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Wednesday, September 27, 2000

Star-Bulletin closing after 117 years

Judge names Canadian Black sole qualified Star-Bulletin bidder

The prospective publisher now must
negotiate a final deal by Oct. 27 with
the paper's owner and with Gannett

By Rick Daysog

A federal judge today selected Canadian publisher Black Press Ltd. as the sole qualified bidder for the Honolulu Star-Bulletin.

Federal Magistrate Barry Kurren chose Black Press ahead of Los Angeles-based Hadland Communications Inc. and a local group that includes former U.S. Rep. Cecil Heftel, Kauai developer Jeff Lindner and Kauai publishers Peter and Jane McClaran.

Phil Murray, the broker in charge of the court-supervised sale of the 118-year-old afternoon daily, confirmed Kurren's ruling.

As the sole qualified bidder, Black Press must negotiate a definitive purchase agreement with the Star-Bulletin's owner, Florida-based Liberty Newspapers Limited Partnership, and Gannett Co., which owns the Honolulu Advertiser.


Bullet Headquarters: Victoria, British Columbia
Bullet Owner: David Black
Bullet Holdings: 80 newspapers in Western Canada and Washington state
Bullet Recent history: In 1997, Black Press paid British-based Trinity International Holdings $58 million for 33 newspapers in Western Canada, including the Red Deer Advocate, a 19,000-circulation daily.


Bullet Established: 1882
Bullet Owner: Florida-based Liberty Newspapers L.P.
Bullet Circulation: 63,000
Bullet Newsroom employees: 97
Bullet Printed: By the Hawaii Newspaper Agency, under a joint operating agreement with Gannett Co., owner of the Honolulu Advertiser
Bullet Recent history: Put up for sale in April after antitrust lawsuits thwarted a deal between Liberty and Gannett to shut the Star-Bulletin down.

Such an agreement would include a number of transitional issues that could make or break a deal.

Kurren has set an Oct. 27 deadline for Black Press, Gannett and Liberty to reach an agreement.

"I'm glad we've passed a milestone," said John Flanagan, Star-Bulletin publisher and editor. "Having met (owner) David Black, my impression is very favorable and I think he has some exciting ideas for a future Honolulu Star-Bulletin."

Today's decision was announced after an hourlong meeting in Kurren's chambers with lawyers representing Liberty, Gannett, the attorney general's office and local community group Save Our Star-Bulletin.

The attorneys declined comment.

David Black could not be reached for immediate comment.

Black, 54, is owner of Black Press of Victoria, British Columbia, which operates 80 community newspapers in western Canada and Washington state.

Black has previously stated that he was prepared to invest tens of millions of dollars in the Star-Bulletin to expand its operations. In addition to hiring more than 200 employees to handle circulation, printing and advertising functions, Black said he hoped to add a Sunday edition to the Star-Bulletin's six-day-a-week coverage.

Black also has said he planned to expand the daily circulation from the current 63,000 to about 100,000.

Kurren's ruling comes after Liberty Newspapers put the paper up for sale in April after the attorney general's office and Save Our Star-Bulletin filed antitrust lawsuits in U.S. District Court. The two suits were later consolidated.

The suits were in response to Liberty's announcement last September that it was going to close the Star-Bulletin and terminate its joint operating agreement with Gannett.

In exchange, Gannett was to pay Liberty $26.5 million. Under the JOA, which is scheduled to expire in 2012, both newspapers share printing, advertising and distribution costs but retain separate editorial voices.

The proposed sale of the Star-Bulletin would terminate the JOA and force the Star-Bulletin to build its own advertising and circulation functions from scratch. The JOA's termination also would mean that the Star-Bulletin would have to compete with the morning newspaper for advertising revenue and readership.

Under a revised agreement between Gannett and Liberty, if the Star-Bulletin is sold, Liberty would receive about $25 million from Gannett to end the joint operating agreement.

If a sales agreement is not reached, the antitrust lawsuit is scheduled to proceed.

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