Gary Pruitt: Balancing the Interests of Shareholders and Stakeholders

Few news business leaders will draw more attention than Gary Pruitt during next week’s Newspaper Association of America convention in Chicago. Pruitt, CEO, president and chairman of the board of the McClatchy Company, will stop in while engaged in his third week of a business triathlon. He is completing details of McClatchy’s acquisition of Knight-Ridder, selling 12 newspapers and leading a company that has more than doubled in size. Along the way, he seeks to buck up the reputation of newspapers and soothe jittery market analysts.  In a telephone interview Thursday, Pruitt talked with me about shareholders and stakeholders.


Karen Brown Dunlap: In your press conference at the acquisition of Knight Ridder, you stressed discipline and quality journalism. Say more about the disciplines needed in the industry today.


Gary Pruitt: With emerging new media taking shares from all, the margin for error is smaller, and that puts a premium on discipline and executing well. That doesn’t mean abandoning journalistic goals.  It means pursuing them with discipline.

A lot of people think discipline means cost-cutting. We believe it means allocating resources to those areas that most drive quality and performance, and otherwise trying to be an efficient operator. At McClatchy we speak of being athletic: trim and fit, but also muscular in areas that improve quality and performance. So you need Internet employees, ad sales staff and others.


How does McClatchy define quality journalism?

It is a commitment to a relevant news product that informs readers so they can participate in society as citizens. Our newspapers encompass all of life. They serve a mass audience. They must be interesting and relevant to all potential readers, to inform them so they can lead better lives whether they want to find a movie or restaurant or participate in the democracy.


Some organizations seem to be giving up on quality journalism.

They need to understand that to compromise the long term is potentially deadly. Conventional wisdom is that newspapers face an inevitable decline. As a result, it would seem that we have to cut expenses.

It is important to understand that we operate in a highly competitive media arena and newspapers are in a great position for growth. We are holding on to audiences better than competitors. We can be the leader in providing local news and information to people when they want it, more effectively than any other media.

I think the future is bright indeed.


How will an acquisition of this size affect McClatchy’s culture?

I don’t think it will. I think the company is strong and long-standing. It clearly communicates its values and most people know its culture. We will be able to maintain the same culture.


You’ve indicated that staffs at the new McClatchy newspapers will not be cut, but that cuts will be made at Knight Ridder corporate. KR corporate includes some of the most respected journalists in the nation. What’s their future?

What we have to do is look at the two corporate offices, figure out which jobs we need and which jobs we don’t need. There will be some people losing their jobs. That comes with corporate mergers.


How are things going since the acquisition? Any surprises?

The skepticism about the future of newspapers is more pervasive than I realized.  There is skepticism about the ability to execute on the sales. I’m gratified by the level of interest in the sales and confident that we will be able to sell the newspapers.


You indicated that members of the McClatchy family approved of this acquisition. Would you describe the conversations that took place?

Four members of the McClatchy family are on the Board. We had several board meetings discussing the acquisition possibility. The family and other board members were unanimously supportive. We did not believe we needed this deal for McClatchy to be successful, but the deal offered an opportunity to grow in a way consistent with our strategy.


What’s the biggest challenge for you over the next six months?

Most important is the execution of this deal: to get it closed, sell the 12 newspapers, and integrate other Knight Ridder papers into McClatchy in a way that is beneficial to all stakeholders. Stakeholders include employees, readers, Internet users, advertisers, etc.


What lessons should your fellow newspaper owners draw from the turn of events that began with Bruce Sherman’s call for the sale of Knight Ridder?

The short lesson is that unless you have two classes of stock or you are a private company, you are vulnerable to the stock market.


What’s the longer lesson?

That’s the longer lesson too. If you have one class of stock and are publicly traded, you are vulnerable to shareholder activism. You have to keep a number of shareholders happy.


A large block of McClatchy stock is also owned by Bruce Sherman’s group. How does McClatchy prevent stockholder unrest?

McClatchy has had a good record in shareholder return. Shareholders have been pleased. Bruce Sherman was supportive of this deal to acquire Knight Ridder.


What do you see for journalism in, say, the next 10 years?

Invariably there will be more fragmentation, more sources, more delivery options,  delivered at various ways and various times. Newspapers will remain the last mass medium in each of their markets.


How are you making it in all this?

I’m fine. It’s a busy time, but it’s also exhilarating to think about what the new company can be.



What gives you the greatest sense of professional achievement?

My greatest sense of achievement is seeing McClatchy meeting the challenge in the marketplace and remaining true to its values.