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Continued: Schafer: Steinway sale may portend lessons for sale of Star Tribune

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: September 28, 2013 - 9:38 PM

Sweeney calls himself the “chief stability officer” of the Star Tribune, having become chairman in 2009 after the painful reorganization of the company and its emergence from bankruptcy.

It would be pretty easy to overstate the similarities between a manufacturer of a premium piano like Steinway and the Star Tribune. A Steinway piano can be a family heirloom passed between generations, while a printed newspaper can wrap the walleye catch by lunchtime.

What’s similar to Sweeney is the notion of community and making sure the products are made as well as they can be.

Steinway’s community is all the musicians, dealers, educators and enthusiasts who care passionately about their Steinway pianos. To remain viable, a media company like the Star Tribune needs to generate that same kind of passion in its community. If it does, it can have a sustainable value like, well, a hand-built Steinway.

Sweeney says the Star Tribune must continue to innovate. It still needs to become more efficient. That’s true for Steinway, too. But a cost-takeout strategy that, as Sweeney put it, “cuts into muscle” will quickly erode the value at the Star Tribune.

Sweeney said the company’s majority investor, Wayzata Investment Partners, has been supportive of the Star Tribune’s management and board. Evidence of quality includes two Pulitzer Prizes.

On the other hand, Wayzata’s partners are in much the same boat as directors of Steinway with their Revlon obligation. They can’t pick a buyer who wants to buy cheap but promises to produce the kind of journalism that wins more Pulitzers. They have to maximize the proceeds from the sale of an investment for their limited partners.

It’s been about five years since Wayzata invested in the Star Tribune, and that’s about the length of a typical holding period. Sweeney said a sale could come as soon as 2014.

“I think they feel like their investment is growing in value,” he said of Wayzata.

There are certainly questions about how any sale process will go. Among the many differences between Steinway’s deal and what may happen here is that Steinway’s investment banker managed to contact 65 potential buyers in just 45 days this summer. The list of candidates eager to hear about a newspaper deal won’t be nearly as long.

So another question that comes to mind is this: Like his Steinways, does John Paulson own three newspapers?

Sweeney smiled and said, “I don’t think he owns any.” •


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