The former congressman is criticalBy Peter Wagner
of the procedure to sell the paper
but the broker defends the process
Former five-term Hawaii congressman and broadcast executive Cecil Heftel has stepped forward as a prospective buyer of the Honolulu Star-Bulletin, saying the community needs a second voice.
But the 75-year-old multimillionaire said he is skeptical of the seller's effort, characterized by tight deadlines and a scarcity of information.
"There is a great question of credibility which has tainted any sincere effort by any of the groups or individuals to pursue this process," he told the Star-Bulletin over the weekend.
Diane Hastert, Honolulu attorney for the Star-Bulletin's Florida-based owner Liberty Newspapers L.P., today declined to respond to Heftel's comments, saying the appropriate party to do so is Phillip Murray, the broker hired to conduct the sale.
Murray said today his firm is working hard to find a buyer. "We've literally made hundreds of contacts in an effort to sell the paper, thousands probably if you count letters. Direct contacts, you know, hundreds," Murray said.
Heftel said he sent a hasty fax over the weekend to Murray's firm, Dirks Van Essen & Murray in Santa Fe, N.M., stating his interest in the newspaper.
The brief submittal, he said, was all he could muster in the little time that remained before today's deadline to show an "indication of interest."
Like others expressing interest in the newspaper, Heftel said he was not able to respond to an earlier call for nonbinding bids because no meaningful financial data -- statements showing earnings, expenses and assets -- was provided by the broker.
Under the court-supervised sale, parties were to have submitted nonbinding bids, financing plans, anticipated timetables and other details by today. Those criteria were dropped last week after a conference called by U.S. Magistrate Barry M. Kurren, triggered by potential buyers' concerns.
There will be adequate timeMurray said today that Heftel and anyone else interested will have plenty of time to discuss details after their initial expressions of interest come in.
"If one thing he's (Heftel) worried about is time, he's going to have plenty of time. Everybody is going to have a reasonable amount of time to make a decision here," Murray said.
Murray has said he will release financial data to serious inquirers after today`s deadline. But, citing confidentiality agreements, Murray said last week that he would not disclose the names of any potential buyers.
Another group that has filed an "indication of interest" with Murray's firm is ESOP Star-Bulletin, a majority of the roughly 100 newsroom employees of the Star-Bulletin.
"We continue to wait eagerly for the opportunity to lead or participate in a bid to keep the paper publishing," said Josh Wolf-Powers, an agent for the New York investment banking firm Keilin & Co. that is representing the employees in their efforts. "Thus far, we have not been able to get even the most basic information about the newspaper, but we are hopeful that in the coming days we'll be able to begin our due diligence."
Heftel, who has owned 17 television stations across the country, said he is apprehensive. "I'm going to be fascinated to see what they give us as financials," he said. "I've been through at least 17 acquisitions and you never accomplish an acquisition without having meetings and negotiations. This whole process has been very different."
Heftel has kept a low profile despite his interest in the Star-Bulletin since early this year. He leads an investor group that until last week included Windward auto dealer Mike McKenna, who dropped out calling the sale effort a "sham."
McKenna told the Star-Bulletin he also tried to buy the newspaper when it was put up for sale by then-owner Gannett Co. in 1992. He said Gannett announced the paper's sale to Liberty before he could get an offer on the table.
A Gannett spokesman today declined immediate comment.
Heftel said he shares McKenna's skepticism about the current sale effort.
"They wasted time as they worked at discouraging people," Heftel said.
Community needs two papersHeftel said he wants to keep the Star-Bulletin alive as a second editorial voice in Honolulu and to prevent a business monopoly. He said without two newspapers, advertising rates will go up, the newspaper will shrink, and news stories will go unreported.
"The community wants and needs two newspapers," he said.
He cited as an example the Star-Bulletin's 1997 publication of the "Broken Trust" essay by a distinguished group of Hawaiian community leaders that eventually led to the resignation of Bishop Estate's trustees.
Contrary to recent comparisons with afternoon newspapers that have failed on the mainland in recent years, Heftel said Hawaii's time zone provides a unique opportunity to offer today's news today.
"When you print at 11 a.m. in Honolulu, it's 5 p.m. on the East Coast," he said. "So only an afternoon paper can deliver today's news, and all the news in a morning paper is yesterday's news." That, Heftel said, is an advantage he would play heavily if successful in his pursuit of the Star-Bulletin.
Heftel, a radio-station investor since the 1950s, founded Heftel Broadcasting in 1965 with the purchase of Honolulu's KGMB-TV and KGMB-Radio (now KSSK).
He was a Democratic congressman from Hawaii from 1976-86. After he left the House, he bought into Spanish-language radio on the mainland and after a number of different corporate and partnership structures, started a new Heftel Broadcasting in 1988, going public with it in 1994.
By 1996, the company had 16 broadcasting subsidiaries. That year, Clear Channel Communications bought Heftel Broadcasting for $218 million and assumed $118 million of its debt, and Heftel left the business, which is now called Hispanic Broadcasting Co.
Since May 5, Dirks Van Essen & Murray has been seeking a buyer for the 118-year-old newspaper on behalf of Liberty Newspapers.
Liberty and Advertiser owner Gannett on April 21 agreed to a 65-day deadline to sell the paper. The agreement, presided over by the federal court, put aside an antitrust lawsuit filed in federal court against Liberty and Gannett. The suit, filed last October by the state attorney general, alleges the publishers conspired to close the Star-Bulletin in order to create a monopoly.
The two parties announced last September they would close the paper and end a joint operating agreement with Gannett to pay Liberty $26.5 million.
If no deal is closed, the antitrust suit is expected to move toward trial.
Star-Bulletin reporter Russ Lynch contributed to this report.
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