Tuesday, February 13, 2007

Pruitt turns pragmatic

Less than a year ago, the newspaper industry looked at McLatchy's purchase of Knight-Ridder as a positive sign. But the company's stock has sunk since then and that has led to a change of heart on opinions of McLatchy CEO Gary B. Pruitt.

“If you had this warm and fuzzy feeling about being taken over by McClatchy, I suspect that has dissipated,” (industry analyst John Morton) said. “As a financial steward, you couldn’t get anybody to run your company better than Gary Pruitt, but you can’t look at everything from a financial steward point of view. For heaven’s sake, newspapers are a public trust. He’s acting as if he’s running a green bean cannery.”

But he also has his supporters:

“I recommend a buy on McClatchy,” said Barry L. Lucas, an investment analyst at Gabelli & Company, in Rye, N.Y. “You will see revenue growth come back, you will see debt come down rapidly, and ultimately, Gary may be proved right.”

Despite the firesale of the Minneapolis Star Tribune in December, Pruitt sees good times ahead “both in print and online” and defends the sale of because of the big tax benefit for McClatchy, money which will be used to help pay off the $2 billion debt it incurred in buying Knight Ridder. The Times story also notes the firesale, along with The New York Times Company's $800 million writedown of the Boston Globe and The Worcester Telegram & Gazette (about 60% of the $1.4 billion purchase price) has potentially complicated the process of setting a value for Tribune Co., even though the big newspaper player has been turning profits in the 18 to 24 percent range this decade.

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