A Push Toward Private Control of Newspapers

Advertising and public relations executive Brian Tierney, center, is one of the major partners in the privately held group that bought the Philadelphia Inquirer and Daily News last month. (By Rusty Kennedy -- Associated Press)

Morton has become a convert to the return-to-private thinking, which he said has its journalistic benefits.

"The fact is, Wall Street is so short-nosed and is so dedicated to maximizing return on investment to the exclusion of almost everything else, you're going to have situations where, basically, you have a lot of public shareholders who have interests that are inimical to good journalism," he said.

But lest a generation of newspaper journalists -- who have watched corporate parents slash costs through layoffs, budget cuts, bureau closings and the like -- gets dewy-eyed over the prospect of local, private ownership, Singleton warned: "I don't think there's a lot of difference between performing well to please your shareholder or performing well to please your bankers."

There is some good news in the unrest, Morton and newspaper executives say. If the sale price of Knight Ridder -- $4.5 billion -- was a referendum on the health of the industry, the answer was positive. The price was higher than most expected and acknowledges the fact that many newspapers still enjoy profit margins of about 20 percent -- higher than that of most business.

And even though big-city newspapers are losing circulation, many small and mid-size communities' newspapers are growing. It was those Knight Ridder papers that caught McClatchy's eye.

After buying Knight Ridder's 32 papers, McClatchy chose to hold onto only 20 of them -- and only four of them are large papers, including the Miami Herald and the Kansas City Star. The rest include the Olathe (Kan.) News, with a daily circulation of 4,986; the Idaho Statesman (circulation 62,000); and the 100,000-plus Lexington (Ky.) Herald-Leader.

The smaller papers are growing because, unlike in large media markets, they are either the only or the dominant advertising vehicle in town. It is an advantage that large papers, such as the Philadelphia Inquirer, cannot match, as advertisers have more ways to reach consumers there.

The Inquirer ended up in the hands of a group led by a founder of Toll Brothers Inc., a home builder. Although Toll is a publicly owned company, it is local to the Philadelphia area.

Staff writer Annys Shin contributed to this report.