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Saturday, September 2, 2000

Star-Bulletin closing after 117 years

Purchase bids
submitted for

The proposals seem to undermine
arguments that the paper could
not be sold in its present form

By Rick Daysog

Several groups have submitted bids to purchase the Honolulu Star-Bulletin, as the court-supervised sale of the 118-year-old afternoon daily passed another critical deadline.

Black Press Ltd., which owns 80 community newspapers in Canada and Washington, said it submitted an offer for the 63,000-circulation Star-Bulletin, while an investor group that includes former U.S. Rep. Cecil Heftel and Kauai publishers Peter and Jane McClaran said they are finalizing their offer and hope to submit it by Tuesday under an informal agreement with broker Phil Murray.

A third, unidentified party also is believed to have made a bid.

Yesterday was the formal cutoff to submit offers for the afternoon daily. In a terse, three-sentence news release, Murray confirmed that his office received at least two bids for the Star-Bulletin by yesterday's 1 p.m. deadline, but he did not disclose the names of the interested parties and did not say how many bids were received.

Murray will present the offers to federal Magistrate Barry Kurren on Tuesday. Kurren has set a Sept. 15 deadline to review the proposals and approve a buyer.

Ogden Newspapers Inc., the West Virginia chain that recently acquired the 16,000-circulation Maui News, said it did not submit an offer, and Windward Oahu car dealer Mike McKenna, one of the Star-Bulletin's more outspoken suitors, said his group did not bid.

McKenna, whose partners included Chicago attorney Mark Eissman and former Chicago Sun-Times Publisher Robert Page, said his group sent the broker a letter asking for an extension. The letter said the group would bow out if the extension were not granted.

ESOP Star-Bulletin, which represents a majority of the newspaper's 97 employees, also did not present a bid, but sent Murray a letter reiterating its interest in working with prospective buyers.

The proposals appear to undermine arguments by analysts that the newspaper could not be sold in its present form since it does not own printing presses, does not have its own circulation and advertising departments and would not take part in a joint operating agreement.

The Star-Bulletin currently operates under such an agreement with Gannett Co.'s Honolulu Advertiser in which the two papers share business functions but retain separate editorial voices.

Last September, Liberty Newspapers Limited Partnership announced it was closing the Star-Bulletin and terminating the JOA in exchange for a $26.5 million payment. The plan prompted antitrust lawsuits by the state attorney general's office and a community group, Save Our Star-Bulletin, which eventually forced the Star-Bulletin's court-supervised sale.

Both the state and SOS were pleased by the latest development in the yearlong Star-Bulletin saga and said they looked forward to reviewing the proposals.

The Advertiser's publisher, Mike Fisch, was not available for comment.

Tom Brislin, University of Hawaii journalism professor, said the interest in the Star-Bulletin underscores the community support for a second daily newspaper in Honolulu. That support, he said, may have contributed to the prospective buyers submitting their bids.

Brislin, a former editor and reporter for the Advertiser, added that it is significant that a newspaper operator like Black Press submitted a bid since it has the operational experience that a nonmedia investor group does not have and would be able to spread its costs better.

John Flanagan, the Star-Bulletin's editor and publisher, said he was encouraged by the latest developments. Flanagan said staffers are guardedly optimistic that the Star-Bulletin will continue to publish now that formal offers had been made.

Flanagan said the JOA has created the perception in many readers that the Star-Bulletin and the Advertiser are the same product. The two newspapers carry the same ads, are printed on the same presses and are delivered on the same trucks.

Under new ownership, the Star-Bulletin could end up looking very different from the Advertiser, giving readers and advertisers a clearer choice.

"I am pleased that some qualified buyers have emerged in the process," Flanagan said. "Having met with some of these folks, I'm really encouraged."

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