Honolulu Star-Bulletin Buys Rival Paper

HONOLULU (AP) -- The parent company of the Honolulu Star-Bulletin on Thursday announced it was purchasing longtime rival The Honolulu Advertiser, the largest newspaper in Hawaii.

Oahu Publications Inc. said it will acquire the Advertiser, its Web site, non-daily publications and an interest in Hawaii.com from Gannett Co. The Advertiser, one of Gannett's larger newspapers with a daily circulation of 130,000, was founded in 1856 and purchased by Gannett in 1993.

Financial terms were not disclosed. The deal is subject to regulatory and other approvals and is expected to close in the second quarter.

"We are pleased to be able to purchase the Advertiser, a strong and excellent newspaper," Oahu Publications chairman David Black said in a statement. "We will endeavor to continue the tradition of good Hawaiian newspaper stewardship."

The acquisition could make Honolulu a one-newspaper town, joining such cities as Seattle and Denver.

Under antitrust laws, the Star-Bulletin will be put up for sale. If no one buys the paper, it will be consolidated with the Advertiser, Star-Bulletin publisher Dennis Francis said.

It hasn't been decided what the name of the combined paper would have. Francis said there would be some layoffs if the papers were combined. The company hasn't decided on how many would be laid off or where the layoffs would come from, he said.

"We cannot keep both staffs intact as they are, but we haven't determined what that number is yet," Francis said.

With a circulation of about 55,000 daily, the Star-Bulletin had lost money for the past nine years and its circumstances have deteriorated during the economic downtown. The company decided it had to either close the Star-Bulletin or purchase the Advertiser to survive.

A merge of the papers would enable the company to be profitable, he said.

Evan Ray, Gannett's senior vice president of finance and operations, would only say that selling the Advertiser was a financially attractive deal for the company.

Employees of both newspapers were notified in separate staff meetings. Both newsrooms were stunned the announcement.

"I think people were surprised and still waiting for the shock to wear off," Advertiser Editor Mark Platte said.

Advertiser reporter Suzanne Roig, president of the Hawaii Newspaper Guild, said it was "a very sad day to be a journalist in Hawaii."

"There are many unknowns right now. We are still in shock," Roig said in a story on the paper's Web site. "I am sure that many Advertiser employees will be going home tonight and taking stock of their finances and looking at what their options are."

"A vibrant marketplace calls for many and diverse voices. Less voices is an injustice to the community," said Gerald Kato, chairman of the University of Hawaii journalism department.

The Advertiser, just like many other Gannett papers, had already been trimming costs and its staff. There had three rounds of layoffs last year, totaling 91 positions. It also announced 41 voluntary buyouts in December.

Ad revenue at Gannett's newspapers and magazines plunged by nearly $1.2 billion, or 28 percent, last year. Besides triggering furloughs, last year's deep drop prompted Gannett to cut 1,400 jobs, or about 3 percent of its work force.

Oahu Publications said it has discussed the purchase of the Advertiser with the state attorney general and the U.S. Justice Department.

Gannett owned the Star-Bulletin from 1971 to 1993, when it sold the newspaper to Liberty Newspaper to purchase the Advertiser. Liberty and Gannett announced in 1999 that they were ending their joint operating agreement and would close the Star-Bulletin on Oct. 30, 1999.

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

The Star-Bulletin continued to serve as Honolulu's afternoon newspaper before recently becoming a morning publication.

Gannett publishes 83 daily U.S. newspapers, including USA Today, and more than 650 magazines and other non-dailies. It also operates 23 television stations in 19 markets.

Oahu Publications is a private company with several local shareholders. Its majority shareholder is Sound Publishing Holding Inc., a subsidiary of Black Press Ltd.

Associated Press writers Mark Niesse, Audrey McAvoy and Greg Small contributed to this report.