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Originally published Tuesday, March 18, 2008 at 12:00 AM

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Times Co. puts Maine newspapers on market

The Seattle Times Co. put its Maine newspapers up for sale Monday, saying it needs cash to help its flagship paper survive an industrywide...

Seattle Times business reporter

The Seattle Times Co. put its Maine newspapers up for sale Monday, saying it needs cash to help its flagship paper survive an industrywide drop in advertising revenue that shows no signs of reversing.

But industry observers predicted the company won't get nearly as much for the three dailies and one weekly as it paid for them a decade ago.

"This is a terrible time to be selling newspapers," said John Morton, a newspaper analyst in Silver Spring, Md. "They [The Times] must really need the money."

Times Vice President Jill Mackie said sale of the Maine papers would allow the company to focus on its Washington papers, which also include the Yakima Herald-Republic and Walla Walla Union-Bulletin. Declining print revenues are affecting the company's papers on both coasts, she said, "and it doesn't make sense to continue to starve both.

"We're a relatively small company, and there just are not enormous reserves of resources out there."

The Maine papers include the Portland Press Herald, (Augusta) Kennebec Journal and (Waterville) Morning Sentinel — all dailies — and the weekly (Bath) Coastal Journal. The dailies have a combined circulation of about 101,000 on weekdays and 137,000 on Sundays.

Mackie said money from a sale would be used mostly to reduce debt. She acknowledged that most of what the privately held company owes was borrowed to buy the Maine papers.

But she said the decision to sell was not forced by lenders and was made "reluctantly" by the Blethen family, which holds a majority interest in The Times.

The company said it hopes to find a buyer within the year.

Monday's announcement "does not mean that we are out of the woods," Times President Carolyn Kelly said in an e-mail to Seattle employees. "We hope it buys us some breathing room as we transform ourselves."

The Times borrowed about $213 million to purchase the Maine newspapers in 1998, an internal company document indicates. That was during the industry's heyday, before print revenues — and newspaper market values — began to slide as advertisers and readers migrated to the Internet.

Last year, McClatchy sold the Minneapolis Star-Tribune for about half the price it paid for the paper in 1998. Morton said The Times might lose a similar amount on the Maine papers.

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Fewer companies are buying now, he said, and most of them want smaller papers.

Plus there are lots of newspapers for sale right now, said Larry Grimes, a newspaper broker in Gaithersburg, Md.

Landmark Communications, whose holdings include the Virginian-Pilot in Norfolk, is for sale. So is News Corp.'s Ottaway Community Newspaper unit, with 15 dailies in seven states.

The Maine papers are "nice properties" with strong positions in their markets, Grimes said, and The Times will find a buyer for them. "But they're going to be selling at a distressed price," he added.

The Times knows its timing isn't ideal, Mackie responded: "Getting through a difficult moment in time, sometimes you have to make tough choices."

The Times bought the Maine papers in part because family patriarch Alden J. Blethen came to Seattle from Maine. Knight Ridder, which owned a minority interest in The Times until 2006, criticized the deal, saying the Blethens had overpaid.

The Blethens don't regret the purchase, Mackie said. "At the time it was a good decision. A lot has changed in the last 10 years," she said.

The marketing of the Maine papers is part of an industry trend, said Rick Edmonds, media-business analyst with the Poynter Institute, a Florida journalism think tank.

More newspaper companies are shedding other investments to generate cash for their primary properties, he said. Copley Newspapers, for instance, recently sold all its dailies except its flagship San Diego Union-Tribune.

But "the Portland paper is just superb" journalistically, Edmonds said. "I would hate to see a scenario where some new owner comes in and says, 'You don't need this big a staff,' or 'You don't need to go all over Maine.' "

The Portland paper, like The Seattle Times newspaper, has laid off employees recently. C.J. Betit, administrative officer of the Newspaper Guild local that represents workers at the Portland and Waterville papers, said employees are concerned a new owner could impose deeper cuts.

The Guild probably will explore the feasibility of employee ownership, he said.

Monday's announcement "wasn't completely unexpected, given what's going on in the industry and what's going on in Seattle," Betit said.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

Copyright © 2008 The Seattle Times Company

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