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Saturday, April 22, 2000



Star-Bulletin for sale

Pending lawsuits will remain
until a buyer is found and a
sale is approved by the court

Reaction to the deal is mixed
What's next

By Helen Altonn
Star-Bulletin

Tapa

The Honolulu Star-Bulletin will be offered for sale by the owner, Liberty Newspapers, under an agreement approved by U.S. District Court Judge Alan C. Kay, it was announced today.

The agreement was reached in confidential negotiations to settle antitrust lawsuits filed by the state and a citizens group against Liberty and Gannett Pacific Corp.

Said the parties: "Additional delays, costs and uncertainties ... are not in the best interest of the Honolulu Star-Bulletin as a going concern, nor in the interest of the readers of the Honolulu Star-Bulletin, the citizens of the state of Hawaii, and the parties."

A stipulation filed in federal court provides for sale of the afternoon daily's assets to a new owner that would publish it apart from The Honolulu Advertiser -- even at a different location.

No upset price is listed, and no subsidy or joint operating agreement are being offered to the buyer.


By Blaine Fergerstrom, Starbulletin.com
Star-Bulletin Managing Editor David Shapiro reads the announcement
from Liberty Newspapers general partner Rupert Phillips officially
offering the Star-Bulletin and some assets for sale. The Star-Bulletin's
Saturday morning staff looks on. The rest of the staff will be briefed
at a Monday morning meeting.



Star-Bulletin Managing Editor David Shapiro said, "It's good news to all Star-Bulletin employees that the case is again moving forward with a real chance that we will stay in business and continue to serve the readers who depend upon us."

"I think everyone agrees that the proposed sale process has the strongest potential to result in the continued publication of the Honolulu Star-Bulletin," said Michael Fisch, Hawaii Newspaper Agency president and Advertiser publisher.

The two daily newspapers have been managed under a joint operating agreement since 1962. The JOA provides for shared printing, advertising and circulation functions while maintaining separate newsrooms.

Owners of the newspapers agreed last September to end the JOA Oct. 30 and close the Star-Bulletin. The plan was for Gannett to pay Liberty $26.5 million.

Judge Kay issued a preliminary injunction to stop the closure after the lawsuits were filed, and the case was scheduled for trial Sept. 19.

Under the settlement agreement, the successful bidder could contract with the Hawaii Newspaper Agency to print the Star-Bulletin -- only if it continues as an afternoon newspaper -- and to purchase news racks, trucks and other items needed to produce and distribute it.

That would be the only relationship between the Star-Bulletin and HNA, Fisch said, adding that all news and business functions would be separate.

Liberty will retain a newspaper broker to facilitate a sale, and Magistrate Judge Barry M. Kurren will supervise the sale process.

The procedure calls for preliminary indications of interest, from which final bidders will be selected by the court.

Liberty and Gannett will end their business partnership if the Star-Bulletin is sold and the pending lawsuits dismissed. However, the lawsuits will remain until a buyer is found and a sale is approved by the court.

The buyer will be required to continue publishing the Star-Bulletin "as a daily English-language newspaper of general circulation on Oahu."

Star-Bulletin assets acquired by the buyer would include the name, title and masthead; all names, titles and slogans used exclusively with the newspaper; and related copyrights and trademarks.

A list of subscribers would go with the Star-Bulletin, as well as a list of contract advertisers in the afternoon paper the past year.

The buyer must accept the Star-Bulletin's collective bargaining agreement, offer jobs to all employees and give severance payments to employees it does not hire.

The Star-Bulletin's title and interest in the Internet domain name starbulletin.com and archives of material displayed in that site will be transferred to the new owner.

The Star-Bulletin, now sharing office space with the Advertiser in a Gannett-owned building, would have to find new quarters.

The new owner also would have to set up separate circulation, advertising, accounting and other operational functions.

Announcing the agreement to the staff this morning, Shapiro said the parties are optimistic that the Star-Bulletin will be sold. But if it does not sell, all parties retain their rights to continue litigating.

"The bottom line is, this does not take us out of our limbo or promote a certain outcome," he said, "but it gets the ball moving again."

Rupert Phillips, Liberty's general partner, said: "The Star-Bulletin has a long and justly proud history of service to its employees and the people of the state of Hawaii. Liberty will be very pleased to pass the stewardship of the newspaper to a new owner who is prepared to continue its publication."


Paper’s potential sale
raises hopes, uncertainty

By Jaymes K. Song
Star-Bulletin

Tapa

Reaction to the potential sale of the Honolulu Star-Bulletin was mixed, but most people reached today say a sale could keep the 118-year-old newspaper publishing.

"We're very hopeful this will lead to a continuation of two statewide daily newspapers," said Richard Port, spokesman for Save Our Star-Bulletin. "The public wants it, the elected officials want it, and Save Our Star-Bulletin wants it.

Port would not go as far as considering the planned sale a win, but he did say it was "certainly a positive step."

"The best of all worlds would have been continuation of the joint operating agreement, either by current owners or by some new publisher," Port said. "We're cautiously optimistic this will work out."

Wayne Cahill, Hawaii Newspaper Guild officer, said he was "delighted" by the new plan.

"We think the paper should have been put up for sale last September if Rupert Phillips wanted to leave town," he said.

Michael Fisch, HNA president and publisher of The Honolulu Advertiser, said, "I think everyone agrees that the proposed sale process has the strongest potential to result in the continued publication of the Honolulu Star-Bulletin."

But uncertainty still lingers with several Star-Bulletin employees.

"This settlement removes some but not all of the uncertainty that we've been feeling for months," said Steve Petranik, a Star-Bulletin copy editor. "I hope they find the right buyer -- someone with the resources to let us keep doing our jobs as journalists."

Ian Lind, a Star-Bulletin reporter, said "it's better than having the doors closed in a month," but many questions remain unanswered.

"Is it going to be the same paper? I don't know," he said. "Same staff? I don't know. Layoffs? I don't know."

Lind and others were somewhat comforted by the court's supervising the sale.

"If the Star-Bulletin doesn't sell, the injunction stays in place and it goes back to lawsuit," Cahill said.

"I certainly hope going through the motions is not what Gannett and Liberty have in mind," he said. "It is court supervised. The courts are going to have a hand in it and supervise this thing."

Stephen Barnett, University of California-Berkeley law professor, said the sale proposal does not sound too enticing.

The agreement to sell the Star-Bulletin without a joint operating agreement or subsidy "sounds distinctly less attractive for the Star-Bulletin and a potential buyer than the deal that has been made in San Francisco."

The Hearst Corp. planned to buy the San Francisco Chronicle and sell the Examiner. It offered a $66 million subsidy to buyers of the Examiner.

Even with that, Barnett pointed out, the deal is being challenged. A federal judge blocked Hearst from buying the Chronicle because of doubts the Examiner could survive.



Next steps

A broker will be retained by Liberty Newspapers to find a buyer for the Star-Bulletin within 65 days, according to an agreement filed in federal court.

The broker's name and experience will be submitted to the court and to attorneys for plaintiffs in the antitrust lawsuits against Liberty and Gannett Pacific.

The defendants will pay the cost of the broker.

The broker is required to keep a detailed log of its activities and prepare reports for the court and attorneys involved.

The court may modify the 65-day period for good cause. Otherwise, a "court-approved sale" must occur within that time.

It must involve a written agreement by the successful bidder to buy all of Liberty's assets relating to the Honolulu Star-Bulletin.

The successful bidder also is required within the 65-day period to:

Agree to purchase certain assets from the Hawaii Newspaper Agency used for publication, production, distribution and circulation of the afternoon daily or satisfy the court that they are not needed or have been obtained elsewhere.

Exercise an option to enter a printing arrangement with the Hawaii Newspaper Agency or establish one with another party.

Finalize and complete plans or arrangements to acquire the assets and services described from Liberty, HNA, Gannett or another party.

The court will determine the bidder most likely to succeed in publishing the Star-Bulletin "on a stand-alone and ongoing basis" separately from the Honolulu Advertiser.


Helen Altonn, Star-Bulletin




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