May 16, Tuesday

Today's landmark: 8 months since Rupert Phillips' now infamous announcement of the Star-Bulletin's closing.

My friend Marnie responded to yesterday's mention of the generic "the newspaper" with her own tale of responding to a friend's "read it in the newspaper" comment by demanding that they identify which newspaper. As Marnie explained, Robert Louis Stevenson would refuse let anyone discuss a book with him unless they first correctly identified the author. Unfortunately, we rarely demand such precision of anyone, including ourselves. Hence our precarious situation.

 The selected broker is presumably hard at work contacting potential buyers across the country to encourage interest in the Star-Bulletin. Found among the fine print of the sales agreement is a clause allowing the 65-day sales period to be cut short if it becomes obvious that there's no interest in the deal. There seems to be a reasonable chance that we will end up in such a situation shortly, but what happens after that has not been defined. Our hope, of course, is that the judge will convince Gannett and Liberty to sweeten the offer. The parameters of an acceptable isn't clear, since we're still dealing with a strangely noncompetitive world despite the looming antitrust charges.

After all, according to the current Joint Operating Agreement, Liberty Newspapers is free to sell its share of the JOA. Gannett cannot withhold approval unreasonably, the JOA provides. This means that Liberty can sell its position in the JOA but has declined, either under pressure from Gannett or because Gannett has offered it a rate of return considerably above the market to agree to end the JOA. In either case, it appears part of the ongoing and continuing antitrust conspiracy.

This is being written en route to Chicago. More on that tomorrow.

 

May 17, Wednesday

We boarded United Flight 44 from Honolulu to Chicago on Monday afternoon. Our departure was highlighted by the maintenance crew that climbed, crawled, and stretched to place a huge flower lei around the nose of the plane. The United staff were a little unsure of the exact historical moment being recognized, but the best of the varied stories said it was the 50th anniversary of the first Hawaiian flight attendants, or the 70th anniversary of the first United flight attendants. Take your choice. They tried several times to "clarify" and each attempt merely managed to further confuse us all. But the festive sendoff did leave the crew in good spirits, which always makes for a good flight.

Crew tries to get the lei over the nose of the plane.

This flight had a Hawaii-based crew, and we immediately ran into some we knew. We had originally met Jill Coryell back in September on a flight back to Honolulu from Chicago. She remembers it vividly, because the flight was on September 14, and the next day word leaked out about the threatened closing of the paper. Jill couldn't believe that we hadn't known anything about what was coming on that September afternoon, and she now buys a Star-Bulletin whenever she's in town. She was eager for news about the paper's prospects and the possibility of a sale, as was a second flight attendant who came over to introduce herself a few minutes later. Trudy Wong said her father-in-law, A.K. Wong, was a v.p. of the Star-Bulletin at the time the original JOA was being put together in the early 1960's. She remains a S-B supporter, and knows several current staffers. Those Star-Bulletin fans are everywhere!

Trudy Wong sends her best to the S-B crew

May 18, Thursday

Yesterday was a classic of good news-bad news. Both the Advertiser and Star-Bulletin reported that several parties have made preliminary inquiries to the broker handling the Star-Bulletin sale. They reportedly include five mainland companies and one or two local investor groups.

Jim Bickerton, one of the attorneys representing the "Save Our Star-Bulletin" plaintiffs, said he was encouraged by the initial show of interest and, as a result, increasingly optimistic about the chances of saving the paper from closing.

That was the good news. Then came the bad news, for us at least. A staff message at 8:30 a.m. announced the resignation of reporter Susan Kreifels, effective a week from Friday. Susan has done a great job, both with her primary interest in Asia-Pacific issues and other assignments. She'll be moving to the East-West Center in Honolulu as assistant to the president. Her departure comes at a critical time, and leaves a vacuum that will be difficult to fill under the circumstances. We also have to hope that this doesn't trigger a broader exodus of staffers seeking other, more stable, positions.

But it's happening across the hall as well. Word leaked out on Tuesday that Dave Montessino, the Advertiser's assistant managing editor for graphics, is looking for work on the mainland. The news hit our newsroom about the same time Montessino was meeting with their management, or so the instant legend tells it.

"We knew the Advertiser wasn't the promised land across the sea of (so they say) Red Ink from the Bulletin. But it's interesting to have it confirmed," George Steele comments.

 

May 19, Friday

 

Imagine our surprise when an early morning walk through the streets of downtown Columbus, Ohio turned up this Hawaiian flag at a major intersection. At first it appeared that, in the Columbus tradition, the area had been claimed by the People of Hawaii, but apparently that's not the case, or at least the natives here aren't ready to acknowledge the claim. Actually, Hawaii's flag was at the end of a long block featuring all 50 states in the order they joined the United States. Quite an interesting historical run. Back in the islands: There's quite a buzz over the possible last-minute formation of an employee ESOP to participate in the purchase of the Star-Bulletin. Phone calls, meetings, and discussions with a professional advisor have been part of the last minute action. It is beginning to appear that there has been some behind-the-scenes exploration of this scenario going on with the knowledge of the Newspaper Guild but without newsroom participation, and that effort is just now surfacing. And not a moment too soon.

There's a lot of confusion about what this approach would mean, for the paper and for us, and how our participation could help craft a friendlier outcome. It will all have to shake out in the next few weeks, it seems.

 

May 20, Saturday

For months after this Star-Bulletin saga began, I refused to travel, fearing that the end could come unexpectedly and I would miss the opportunity to complete the chronicle. I canceled two previously planned trips "just in case" the end really was near, and after the fact decided it hadn't brought me any closer to the god of truth after all.

Now that I've abandoned the hard line and reclaimed a semblance of normalcy, I admit to a residual guilt at not being around to feel each step, however small, as it reverberates through the newsroom and then through the rest of the Hawaii Newspaper Agency building. At the same time, leaving town restores a sense of perspective. There's still a big world out here that isn't waiting on the future of the Star-Bulletin.

Time and distance create a buffer from the immediate worries, and have allowed the Star-Bulletin to drop ever so slightly on my mental checklist. I've even waiting until late this afternoon to check email from home, allowing a lack of information to expand the mental buffer even further, if only temporarily.

 

May 21, Sunday

Another free fall, stomach challenging, roller coaster wave of emotions swept through the newspaper building on Friday, when Hawaii Newspaper Agency head Mike Fisch posted one of his iron fist-velvet glove specials, this one giving a legally required 45-day notice of possible or impending salary cuts and layoffs in the event of a Star-Bulletin sale. The memo stated that individual employees impacted will be notified by letter. I haven't actually seen the memo yet, and have only sketchy reports available so far, but the notice most likely refers to employees of HNA rather than staffs of either newsroom, although the expiration of the current Guild contract in the next few weeks leaves everyone more than a bit uneasy.

The Hawaii Newspaper Agency, the joint business arm of the current JOA, would cease to exist if the Star-Bulletin is sold or closed, and the JOA terminated. A recreated entity would immediately take over the same functions for the surviving newspaper, but Gannett appears ready to seize the opportunity to recoup some of its recent losses by inflicting collateral damage on exposed employees along the way.

But the memo was posted on an Advertiser bulletin board, and sent staffers on that side into a tailspin. Coming without warning, and without context, Gannett staffers were ready to presume the worst. At the Star-Bulletin, a "been there, done that, and survived" attitude appears to have prevailed.

Talks continue this week on a possible Star-Bulletin ESOP. An interesting source of background information is the National Center for Employee Ownership, a nonprofit group that provides information on employee stock ownership plans (ESOPs) and other employee participation programs.

 

May 22, Monday

The letter distributed to Star-Bulletin staffers at the end of last week was signed by publisher John Flanagan:

As you know, Liberty Newspapers Limited Partnership ("Liberty") is engaged in litigation with the State of Hawaii and others regarding Liberty's decision to discontinue operations in Hawaii. In connection with that litigation and with the approval of the court, the parties have entered into an agreement that provides for Liberty's seeking a buyer for the Honolulu Star-Bulletin.

If Liberty successfully finds a buyer, it will terminate your employment effective upon a closing of the sale of the Honolulu Star-Bulletin, but in no event sooner than 45 days from the date of this letter.

Termination of your employment is contingent on ALL of the following: 1) a qualified buyer's expressing interest in acquiring the Honolulu Star-Bulletin; 2) negotiation of an agreement between Liberty and the buyer; 3) court approval of the agreement between Liberty and the buyer; and 4) the closing of the agreement between Liberty and the buyer.

We do not expect these contingencies to be met before July 5, 2000. Since a buyer has not been found yet, the employment arrangements a successor to Liberty will make are unknown. Accordingly, to comply with applicable statutes, Liberty must issue this notice to all Honolulu Star-Bulletin employees.

The letter went on to describe severance benefits and other matters. We've been here before, and the same concerns have run under the surface of daily affairs since September, but this kind of smacks you in the face and brings it all to the fore once again.

The similar letter sent to HNA and Advertiser staffers mentioned layoffs in the mailroom and distribution.

The existing court order requires any Star-Bulletin buyer to honor the existing Guild contract, so we are protected to some extent. But it now appears likely that finalizing a new contract for the Star-Bulletin will be left to a new owner, if any.

I had a dream last night that we were sitting at our desks in the Star-Bulletin newsroom as several small groups, apparently representing different potential buyers, walked by. I don't remember all of them, but I can vividly recall the terrible feeling as word spread through the staff that one group represented the owners of the Washington Times, still shopping after their recent acquisition of UPI. Obviously, mere survival of the Star-Bulletin name is not the only thing we're hoping for, and having a buyer step forward is only the first step. Then comes the difficult task of assessing that buyer and their plans, determining how large a staff a new owner will maintain, and helping individuals figure out what it all means for their own future plans.

 

May 23, Tuesday

Tuesday is going to be a pretty long travel day which will take us from a morning walk along the Chicago lake shore back to the Kaaawa oceanfront by early evening. So no updates will be posted until sometime on Wednesday. Thanks for stopping by.
Chicago	Kaaawa

 

May 24, Wednesday

The recent flurry of ads hyping the Advertiser's new "Ohana" section inspired this bit of insightful satire by Marnie Weeks. If you missed the "bathroom" reference, refer back to the newsroom diary's entry for April 27.

Click for full-size image

 

May 25, Thursday

It feels like end game as we careen towards a resolution.

The day started with news of a rewritten termination agreement to end the existing JOA between Gannett and the Star-Bulletin's owners. The deal is contingent on the sale of the Star-Bulletin, and provides that Liberty Newspapers Limited Partnership will receive its full payment of about $25 million directly from Gannett and will not be dependent on the sale to recoup its projected profits.

The announcement of the termination agreement raised anxiety levels enough that an impromptu meeting was called by Managing Editor Dave Shapiro to answer questions about the deal. Bottom line: the termination agreement appears positive for us because it allows the Star-Bulletin to be sold for a nominal amount, allowing a buyers assets to be reserved for startup costs and initial operations.

So if you want to buy a paper, now's the time!

Dave's current assessment is that a sale, while not yet "probable", is now very possible.

Buzz of the building: An interesting "For Sale" listing in the Hawaii Homes section of the Advertiser's classifieds.

$765,000 (FS) 58 LAWAI ST. 4-5 bdrm., 2 bath First Open Sun 12-4 By Owner 396-0557
Subclassification: Hawaii Kai-Portlock

Interesting because, according to real estate records, the home belongs to Advertiser Editor Jim Gatti and his wife. The 2,605 square foot home on a 10,757 square foot lot was purchased in April 1996 for $615,000, records show. They could be trading up the real estate food chain, but the listing started waves of speculation nonetheless.

 

May 26, Friday

The move towards creation of an ESOP to participate in the purchase of the Star-Bulletin is still bogged down in high anxiety, general confusion and lack of clear information, despite a continuing series of consultations, conference calls, and meetings.

Several routes are being actively explored. It isn't yet clear what immediate legal steps must be taken, but that will hopefully be sorted out soon.

I ran across an interesting item about a 1999 deal involving Keilin & Co. in an online newsletter on labor and corporate governance. It at least hints at Keilin's approach.

Union Led ESOP Saves 2,200 Jobs at Champion International

The Ohio Employee Ownership Center reports the largest employee-led buyout to hit finance markets since the mammoth ESOP at United Airlines. The paper extruding and converting plant deal was initiated when management abandoned on its extruding plant in Waynesville, NC. Looking for a way out, the company went about selling it the old-fashioned way: It went to Wall Street. When no suitable offers came forth, the plant was purchased in a union-led drive through a $200 million ESOP restructuring. The paper workers' union, PACE, along with the Southern Appalachian Center for Cooperative Ownership and ESOP specialist KPS Special Situation Fund combined to save the six plants scattered across the United States.

The Special Situation Fund, closely tied to Keilin & Co., is a new venture capital vehicle aimed specifically at ESOPs. With an initial capitalization of $205 million, the fund hopes to grow to $1 billion in employee-led buyouts. As part of the Champion ESOP, KPS's $35 million investment will give it control of 55 percent of the new company (now called Blue Ridge Paper Products). The employees control 40 percent after agreeing to wage and benefit cuts of 15 percent. KPS expects to exit the venture in five years, after employees have preemptive rights for controlling ownership. The company, with its existing market share base and motivated employees, looks to become an industry leader.

 

May 27, Saturday 

If it's not one thing, it's another. Webmaster extraordinaire Blaine Fergerstrom left the newsroom just after 4:30 p.m. on Friday to begin the holiday weekend. I discovered him a few minutes later, hovering over an empty stall in the parking lot where he had parked his truck at 7 a.m. The 1998 truck, unfortunately, was long gone, and Blaine was waiting for the police to arrive. He remained in remarkably good spirits under the circumstances, patiently explaining to his son just what the nefarious truck thieves had probably done to drive it away.

Earlier in the day, staffers gathered around the city desk to say good-bye to reporter Susan Kreifels, who is taking a position as assistant to the president of the East-West Center. It's a break for her, another loss for the Star-Bulletin.
	We gathered around a beautifully decorated cake, while Susan prepared to serve up a special clam chowder. "My Aunt Norell's recipe from Seattle," she said. Just another day in the newsroom.

Bloomberg reported this week that Gannett's 73 local newspapers are now authorized to print front page advertisements. I'm sure this move is not welcomed by reporters, who must view it as another blurring of the boundary between news and advertising and, as a result, a further erosion of professional integrity. I know it's just about money, but the implications are significant.

According to Bloomberg, there is a waiting list for ad space on the front page of USA Today.

 

May 28, Sunday

No sign of Blaine's truck. He says: "We gotta laugh, Ian, or we'd cry! =)"

Sounds like sage advice for living through the whole Star-Bulletin saga as well.

 

May 29, Monday

Closing arguments in the San Francisco newspaper antitrust lawsuit are scheduled for Wednesday. Nothing new is really expected, since proposed findings of fact have already been filed by each side, spelling out their opposing views of the legal situation.

If a buyer materializes for the Star-Bulletin, then these final days of the San Francisco case will prove to be irrelevant to us. But if no buyer steps forward, or those with interest reject the terms offered, then the court's ruling will directly impact on Gannett's success in making similar arguments here.

One key point argued both by Hearst and the Chronicle, as well as Gannett and Liberty Newspapers is that the JOA effectively eliminates competition and, therefore, there can be no legal grounds for antitrust concerns at termination of the JOA. The termination can't have an anticompetitive impact, they argue, because there hasn't been any competition in years.

The same argument was made in the Star-Bulletin case, but rejected by the Justice Department, and then by both the District Court in Honolulu and the 9th Circuit Court of Appeals. Whether it will fare any better in the San Francisco case, in the context of a full trial on the issues, remains to be seen.

I was scolded Friday morning for disclosing more than some feel appropriate about the nature, status, and direction of ESOP discussions underway among Star-Bulletin staff. A complaint came first from an outside party who objected to a reference in Friday's entry (you might be surprised at who is reading this journal!). The objection was then passed on to me by another S-B staffer, and I reluctantly edited the entry in deference to the sensitivities of my colleagues. I'm not sure how I'll deal with the ESOP issue over the next several weeks, except that I'll stay out of any discussions requiring a pledge of confidentiality and stay free to comment from the "outside".

 

May 30, Tuesday

With the search for a buyer underway, and the deadline for preliminary proposals approaching all too rapidly, there are complex undercurrents in the Star-Bulletin newsroom and throughout the Hawaii Newspaper Agency building.

Staff ambivalence to the Newspaper Guild has surfaced again in the context of the ESOP proposal. There's obvious concern that our union hasn't leveled with us and has taken actions in our name without consultation or involvement, although at the same time there's a somewhat grudging recognition that the paper wouldn't be alive today if it weren't for the Guild's intervention. But a parallel move to put an independent ESOP proposal on the table reflects a measure of discomfort at simply placing our future in the Guild's paternalistic hands.

In the wake of the new round of layoff letters received by all Star-Bulletin staff, people appear to be quietly pursuing individual contingency plans for the possibility that no buyer will emerge. And even if the Star-Bulletin survives, there will be another round of decisions as we decide whether the surviving form retains enough of the "old" Star-Bulletin to draw present staff in.

Several people noticed that a security guard has been posted again in the back of the news building along the loading dock after being withdrawn several months back. There may be good reason for this, but we can't help associating increased security with Gannett's actions back in October.

 

May 31, Wednesday

The ESOP rumble continued yesterday with a meeting of interested staffers aimed at bridging the gap between the Guild-backed approach and the "independent" avenue being explored last week. Mission accomplished. The two factions have agreed to proceed together. Not a moment too soon.

The grapevine's product yesterday was a vignette of the Advertiser's managing editor, Jim Kelly, mounting the stairs in their newsroom brandishing one of the second place awards received in the recent competition sponsored by the Hawaii Publishers' Association.

"Here's what we think of second place," Kelly reportedly said to the assembled staff and, with a flourish, hurled the award several feet into a waiting waste basket.

The grapevine didn't include a report on reactions to the outburst.

On our side, some thought it was funny, others complained about bad taste. Kelly is an unlikely candidate for Mr. Macho, but if something like this works to rev up the troops, then why not? We're all up for continued competition.

 

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