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Friday, October 20, 2000

By Dennis Oda, Star-Bulletin
David Black got a lei greeting and a hug yesterday
from Laureen Kodama of the Star-Bulletin.

Paper supply a roadblock to finalizing Bulletin deal

Publisher David Black says
Gannett Co. refuses to let him
buy the daily's allocation of newsprint

By Rick Daysog

The prospective buyer of the Honolulu Star-Bulletin said he is close to reaching an agreement to take over the 118-year-old afternoon daily.

Star-Bulletin closing after 117 years David Black, head of Black Press Ltd. of Canada, said talks with Star-Bulletin owner Liberty Newspapers Limited Partnership and Gannett Co., which owns the rival Honolulu Advertiser, have progressed to the point where he hopes to wrap up a deal by a court-imposed Oct. 27 deadline.

"I think we're quite close," said Black, who met with the Star-Bulletin's editorial staff yesterday. "There are a few deal points between us."

Black said the key stumbling block at this point is access to the Star-Bulletin's supply of newsprint.

Gannett, which conducts the printing and business functions of both the Star-Bulletin and the Advertiser under a joint operating agreement, has refused to provide him with the afternoon newspaper's allocation of newsprint.

Black -- who has offered to buy the newsprint at market costs -- said the newspaper industry is facing a severe paper shortage which has made it difficult for him to secure enough newsprint from alternative sources.

Typically when a newspaper is sold, the buyer receives the paper's allocation of newsprint from the seller, said Black, who said he has approached paper manufacturers on the West Coast and in Asia.

By Dennis Oda, Star-Bulletin
Annabeth Black, center, wearing the lei, wife of Canadian
publisher David Black,watches her husband address the
Star-Bulletin staff in the newsroom yesterday.

Lack of an adequate supply of newsprint would thwart any attempt to buy the Star-Bulletin, Black said. Each year, the Star-Bulletin uses about 15,000 metric tons of newsprint.

"It's not that they don't have it; it's that they chose not to make it available to us," Black said.

Mike Fisch, president and publisher of the Advertiser, questioned Black's assessment, saying that even in times of shortages, newsprint is usually available. "It's only a matter of price," he said.

Fisch, who said he is not involved in the negotiations with Black, noted that the original offer to sell the Star-Bulletin included an option to enter into a printing contract with Gannett. That contract included a newsprint allocation for the Star-Bulletin, he said.

Black instead has said he plans to print the Star-Bulletin at RFD Publications in Kaneohe, where the free weekly newspaper Midweek is published.

Black was selected last month by Federal Magistrate Barry Kurren as the sole qualified bidder for the Star-Bulletin and given an Oct. 27 deadline to reach agreement with Gannett and Liberty over the terms of his takeover of the 63,500-circulation newspaper.

Liberty put the Star-Bulletin on sale in April, postponing antitrust lawsuits in federal court by the Attorney General's Office and a local community group, Save Our Star-Bulletin. The two groups sued after Liberty announced in September 1999 that it was closing the Star-Bulletin and terminating its joint operating agreement with Gannett.

By Dennis Oda, Star-Bulletin
Black laughs while taking questions from Star-Bulletin staffers.

Gannett had agreed to pay Liberty $26.5 million to end the JOA, which was set to expire in 2012. Under the JOA, both newspapers share printing, advertising and distribution costs but retain separate editorial voices.

The pending sale of the Star-Bulletin to Black also would terminate the JOA and would require the buyer to build his own advertising and circulation departments from scratch.

Yesterday, Black said he is committed to hiring 200 to 300 new employees for the Star-Bulletin's business functions. He also said he plans to retain all 97 of the company's newsroom workers, saying he hopes to expand the newspaper's coverage.

That expansion would include a Sunday edition to go along with the afternoon daily's six-days-a-week coverage, a circulation increase to about 100,000, and news-stand sales of the Star-Bulletin on the neighbor islands. The Star-Bulletin's circulation on the neighbor islands currently is limited to a handful of retail locations.

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