Former Enquirer Publisher Bill Keating Looking To End Gannett Stock Lawsuit? $1.3 Million Settlement Deal On Table

Keating Case Settlement Talks

CINCINNATI (TDB) -- A two-week old court filing in Cincinnati discloses that Bill Keating's lawyers said they would accept $1.3 million to settle the retired Gannett Co. Inc. newspaper exec's lawsuit against his investment advisers.  Keating contends a $20 million investment portfolio was mismanaged.  He and his wife, Nancy, lost $6 million on holdings in Gannett (43,558 shares) and Fifth Third Bank (225,000 shares).  Settlement discussions with a private mediator have taken place.  They failed.  But with the case heading for December 8 trial there is a good chance the talks will be revived under court supervision.  The court filing says:  "The parties engaged a mediator and conducted a partial day of mediation to no avail.  More recently Defendants increased their offer to $500,000 and Plaintiffs reduced their demand to $1,300,000."  That indicates there was movement.

The defense contends Keating was sophisticated about business and investing and should have known that investors can lose money, as well as make money, in stocks.  The trend line is not always up:   "Plaintiffs took on the risk inherent in the market when they invested the portfolios in securities."  Keating is a former GOP congressman from Cincinnati who ran Gannett's newspaper operations in Detroit and Cincinnati.  He was chairman of the Associated Press from 1987-1992.  He was vice president and general counsel of Gannett.  Keating claims he ordered his investment advisers at Sena Weller Rohs and Williams LLC in Cincinnati to aggressively liquidate his stakes in the Gannett media chain and the bank.  He said he wanted a diversified investment portfolio.  He says his orders were not followed.  Keating had served on Fifth Third's board of directors.  The investment advisers said Keating never gave orders to liquidate and reinvest.  In the pre-trial statement filed with Hamilton County Common Pleas Judge Jerome J. Metz Jr., -- the same document that disclosed the settlement offer -- Keating's investment advisers describe the lawsuit as a case of sour grapes that grew out of Wall Street's sharp declines.  The defense lawyers pointed out that all securities markets got clobbered by the same percentages that Keating got clobbered:

"The evidence will show that Plaintiffs received and reviewed monthly statements, quarterly statements and dozens of letters regarding their portfolio.  Since they did not object then, they cannot do so now.  Plaintiffs can prove no damages.  During the period of their relationship all securities markets declined between 40% and 50%, the same amount that the portfolios declined.  Even though Plaintiffs have not alleged a conversion, they argue that a conversion measure of damages, or the New York Rule should be used.  If the proper measure of damages is used Plaintiffs have none, since they are in essentially the same position they would have been in had they received what they now claim they wanted."

Another Veteran Ohio Journo Sent Packing By Gannett's Cincinnati Operation: Bengals Blogger Chick Ludwig Booted From Cincinnati.com

CINCINNATI (TDB) -- Retired Dayton Daily News sportswriter Chick Ludwig -- who spent 12 years as that newspaper's Bengals beat writer -- has been sacked after a year at Cincinnati.com.  He wrote a popular blog (1.3 million page views) mostly about the NFL football team.  Ludwig said his contract wasn't renewed, apparently for economic reasons.  Ludwig spent 30 years with the Dayton Daily News and hooked up with Cincinnati.com last October.  Cincinnati.com is the Cincinnati Enquirer's companion website and is a property of Gannett Co., Inc. the giant media company that owns USA Today.  Gannet's stock was down $1.24, or 8.8%, Friday o n the New York Stock Exchange.  Investors were disappointed by the company's third quarter earnings report .  So adios, Chick, a Cincinnati native who appears to be yet another victim of Gannett, and the entire traditional media's, constant cost-cutting mode.

This is some of what Ludwig had to say about his departure, which he wrote on the blog.  He was classy and didn't offer sour grapes:

"The awesomeness, intensity and belligerence that marked 'Typing Away With Chick Ludwig' has come to an end.  I often use the term 'knifed' when a Cincinnati Bengals player gets terminated, released or waived. Now the time has come for 'The Chickster' to get knifed.  My contract is up, and I haven’t been renewed. The economy has claimed yet another victim. So this is my final entry for the Cincinnati.com Blog Network.

"I’d like to think my specialty is the written and spoken word. And all I ever wanted to do was offer opinion, insight and analysis on the Cincinnati Bengals, and bring a little levity to your day. Hopefully, 397 blog entries and 1.4 million page views are signs I made a dent, if not a smidgen of difference, in your daily life.  My immediate plan: Fire up a Hav-A-Tampa sweet jewel, sip a glass of Rolling Rock, take a nap and prep for my Sunday, Oct. 17, speech at the Maketewah Country Club Caddie Banquet (cocktails 5:30, dinner 6:30)."

By the way, The Chickster remains the Bengals correspondent for the Sporting News.

Cincinnati Enquirer Parent Gannett Co. Inc's (GCI) Stock Chart: When Will The Asteroid Strike?

CINCINNATI (TDB) -- The Cincinnati Enquirer has been writing a lot lately about Fifth Third Bank and its problems in a difficult business environment caused by a slow-growth economy. But the Gannett-owned newspaper has been largely silent about the near 50% plunge in its own parent company's stock price over the past year (see table). According to the chart, Gannett has done worse than its peers in the media industry, and worse than the S&P 500. None of that has been widely reported by The Enquirer, a major source of news and information in Ohio -- both online and in print. And the steep reversal in Gannett's value on Wall Street since last June is an indication that the company's business practices and business model are out of step with reality in the 2008 economy -- that it hasn't yet figured out how to compete, grow, or rally when faced with adversity. The Ohioans who depend on the company for news and information and entertainment may find themselves left in the lurch if there are cuts. John Friedman at MarketWatch, a financial news service that operates online and serves the nation's investment community, noted in commentary Thursday that Gannett and the New York Times, another newspaper giant, are both headed down, down, down:

"Meanwhile, Gannett, the publisher of USA Today [along with more than 80 other dailies, including Cincy], said its May ad revenue had dropped 14% from a year ago. Its classified ad figure fell 19% for the month, underscoring the impact of online services."

A link to Friedman's commentary is here, and its speculates the New York Times could become a takeover target as its share price falls. Gannett stock traded for a time at $91 a share in 2004, but was around $24 when the Bellwether checked today around noontime. At that price, the yield on the dividend is near 6.55%, which is better than any bank savings account pays. But how long will it be before the dividend is cut? And how long will it be before Gannett considers selling off its newspaper holdings like the Cincinnati Enquirer?