Fascinating piece in the Los Angeles Times about billionaire investor Ron Burkle of Yucaipa Cos., who has made a ton of money buying and selling supermarket chains.
Burkle, who has been engaged in a running battler with a New York Post columnist who he says tried to extort him in exchange for favorable coverage, currently is launching a bid for a number of newspapers that are being sold by McClatchy Co. But Burkle says the bid was prompted by his respect for the integrity of fourth estate, not any desire to meddle in editorial decision-making. And, he says that there are some parallels with the supermarket business.
The Times writes: "In recent years, the national grocery chains 'were competing on who had the lowest level of services or the lowest level of benefits for employees,' said Burkle, who has reentered the industry with the purchase of stakes in the Pathmark and Wild Oats chains. 'We thought that was just a bad business model.'
"Although profit margins in the newspaper business average around 20% versus a razor-thin 2% or so in the grocery industry, Burkle said he doesn't focus on margins when looking at acquisitions…'People have said (newspapers) is too tough a business or that the only way you can make this work is if you dramatically cut costs,' he said. Expectations are down, he said, and 'we think that probably creates an opportunity.'"
According to the Times, the newspaper unions involved with the McClatchy papers actually are favorable to a Yucaipa takeover, even though it is generally conceded that there will need to be cutbacks. But Burkle is perceived as employee-friendly, doing his best to preserve health benefits and willing to offer employees an ownership stake in the company in exchange for givebacks.
Burkle tells the Times that people obviously are always going to need information…and that newspapers have to find new and compelling ways to deliver it.
Burkle, who has been engaged in a running battler with a New York Post columnist who he says tried to extort him in exchange for favorable coverage, currently is launching a bid for a number of newspapers that are being sold by McClatchy Co. But Burkle says the bid was prompted by his respect for the integrity of fourth estate, not any desire to meddle in editorial decision-making. And, he says that there are some parallels with the supermarket business.
The Times writes: "In recent years, the national grocery chains 'were competing on who had the lowest level of services or the lowest level of benefits for employees,' said Burkle, who has reentered the industry with the purchase of stakes in the Pathmark and Wild Oats chains. 'We thought that was just a bad business model.'
"Although profit margins in the newspaper business average around 20% versus a razor-thin 2% or so in the grocery industry, Burkle said he doesn't focus on margins when looking at acquisitions…'People have said (newspapers) is too tough a business or that the only way you can make this work is if you dramatically cut costs,' he said. Expectations are down, he said, and 'we think that probably creates an opportunity.'"
According to the Times, the newspaper unions involved with the McClatchy papers actually are favorable to a Yucaipa takeover, even though it is generally conceded that there will need to be cutbacks. But Burkle is perceived as employee-friendly, doing his best to preserve health benefits and willing to offer employees an ownership stake in the company in exchange for givebacks.
Burkle tells the Times that people obviously are always going to need information…and that newspapers have to find new and compelling ways to deliver it.
- KC's View:
- Just as people will always need food, and stores have to find new and compelling ways to provide it.
