March 12, 2010

Effort to buy papers pushed into next year


— By

Staff Writer

A group of investors announced Monday that it will not be able to finalize the purchase of Blethen Maine Newspapers, including the Portland Press Herald/Maine Sunday Telegram, by year's end.

Still, the leader of Maine Media Investment LLC again expressed confidence that he and his partners would obtain the financing they need, and said they hope to complete the deal early next year.

''We've got a great dialogue going with all of the parties involved: lenders, private equity sources, key decision-makers in the Blethen organization and all the bargaining units,'' said Richard L. Connor, editor and publisher of the Times Leader newspaper in Wilkes-Barre, Pa.

Charles Cochrane, president and chief executive officer of Blethen Maine Newspapers, also expressed optimism, based on the prospective buyers' commitment and experience.

''Both parties expect that this will be brought to a timely conclusion,'' Cochrane said.

The newspapers and Maine Media had set Wednesday as a target date for the sale, in part to make a clean break at year's end for operational reasons, and also to obtain certain tax considerations for Blethen Maine Newspapers, which is owned by The Seattle Times Co.

Frank Blethen, chairman of Blethen Maine Newspapers and president and CEO of The Seattle Times Co., praised Maine Media Investment in a written statement Monday for persevering in a difficult credit market.

He said he and his family would continue to work closely with the group ''because we believe that a sale to this locally backed investor group would be the best outcome both for the Maine newspapers we serve and for our valued employees.''

Connor said Maine Media and the Blethens agreed to extend their purchase-and-sale agreement, signed on Nov. 11, for ''about 30 days'' to conclude the purchase.

He attributed the delay to holiday scheduling complications since Thanksgiving and severe winter weather, including an ice storm and nor'easter this month.

''A day or two missed working on a deal like this is an enormous setback and inconvenience,'' he said.

Cochrane said the Blethens have no specific plans for layoffs or other operational changes at the newspaper pending a sale. However, he said the owners have a responsibility to operate the newspapers effectively and will make decisions based on revenue.

''The weak economy is affecting many of our advertising accounts,'' he said. ''It's a soft environment.''

Cochrane would not specify the tax considerations tied to closing the deal at year's end, but said the delay would not affect the terms of the proposed sale to Connor's group.

Blethen Maine Newspapers has gone through three rounds of layoffs since it was put up for sale in March.

In addition to the Portland Press Herald/Maine Sunday Telegram, the company owns the Kennebec Journal in Augusta, the Morning Sentinel in Waterville, the Web site, The Coastal Journal weekly in Bath and several other nondaily print publications.

Connor's partners include former Defense Secretary William S. Cohen; Robert Baldacci, a real estate developer and brother of Gov. John Baldacci; and Michael Liberty, a former local developer.

Maine Media first signed a letter of intent to buy Blethen Maine in July. That agreement gave the partnership exclusive rights to negotiate with the Blethen family, but it was suspended in August.

Connor said at the time that he was still optimistic about the purchase and that the partners would continue working to that end, but the negotiations were taking longer than anticipated and dissolving the letter of intent would give the partners and the newspapers more time.

On Nov. 11, Maine Media signed a purchase-and-sale agreement for the Blethen Maine properties.

No price was disclosed, and the sale was contingent on the partnership obtaining financing.

Connor said Monday that he was still ''pinning down some commitments'' to finance the purchase, and that he would not consider the deal done until the money was in hand. He said the lenders could include one or two local banks, with which he has been having discussions.

Newspaper industry experts have observed that Maine Media faces a serious challenge in obtaining credit, given conditions in financial markets and the recession that is tightening its grip on the U.S. economy.

At the same time, the newspaper industry has been hammered by declining revenue and an erosion in readership, as advertisers and consumers migrate from print to the Internet.

Those conditions, which also have afflicted The Seattle Times Co., prompted the Blethen family to put their Maine media properties up for sale.

A key factor in the sale is whether Maine Media Investment and the Portland Newspaper Guild, a union that represents about 350 workers in Portland and Waterville, can reach agreement on the outline of a new contract that would reduce costs and increase management flexibility.

Union leaders say they and Connor's group have forged tentative agreements on a longer work week and a pay freeze.

The union would receive a stock-ownership plan that includes a share of future profits and a voice on the company's board in return for contract concessions.

The union's members would have to ratify any contract changes before a sale could go through.

Tom Bell, a reporter who serves as union president, said Monday that the delay in the sale is actually a positive development because it provides more time for discussion of labor issues.

Bell also praised Cochrane for his diligence in pursuing a sale to the group.

''We really appreciate Chuck Cochrane for all the hard work he has put into keeping this transaction alive,'' Bell said. ''The company's employees and the community will really benefit if the parties can pull this off.''

Blethen Maine Newspapers and the union still face an arbitration proceeding Jan. 13 to resolve a federal lawsuit brought by the company. The company is seeking a ruling on whether a prospective buyer would be obligated to honor the terms of the contract as it applies to employees at the Press Herald/Telegram.

Bell said the union has asked the company to consider delaying the arbitration, but Cochrane said the company wants to go forward with the hearing.

The arbitration should have no bearing on a sale to Maine Media Investment, Cochrane said.

Staff Writer Dieter Bradbury can be reached at 791-6329 or at:

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