First Draft by Tim Porter

Hearst and Singleton: Which is the Cat, Which the Mouse?

Dean Singleton, the physically diminutive but ambitiously gigantic CEO of MediaNews Group - owner of the Denver Post and more than 50 other newspapers, including the a quartet of refugees from the Knight Ridder-McClatchy deal, is the mouse that roared of the newspaper industry.

This Columbia Journalism Review profile of Singleton cast him as the son of the Texas oilfield roustabout who rose up from less-than-humble beginnings to create the nation's fourth-biggest newspaper company. CJR writes (emphasis added):

"For much of his youth, he lived in a ramshackle four-room house on Pecan Street, in a grim section of Graham. The house is still there - an extremely modest place, five hundred square feet, with chickens and roosters galloping in the backyard. It has a bathroom now, but when Singleton lived here the toilet was outside. The day we arrive, the house has a terrible stench: it is being fumigated for rats and mice. Singleton doesn't mind; he lurches through the living room, his face a mask of joy and wonder. Forty years have passed since he's been inside."

Fast forward a few years to this New York Times profile of Singleton, written just after MediaNews spent nearly three-quarters of a billion dollars to two San Francisco Bay Area dailies McClatchy had acquired from Knight Ridder (San Jose and Contra Costa). The Times kept the western theme, but honed in on one of Singleton's signature business characteristics - his partnerships (emphasis added):

"Mr. Singleton, 54, a bantam figure with flinty blue eyes, is indeed thought of as something of a magician in the newspaper world - having transformed himself from the son of a ranch hand in a tiny town in Texas to a media baron who now controls a newspaper empire that sprawls from coast to coast. He has, in a manner of speaking, sawed many of his competitors in half, only to have them hop off the table and become his partners."

Singleton's partner in the Bay Area newspaper deal was Hearst, which already owned the money-losing San Francisco Chronicle. Hearst bought two other of the McClatchy castoffs - the Monterey Herald and the St. Paul Pioneer Press for $263.2 million and agreed to sell them to Singleton for an undisclosed stake in Media News.

The deal was puzzling to some press watchers because Singleton's purchase of the San Jose and Contra Costa papers meant he now surrounded Hearst's Chronicle in the Bay Area market and critics wondered why Hearst would aid a competitor.

Some were concerned about anti-trust issues and some speculated that Singleton was positioning himself to one day get control of the Chronicle.

Alan Mutter, a former Chronicle editor, who now writes Reflections of a Newsosaur, asked (emphasis added):

"(snip) the once-formidable Chronicle has turned into exactly the sort of troubled newspaper that JOAs were designed to save. Unlike some publishers who shun JOA relationships, Dean Singleton has embraced them - and seems to be making them work - in places like Denver and Detroit. Is the San Francisco Chronicle next on his list?"

And, Charles Layton, a senior writer for the American Journalism Review, wrote (emphasis added):

"(snip) in the San Francisco Bay Area, a cluster of suburban papers is rising up to challenge, and perhaps one day overshadow, the San Francisco Chronicle."

No doubt consolidation of traditional news media will continue in the Bay Area - as it will most metropolitan areas - but perhaps the critics of the Singleton-Hearst deal were worried about the wrong private company. Maybe it's Hearst that will end up with the market it was waited for and spent so lavishly on these past decades.

The New York Times today published a takeout on the Hearst Corp. to mark the completion of its opulent new midtown office tower. In a section of the story reporting on the Hearst's business strategy of investing in (successfully) and partnering with other companies (Disney, ESPN, and now Media News), Hearst CEO Victor Ganzi all but said he has his eyes on a larger goal - a greater stake in Media News.

Singleton's partner in Media News is Richard Scudder, a New Jersey newsprint-maker. Ganzi points out - in what might be seen as a morbid observation were this not simply business - that Scudder is 93. The Times wrote (emphasis added):

"Typical of the inscrutable Hearst style, both of these recent deals make the company appear to be a passive, patient investor in a larger entity. But Mr. Ganzi revealed in an interview that both arrangements carry rights of refusal and other provisions that would allow Hearst to increase its stake in Fitch and MediaNews (excluding a group of California newspapers it owns) and potentially acquire control of both businesses down the road.

"'We are comfortable with our minority stake in all these cases and if it never changes we are comfortable with that,' Mr. Ganzi said. In the case of MediaNews, Mr. Singleton, 54, and another investor, Richard Scudder, who is 93, each currently own 45 percent of the group of 55 daily newspapers. 'Ultimately, I think there will be opportunities,' Mr. Ganzi said."

Ganzi could be suggesting that it covets more equity in Media News, perhaps in a deal that swaps the S.F. Chronicle for a fistful of other Media News properties, but I'm not so sure I see Hearst walking away from the William Randolph Hearst's original market. It's more likely Ganzi is sticking with the newspaper strategy that has served the company well - be patient, control costs and one day own the market. For evidence see Houston, San Antonio and, I suspect, Seattle. As Ganzi said to the Times in talking about the what the new office tower says about the company (emphasis added):

"I'm less concerned about a statement to the world. I'm more concerned about a statement to my colleagues. It's a statement about our future as well as, I think, a statement and commitment to our past."

Hearst's past began in San Francisco. Look for it there in the future.

Tags: Journalism, Newspapers, Media; Hearst; Singleton

Posted by Tim Porter at June 5, 2006 10:17 AM