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Friday, May 5, 2000

Star-Bulletin closing

Judge approves broker
for Star-Bulletin sale

The company handled
the Maui News deal

By Peter Wagner


Two weeks into a 65-day deadline to find a buyer for the Honolulu Star-Bulletin, a federal judge approved a mainland newspaper broker to take on what some see as a difficult task.

Federal Magistrate Barry M. Kurren signed an order today naming Dirks Van Essen & Murray of Santa Fe, N.M., one of three brokerage firms that responded to queries by Star-Bulletin owner Liberty Newspapers, L.P.

The 118-year-old afternoon newspaper was put up for sale after an April 21 agreement that temporarily put aside an anti-trust lawsuit against Liberty and Gannett Pacific Corp., owner of the Honolulu Advertiser. The agreement, approved by U.S. District Court Judge Alan C. Kay, gave Liberty 65 days to find a buyer.

"We have no problem with the choice," of Dirks, Van Essen, said attorney Jim Bickerton who represents Save Our Star-Bulletin, a citizens' group that sued to block the planned closure of the paper. "Let's see what they can do."

Liberty, which bought the Star-Bulletin from Gannett Pacific Corp. in 1993, announced plans in September to close the paper and cut short a 20-year joint operating agreement with Gannett. The agreement allows the two companies to share business costs while maintaining two separate newspapers.

An anti-trust lawsuit was filed Oct. 6 by the state Attorney General, joined by Save Our Star-Bulletin, alleging the two publishers conspired to create a monopoly in Honolulu. A preliminary injunction later that month kept the paper alive pending trial, scheduled for Sept. 19 in U.S. District Court.

All parties agreed two weeks ago to drop the lawsuit if a buyer could be found for the Star-Bulletin within 65 days.

Judge Kurren has the option to expand the deadline, believed to be June 27, or shorten it, depending on the likelihood of a buyer.

Dirks, which last year brokered the sale of the Maui News to West Virginia-based Ogden Newspapers Inc., is said to be the largest seller of daily newspapers in the United States. The company reported sales of 140 daily newspapers totaling $3 billion in the past four years.

The company could not be immediately reached for comment.

Dirks will have two weeks to advertise, nationally and locally, with a June 27 deadline to get written indications of interest from qualified buyers. The advertisements are to run once a week for two consecutive weeks in the Star-Bulletin, Advertiser, USA Today and Editor & Publisher magazine.

If no buyer is found and approved by the magistrate, the anti-trust lawsuit proceeds.

Some observers have noted that the Star-Bulletin's decline in circulation in recent years can be attributed to the fact that it is an afternoon paper. Readers prefer to have a morning paper, they say.

According to Liberty, no broker has been willing to work under customary commission-based terms, instead asking for flat fees in advance before taking the job, with subsequent payment on closing a sale.

Terms of compensation for Dirks were not immediately known.

The spokesman, who asked not to be identified, said the unusual proposals reflect uncertainty over a sales price for the Star-Bulletin.

Court documents say the buyer, to be approved by the judge, must show the ability to sustain an English-language daily newspaper on Oahu.

With no subsidy or interest in Liberty's joint operating agreement with Gannett, a buyer also would have to honor union agreements and find its own publishing arrangements.

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