeteria and refusing to lay off workers, even in hard times.
But Pruitt’s calm and unassuming demeanor doesn’t begin to reflect the 48-year-old’s competitiveness and passion for newspapers, friends and co-workers say. Those characteristics came into clearer view in the last few days, as he pushed McClatchy past bigger rivals to a successful bid for Knight Ridder Inc.
Under the $4.5-billion deal announced Monday, McClatchy would become the nation’s second-largest newspaper chain and Pruitt would emerge as America’s newest media master -- heading an empire that would boast 3.2 million readers at 32 papers.
The deal reflects Pruitt’s against-the-grain view of the newspaper industry’s future.
“I understand the conventional wisdom that we are in a bad business,” he said.
“But I also think the conventional wisdom is wrong,” he added. “And if you look at our audience in print and the unduplicated reach of our website and direct mail, our audience is growing, even with circulation down. That can’t be said of many media businesses. And that is hardly the profile of a dying industry.”
Even so, several major newspaper chains saw their shares plunge by 20% or more last year as advertisers shifted resources to Google Inc. and other Internet portals. McClatchy’s own 20-year run of circulation growth ended.
One of Pruitt’s biggest challenges would be reassuring Wall Street investors who have seen other media mergers founder (McClatchy’s stock initially fell nearly 8% on Monday before recovering to $51.55, a decline of $1.51, or 2.9%). He also would have to pay down $2 billion in debt with the sale of 12 Knight Ridder papers that don’t operate in the high-growth communities McClatchy prefers.
Pruitt and his top managers were scheduled to be in Miami today to visit the Herald, the largest of the Knight Ridder papers that would join McClatchy. Then it’s on to a meeting in Naples, Fla., with Bruce Sherman, the Private Capital Management fund executive who drove the sale when he complained about Knight Ridder’s performance.
The following two weeks are filled with more meetings -- with investors, journalists and managers of other Knight Ridder papers.
McClatchy papers have been known for solid if not spectacular journalism, garnering five Pulitzer Prizes since 1935 (not counting Pulitzers won by papers that were later acquired by the chain).
Descendants of its Gold Rush pioneers still hold a controlling interest in the McClatchy operation. Pruitt, who earned $2.2 million in 2004, would be challenged to produce the steady circulation and revenue growth that has made the company a Wall Street favorite, while maintaining the benevolent, public-spirited management that has been embraced by employees.
“Pruitt and the McClatchys have always been the good guys before,” said one worker, who asked not to be named because he was not authorized by the company to speak. “It might not be as easy now.”
If somewhat unknown to the media’s Eastern establishment, Pruitt has long been a golden boy within the McClatchy chain, whose stock gains have been second only to those of E.W. Scripps Co. papers over the last decade.
Born in Virginia the youngest of four children and raised not far from the Kennedy Space Center in Satellite Beach, Fla., Pruitt grew up bodysurfing and playing tennis. He studied political science at the University of Florida before earning a master’s degree in public policy and a law degree at UC Berkeley.
After a short time in private firms, he joined McClatchy in 1984 and instantly became a favorite of journalists and free speech advocates because he pushed hard to get reporters’ stories in print.
“He feels very passionately about the rights of reporters and editors and the important work that they do,” said Kelli Sager, a media lawyer for the Los Angeles Times and other publications who worked with Pruitt years ago. “He makes sure news is being reported and issues aren’t being sidestepped just because it might be difficult.”
Sacramento Bee reporter Denny Walsh recalls that Pruitt beat back a libel suit by then-U.S. Sen. Paul Laxalt (R-Nev.) over a 1984 story. The piece said that Internal Revenue Service agents suspected that gambling winnings at a casino owned by Laxalt’s family were being skimmed to avoid taxes. Laxalt sued for libel, and the Bee countersued.
Asked what made him proudest from those days, Pruitt said: “I cleared thousands of news stories and never killed one.... I loved being a 1st Amendment lawyer. It was a great job. I reluctantly left it.”
Leaders of the papers -- including the last family executive, C.K. McClatchy, who died in 1989 while jogging in a Sacramento park -- saw Pruitt’s intellect and drive and early on began to groom him for a larger role.
“They just thought he walked on water,” said James Meier, who worked in the legal department with Pruitt in the mid-1980s.
The McClatchys made him publisher of the Fresno Bee in 1991, then quickly promoted him, through the ranks, to president in 1995 and chief executive in 1996.
Pruitt wasted no time expanding his and the company’s imprint, which had been mostly focused in the West.
He led the purchase of the News & Observer of Raleigh, N.C., in 1996 and then the Minneapolis Star Tribune in 1998, which instantly became the biggest paper in the McClatchy empire. In what might have been a harbinger of the Knight Ridder deal, McClatchy outbid larger rivals such as Gannett Co. and was accused of paying too much.
But those deals are now generally viewed in the industry as winners that have helped McClatchy continue in most years to produce profit margins of more than 20%.
Peter H. King, a onetime columnist for the Bee papers and now a reporter for the Los Angeles Times, says Pruitt is “always a guy who has a plan. He doesn’t just go out on a limb. And maybe he knows something that other people don’t know.”
McClatchy and Pruitt have been proud of their ability to avoid layoffs, even in economic downturns. Pruitt said Monday that there would be staff cuts at the corporate level that would trim costs by $40 million annually, but that he did not expect any layoffs at the newspapers.
At least some observers wondered whether the company and its leader were simply fobbing off those tough decisions on others with their plan to sell 12 Knight Ridder papers that face tougher competition.
In a note to current and former Knight Ridder journalists, former Philadelphia Inquirer executive editor James Naughton said he wished that McClatchy would hold on to the dozen papers (including the Inquirer and the San Jose Mercury News) and “reap long-lasting benefits by recognizing how vital they are to their communities.”
Pruitt denied that the sales were designed to avoid layoffs, saying McClatchy chose to keep only papers that fit its model. That means focusing on publications that have relatively little competition in growing markets.
He said the papers in the existing McClatchy chain served communities that projected 11.9% growth in households over the next five years, and the Knight Ridder papers McClatchy wanted to keep also were in areas with more than 11% growth. That compares with a national average of 7.5%.
Asked during a conference call if he would rule out any buyers for the dozen other papers, Pruitt ventured a little humor.
“Slobodan Milosevic died over the weekend, so he is out,” Pruitt said, referring to the former Yugoslav leader. He then turned serious. “We care who we sell to and we care about these papers. We are sorry we are not retaining them. They don’t fit our strategy, but they will fit other companies’ strategies.”
Rainey reported from Los Angeles and Lifsher from Sacramento.
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Leap to No. 2
Top newspaper chains by circulation
McClatchy-Knight Ridder: 3.2*
New York Times group: 2.5
*After the buyout and sale of 12 newspapers
Source: Times research
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At a glance
McClatchy plans to keep 20 of Knight Ridder’s 32 newspapers and sell the remaining 12, which don’t fit McClatchy’s strategy of focusing on growing markets.
Currently, McClatchy owns 12 newspapers:
Anchorage Daily News in Alaska
Beaufort Gazette in South Carolina
Herald in Rock Hill, S.C.
Island Packet in Hilton Head, S.C.
Merced Sun-Star in California
News & Observer in Raleigh, N.C.
News Tribune in Tacoma, Wash.
Star Tribune in Minneapolis
Tri-City Herald in Washington state
The 20 newspapers McClatchy plans to keep:
Belleville News-Democrat in Illinois
Bellingham Herald in Washington state
Bradenton Herald in Florida
Centre Daily Times in State College, Pa.
Charlotte Observer in North Carolina
Columbus Ledger-Enquirer in Georgia
El Nuevo Herald in Miami
Fort Worth Star-Telegram in Texas
Lexington Herald-Leader in Kentucky
Idaho Statesman in Boise, Idaho
Kansas City Star
Olathe News in Kansas
Olympian in Olympia, Wash.
State in Columbia, S.C.
Sun Herald in Biloxi, Miss.
Sun News in Myrtle Beach, S.C.
Telegraph in Macon, Ga.
Tribune in San Luis Obispo
Wichita Eagle in Kansas
The 12 Knight Ridder newspapers McClatchy intends to sell:
Akron Beacon Journal in Ohio
American News in Aberdeen, S.D.
Contra Costa Times in California
Duluth News Tribune in Minnesota
Grand Forks Herald in North Dakota
Monterey County Herald in California
News-Sentinel in Fort Wayne, Ind.
Philadelphia Daily News
San Jose Mercury News
St. Paul Pioneer Press in Minnesota
Times Leader in Wilkes-Barre, Pa.
Source: Associated Press