For sale: a newspaper in paradise

[February 27, 2010]  HONOLULU (AP) -- Honolulu barely escaped becoming a one-newspaper town about a decade ago. Many believe the death of one its two dailies is inevitable this time around.

The parent company of the Honolulu Star-Bulletin announced Thursday it was purchasing longtime rival The Honolulu Advertiser, the largest newspaper in Hawaii, and would merge the two publications if a new buyer couldn't be found soon.

"The reality of it is, finding a buyer in this kind of economic environment is going to be difficult and that's an understatement," said Gerald Kato, a University of Hawaii journalism professor.

Kato said a "vibrant marketplace calls for many and diverse voices. Less voices is an injustice to the community."

Newspaper analyst Ken Doctor of Outsell Inc. said finding a buyer was "highly unlikely."

"The biggest problem is the loss of reporters ... and everybody's getting a lot less community news," Doctor said.

Advertiser employees were hanging onto hopes that the paper and their jobs could be saved. The Advertiser has about 600 employees, with 120 in the newsroom. Oahu Publications Inc., which owns the Star-Bulletin, has about half as many employees with about 75 journalists.

"I just know the next few months, there's going to be a whole lot of uncertainty," Advertiser reporter Rob Perez said. "Unfortunately, I don't think the outcome is going to be good for most of the people here and it's not going to be good for the community because we're eventually going to end up a one-newspaper town."

The Star-Bulletin, with a daily circulation of about 55,000, is being put up for sale as part of an agreement with the Justice Department.

"Unfortunately, our community can no longer support two daily newspapers," said Oahu Publications chairman David Black, who saved the Star-Bulletin with his purchase in 2001 and is now buying the Advertiser. "Even significant operating cost cuts could not stem the financial bleeding."

Mayor Mufi Hannemann said Honolulu has long been well served by the two dailies and alternative voices.

"The economy, however, has not been kind to the newspaper business," he said. "Many papers all across the country have had to close their doors. It's a sign of the times and it shows no one is immune."

The possible end of one of the Honolulu newspapers comes just as a new Hawaii online news service called Peer News is being launched by eBay founder Pierre Omidyar.

"Whether there will be two newspapers or one, we will try to provide something new and different and valuable to people in Honolulu and Hawaii," said John Temple, editor of Peer News, which plans to produce original, in-depth reporting and analysis of local issues.

Temple said Peer News was not interested in buying the Star-Bulletin.

He knows firsthand about the loss of a daily newspaper. Temple was editor and publisher of the Rocky Mountain News, which ceased publications a year ago - Feb. 27, 2009 - just months before the Denver newspaper's 150th anniversary.

"I hate to see the potential contraction of news coverage and the loss of jobs that comes with it," Temple said.

Under the Honolulu sale, Oahu Publications will acquire the Advertiser, which has a daily circulation of 130,000. It was founded in 1856 and purchased by Gannett in 1993.

"When you look at look at (Gannett) across the board, they are struggling with the newspaper model like everybody else," he said. "In this deal ... they get some cash, they reduce their exposure to newspapers and they call it a day."

Gannett executives said the deal was too good to pass up.

For Black, he would gain control of the Honolulu market.

Doctor said Black's newspaper deals in cities such as Akron, Ohio and San Diego shows the Canadian publisher believes the newspaper industry may be stabilizing.

"He may be right, he may be wrong. But he thinks he's buying at the bottom," Doctor said. "But not a lot of people are willing to take that bet."

Black said his options were to shut down the Star-Bulletin or purchase the Advertiser.

"As believers in Hawaii, despite taking on additional financial risk, we felt a rational market consolidation was warranted," he wrote in Friday's Star-Bulletin.

The Star-Bulletin, which served as the afternoon newspaper for decades before recently becoming a morning publication in a tabloid format, almost closed down in 1999.

Gannett owned the Star-Bulletin when it sold the newspaper to Liberty Newspapers to purchase of the Advertiser in 1993. Liberty and Gannett later announced that they were ending their joint operating agreement and would close the Star-Bulletin on Oct. 30, 1999.

After the state and a community group filed a lawsuit, a federal judge ordered Liberty to put the newspaper up for sale. That opened the way for Black to buy the Star-Bulletin.

[Associated Press; By JAYMES SONG]

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