Vote of confidence for dailies

"We love newspapers. We think they have a great future." So said a happy c.e.o., Tony Ridder, to about a hundred rather relieved staff members gathered in the newsroom of The Kansas City Star in April. His Miami-based Knight-Ridder, Inc. had just agreed to pay $ 1.65 million to buy the Star and three other well-performing papers -- the Fort Worth Star-Telegram; the Belleville, Illinois, News-Democrat; and the Wilkes-Barre, Pennsylvania, Times Leader -- from The Walt Disney Company.

Disney's surprise announcement in January that it was selling off the papers, which it had acquired when it bought Capital Cities/ABC, had seemed disturbing. If prime dailies like the Star and Star-Telegram, whose 25-percent operating profit margins far exceed industry averages, could be sold off like boxed fruit, what did that portend for the future value of, and faith in, newspapers?

As prized as these monopoly newspapers are, their profits weren't growing fast enough to suit Disney, which is accustomed to its entertainment-based earnings increasing at a supercharged rate of 20 percent. Fortunately, a large number of newspaper outfits expressed deep interest and came to the bidding with deep pockets -- including Times-Mirror Co., Tribune Co., Hearst Corp., and Conrad Black's Toronto-based Hollinger Inc. "They're asking a lot of money," said a Hollinger executive, Jerry Strader, of the four papers. "They're worth a lot of money, and we bid a lot of money."

But not enough. Presuming the deal is completed on schedule, sixty days from the announcement, Knight-Ridder will take charge. The deal is part of the strategy of Tony Ridder, who spent a total of twenty-two years at the San Jose Mercury News, a few of them as a reporter, before entering corporate management in 1986. He became c.e.o. in 1995. Knight-Ridder intends to refocus on newspapers; it already has thirty-one, from The Miami Herald to The Wichita Eagle. Now it plans to sell off Knight-Ridder Information, Inc., an online service used mainly for business, to help pay for the acquisition from Disney. Ridder said he didn't anticipate any management changes. But lately he has cut costs at some of the company's newspapers, notably The Philadelphia Inquirer, rankling some veteran journalists while boosting profitability.

"This is a first-rate outcome," says Arthur Brisbane, the Star's editor. "I was pretty worried we'd end up with one of those shark outfits. It's happened in other places."

He didn't say which or where.

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