Sweeeeeeeeeeettttttttt...........March 18 is my birthday! VBG
Monday, February 2, 2009, 2:34pm
Hearst says buyer would need lots of cash
San Francisco Business Times
Investors interested in buying the Seattle Post-Intelligencer would need the resources to sustain up $1.5 million in losses per month and must buy all assets — including parent company Hearst Corp.'s interest in the joint-operating agreement with The Seattle Times as well as the iconic P-I globe.
Hearst also owns the San Francisco Chronicle, the corporation's flagship newspaper.
But one big mystery remains: How much money would investors have to pony up to buy the P-I?
The most detailed public information to date about the sale of the P-I comes from a conversation between the union representing P-I workers and the New York-based investment bank hired by Hearst to sell the Seattle daily newspaper.
Liz Brown, administrative officer of the Pacific Northwest Newspaper Guild, a union representing employees, said she spoke recently with Robert Broadwater, managing director of Broadwater & Associates, about the potential for a group of P-I employees to buy the newspaper.
Brown said Monday that Broadwater told her that she would have to come forward with a qualified investor with enough money to buy the P-I and its assets — and also handle the debt — before he would launch into a detailed discussion of the P-I's finances.
"It's kind of like porno, you know it when you see it," Brown said of the sales price. She said Broadwater said there is no slated purchase price, and no range of how much assets a potential buyer would need access to.
A group of P-I employees has been exploring the possibility of putting together investors to buy the P-I. But so far, those efforts have not struck gold.
"It would be a hard sell to anybody during this recession," Brown said. Noting that Hearst has set a deadline of March 18 to sell the newspaper or potentially shut it down, Brown said it was an "awfully short" time frame.
"I think everybody realizes for the P-I to retain value, it really shouldn't have a period where it goes dark," Brown said.
Brown said she told Broadwater that nobody would be interested in buying the P-I if it meant they would have to buy into the joint operating agreement (JOA). But Brown said Broadwater disagreed, saying that the P-I's revenue from the JOA after all non-news costs amounted to about $5 million last year.
Under the partnership, the P-I relies on the Times for all non-news print and online services and expenses surrounding producing the P-I. After those expenses are met, the P-I and Times divide up all non-news expenses.
Hearst said it lost $14 million in 2008, with more losses expected this year. So anyone taking on the P-I purchase and interested in making money would have to significantly cut into the P-I's newsroom budget, which is estimated to be about $20 million a year.
Brown said that Hearst officials have told her that they are seriously considering operating the P-I as an online-only news venture, but not within the confines of the JOA or with a union-represented staff.
Brown, who highlighted her interview with Broadwater in her blog on the guild's website, said that Broadwater told her a qualified buyer could be an individual, corporation or nonprofit association, "as long as it has enough money and some business acumen."
Broadwater said the buyer would have to purchase all of Hearst's assets, including the P-I name and brand, the seattlepi.com website, as well as all the newspaper's rights and obligations under the JOA. Those include office furniture, equipment, intellectual property rights and archives.
The iconic globe that sits atop of the P-I's Seattle headquarters is not for sale separately, although people have inquired about buying it. Brown said the globe requires frequent maintenance and was damaged during this winter's snowstorm.
Broadwater also told Brown that it would not provide any financial assistance or subsidies to a P-I buyer.
Hearst Corp. announced in early January that it was selling the Seattle Post-Intelligencer, and if no buyer was found by mid March, the daily newspaper with about 180 employees could be shut down.
Hearst, which has owned the P-I since 1921, reported operating losses at the P-I since 2000. If no buyer is found, Steven Swartz, president of Hearst Newspapers, told P-I staffers in January that Hearst would pursue other options. Those include moving to an online-only newspaper with a greatly reduced staff or closing the paper altogether. In no case would Hearst continue to publish the P-I in printed form, Swartz said.
Broadwater declined to discuss with the Business Journal any details surrounding the potential sale of the P-I. Meanwhile a spokesman for Hearst did not respond to a message requesting information.
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