The Honolulu Star-Bulletin will be history this Sunday-The Honolulu Advertiser too – after 128 years of publishing in Hawaii. The new monopoly, Honolulu Star Advertiser, will emerge Monday. David Black and BlackPress of Canada completed the deal with Gannett for the purchase of the former The Honolulu Advertiser.
BlackPress never had any desire, intention or good faith effort to sell the Honolulu Star Bulletin or to leave behind a viable, competitive newspaper, which Black acquired in 2001 along with MidWeek magazine, then and now, a cash cow.
We know this because my partner-Malia Zimmerman of HawaiiReporter-and I made a valiant and serious effort to buy the Bulletin in March and April of this year. Had it not been for the U.S. Department of Justice (DOJ) in Washington, D.C., Mr. Black would have simply closed the Bulletin and moved on. DOJ required a for-sale sign, and while they treated all bidders fairly, DOJ did not force BlackPress to provide vital and valuable financial and asset information.
At the time he purchased the Bulletin in 2001, David Black was interviewed in the Pacific Business News and said this: “I have never said Honolulu needs two papers. What I have said is that everybody tells me Honolulu needs two newspapers. I’m, of course, not a native here and so I wouldn’t presume to tell people in Hawaii how to think about it, but every single person I talk to says we need two papers for editorial reasons and for competitive purposes or advertising rates.” http://pacific.bizjournals.com/pacific/stories/2001/03/12/focus3
Want more? Check out the timing of the StarAdvertiser.com site’s online registration. The domain name was created 2/14/2009 and was renewed on 2/14/2010 for 10 years. The Black merger announcement was made 10 days later on 2/25/10.
Malia, a professional, award-winning journalist and I, are both entrepreneurs with newspaper writing experience and a strong sense of tradition and passion to keep two (or more) independent, printed, editorial newspaper voices alive in Honolulu. We sincerely feel we have a way of accomplishing this. The DOJ grilled us on our business plan, financials and investors and took us seriously too.
Quite simply, we worked diligently, in conjunction with many other small businesses owners and experts, and expended our own time and money to save that independent newspaper voice, keep it local, retain jobs and offer a broader community news and editorial format.
We understood the Bulletin could not be “saved” with the costs and in the manner as was currently done. That is why we proposed creative alternative ways of publishing a new Bulletin (e.g., a statewide rather than O’ahu-centric focus, community and employee ESOP ownership, bold new technology reporting, and greater local investigative analysis, etc.).
Many of the “Save Our Star Bulletin” citizens of a decade ago felt as passionately about saving the paper as we did, and offered their support and prayers. So did some former and current employees of both newspapers who shared their expertise. We are humbled and grateful.
Along the journey, Malia was even threatened with a lawsuit in writing by Black’s Canadian law firm. Her offense? Speaking out publicly and questioning the condition of some of the Bulletin‘s equipment.
As it turned out, there were only three formal qualified bidders – one from Texas, one from Hilo and us – and in the end, we were the last bidders standing. We could have bought the Bulletin, if we were willing to give Black Press millions of dollars for essentially used furniture, a domain name, and an old press – nothing much else.
News reports in the Bulletin during the process about our attempted purchase were sketchy, incomplete and not business-oriented. For any business deal and negotiations to be successful, there has to be a willingness to accomplish this. That was never the case here.
During our due diligence, we reviewed recent sales of newspapers on the Mainland. There were plenty. They all had one thing in common: there was complete and honest transparency about financials, assets and operating agreements. Usually, there was a third party mediator. Not so here.
In our case, we had to struggle to get the basic information we – and potential investors – needed to make a reasonable decision on the true value of the purchase.
In the end, we did not get what was needed. There was an incredibly short time line, which discouraged other potential bidders. We asked for more time and it was denied.
There was no upset price. Black Press refused to disclose a liquidation price. Our successive bids got lower as we did find some of the information needed and were shocked to learn there was little to actually be acquired.
Audited cash flow statements were not provided. Neither were audited advertising or circulation data or the systems that ran them. Black Press basically told us, “Trust us.” We believe the published daily circulation figure for the Bulletin of 37,000 paid (52,000 printed) was inflated. No one will know for sure.
The paper’s archives-valuable for rare photos and documents-only existed from 2001; the previous 100-plus year archives are owned by the Advertiser. Mr. Black declined to purchase them in 2001. The online starbulletin.com, a superior website to the Advertiser, did not come with content or server; only the URL name.
Repair, maintenance and press impression records for the 1982 printing press in Kaneohe were not presented. At our expense, we brought in one of the top web press analysts in the U.S. to formally evaluate the press. His conclusion? It was worth $75,000 tops. Black Press estimated its value at much, much more. (One buyer was willing to pay $80,000 for the press but no one else in the industry was willing to give us even one dollar).
Some aged, low-value vehicles and sorting/mailing equipment were also available in Kaneohe. One piece of equipment actually had cobwebs on it, so we didn’t believe it was actually working, but we couldn’t be sure.
We did not get access to the remaining “assets” until about 48 hours before the final, binding bid was due. A computer expert, photography and camera equipment expert, software expert and financial expert/investor accompanied us to the news offices at Restaurant Row. What we witnessed was unbelievable.
We had received a listing of “all assets” the day before and were cautioned that these assets belonged to both Bulletin and MidWeek.
On the list were “141 workstations” (desks, chairs, some 5-6 year old computer monitors and other office supplies.) The Bulletin representatives could not tell us which of the total were actually involved with the sale and would go to a buyer. Camera equipment – which is valuable and expensive – was not on premises. Copiers listed were actually leased not owned.
At the end of the site visit, one of our experts said, “It was like going to a used furniture garage sale.”
So, our final bid, turned out to be lower than the secret liquidation price. It will be interesting to see if the assets now are actually “liquidated” and how much is fetched from such a sale.
We failed. Sort of. For those that still support an independent Hawaii voice, listen up: All along we had a “Plan B.”
Investors and others said, “Why are you trying to buy this dinosaur? Start your own paper from scratch. Easier said than done. Besides, there is a genuine affinity for the old Bulletin.
We don’t have to do that. HawaiiReporter.com – Hawaii’s first online electronic newspaper, has been publishing daily since 2002. It recently underwent a complete makeover. Check it out (www.HawaiiReporter.com) See the local, national and international writers. Read the in-depth reporting and unexpurgated opinions of all writers and ideologies.
Watch for new features, more investigative reporting, emphasis on Neighbor Island news and some familiar names soon as we attempt to rescue some good reporters who were laid off by the new paper. Go to our website, http://www.savehawaiinews.com and if you have an idea, a comment, or suggestions, sign up and join the community advisory board.
We are also negotiating for a web press and a commercial site for an expanded media center. There will be a printed side-by-side edition (weekly initially) to the online Reporter, and greater use of technology and local reporters’ talents. We previously outlined several of our objectives, which can be seen at http://www.savehawaiinews.com
We learned a lot of lessons in our attempt to save the Bulletin. There is no substitute for good faith and transparency; especially in Hawaii. We are saddened that an era will end, many good employees will be laid off – one of the largest layoffs in Hawaii history -and several reporters have already taken jobs on the Mainland. Those that stay may have a shorter career with the new paper than they believe.
But we are excited and positive that in the end, we will save greater freedom of speech in Hawaii and there will be more alternative voices. That is our pledge to the people of Hawaii.
Sam Slom is a professional consulting economist, president and executive director of Smart Business Hawaii’ (SBH), and owner of his own business, SMS Consultants. He is also a Republican State Senator (8th District Oahu), Hawaii Kai to Diamond Head. Reach him via email at mail to: SBH@lava.net