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Wednesday, May 17, 2000

By Dean Sensui, Star-Bulletin
Star-Bulletin staffers listen intently April 22 as Managing
Editor Dave Shapiro describes the conditions of the
agreement to sell the Star-Bulletin.

Seven potential
buyers interested
in Star-Bulletin

Five mainland and two
local parties have made
inquiries with the broker

McKenna knows the business

By Peter Wagner


The Honolulu Star-Bulletin has drawn interest from at least seven potential buyers since a mainland broker began marketing the afternoon daily under the scrutiny of a federal magistrate 12 days ago.

But a bigger measure of the future of the 118-year-old newspaper lies in the weeks ahead when formal submittals, including nonbinding bids, are due.

Star-Bulletin closing James Bickerton, a Honolulu attorney representing a group known as Save Our Star-Bulletin that opposes efforts to close the paper, disclosed yesterday that five mainland and two local parties have made inquiries to Dirks Van Essen & Murray, the Santa Fe, N.M., broker.

"I think we're off to a good start," said Bickerton, noting his early skepticism that terms of the paper's sale would draw much interest.

Speaking at a luncheon of the Honolulu Community-Media Council, Bickerton said inquiries were made by multistate newspaper publishers, private individuals and undescribed companies. He would not identify the parties but said the media companies are smaller than major chains such as Gannett Co., owner of the Honolulu Advertiser, or Cox Newspapers Inc., owner of several Honolulu radio stations.

"I am confident, more than I ever have been since I started this case, that we'll end up with two newspapers in Honolulu," Bickerton said.

Among the interested parties is Windward auto dealer and former newsman Mike McKenna, who said he wants to keep two newspapers alive in Honolulu.

Meanwhile, sizing up the Star-Bulletin and its Honolulu market yesterday was Philip Murray, vice president at Dirks.

"You've got a terrific market here from the advertising standpoint," he said after walking through the News Building that houses both Honolulu dailies and cruising around town for a quick look at retail establishments. "I think the market is big enough and attractive enough be occupied by two dailies."

Murray confirmed the recent buyer inquiries but called them "early."

More telling, he said, would be an "indication of interest," a formal submittal due to the broker by June 19 under terms of the court-supervised sale. The submittals would include a preliminary, nonbinding cash offer, financing arrangements and other details.

That deadline, originally May 28, was pushed back yesterday by federal Magistrate Barry Kurren at the request of Dirks.

Considered pre-eminent among brokers of daily newspapers in the U.S., Dirks is under a 65-day court-ordered deadline to find a buyer. The broker got its assignment on May 5, two weeks into the period.

The state attorney general, joined by SOS, filed an antitrust lawsuit last October against Liberty Newspapers Limited Partnership, owner of the Star-Bulletin, and Gannett Pacific Corp., owner of the Honolulu Advertiser. The U.S. District Court suit, alleging that the two publishers conspired to create a monopoly in Honolulu, was prompted by plans to close the Star-Bulletin and end the joint operating agreement with Gannett in return for a $26.5 million payment.

A subsequent injunction has kept the Star-Bulletin alive pending trial Sept. 19.

On April 21, all parties agreed to a court-supervised effort to sell the Star-Bulletin within 65 days.

Kurren yesterday approved the language of advertisements to run once a week for two consecutive weeks in both Honolulu dailies, USA Today and Editor & Publisher magazine. The ad begins: "Unusual opportunity to own and operate a well-respected newspaper in a unique island community."

The ad notes the Star-Bulletin's award-winning staff and popular Web site,, thought to be among the busiest in the state with nearly 4 million "hits" per week.

Murray acknowledged that it could be tough finding a buyer under current terms of sale, which offer neither a newspaper with a printing press nor a share of an existing joint operating agreement under which operating costs, and profits, are shared by the Star-Bulletin and the Advertiser.

But Murray said the Star-Bulletin has a number of selling points, including a strong subscription base on Oahu. The Audit Bureau of Circulation, in its semiannual audit last September, showed the Star-Bulletin with 53,338 home deliveries and the Advertiser with 60,578 on Oahu. Total circulation was 67,124 for the Star-Bulletin and 104,602 for the Advertiser.

Results of this year's March audit have not been released.

Murray also said the Star-Bulletin has a good reputation as a news product and one of busiest Web sites in the state. "It's clear there's public support for the Star-Bulletin," he said. "Anybody that's going to make a go of it here is going to need that."

Bulletin closing archive

McKenna likes the
newspaper business

By Peter Wagner


It has been decades since Windward auto dealer Mike McKenna ran a newspaper. But ink seems to be in the blood of the straight-talking entrepreneur, who reads Editor & Publisher and says he wants to buy the Honolulu Star-Bulletin.

"Once a newspaperman, always a newspaperman," said McKenna, president of Mike McKenna's Windward Ford and Mike McKenna's Windward Volkswagen/Mazda.

McKenna said he is in a group of about five investors interested in the afternoon daily.

"My interest is to save the Star-Bulletin," he said. "Frankly, I don't know if I can do it."

In the early 1950s, McKenna worked for newspapers and wire services in Boston. Ten years later he started the twice-weekly La Mirada Lamplighter. Built from scratch, the Lamplighter had a circulation of 21,000 when it merged with the Buena Park News, another community paper, seven years later, he said.

McKenna sold the News, with a circulation of 45,000, in the mid-1970s and began a career in car dealerships.

While he finds current terms of the Star-Bulletin's court-supervised sale unattractive, McKenna said he's hoping owner Liberty Newspapers Limited Partnership will sweeten the offer.

Currently, a buyer would have no interest in Liberty's joint operating agreement with Gannett Pacific Corp., owner of the Honolulu Advertiser.

No subsidy is offered to help a buyer through the early transition. Gannett, which owns the three printing presses and other production equipment used to publish both newspapers, is willing to contract its press to a buyer for an afternoon press run; otherwise, any buyer would be on their own.

But McKenna questions the sincerity of the offering.

"There's so many questions," he said. "I wonder if it's really for sale."

McKenna attempted to buy the Star-Bulletin in 1993 when Gannett, then its owner, put the paper up for sale to buy the Advertiser. But McKenna, who hired a Chicago attorney to put together an offer, said he couldn't get it on the table before Gannett announced its deal with Liberty.

If successful this time, McKenna said he probably would continue operating the Star-Bulletin as an afternoon paper for several years, testing its viability before converting to a morning paper in direct competition with the Advertiser.

Estimates of what it would cost to set up an independent printing plant range widely from less than $10 million to more than $50 million, depending on new or used equipment, construction costs and other factors.

McKenna is among clients who pulled or reduced large advertising accounts with the Hawaii Newspaper Agency last year in protest of advertising rates.

HNA, set up under a federally approved joint operating agreement to handle circulation and advertising for both the Honolulu Advertiser and the Star-Bulletin, informed clients last year that it had no plans to reduce its joint advertising rates despite plans to eliminate the Star-Bulletin.

The agency instead tried to reassure customers that most of the Star-Bulletin's 65,000 readers would switch to the Advertiser.

McKenna said he fears a one-paper monopoly.

"What's going to happen to advertisers, myself included?" he said. "The Advertiser is saying they're not reducing their rates. That means advertisers would have to pay more to get separate ads in the Star-Bulletin."

Bulletin closing archive

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