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Of course, it's impossible to confirm who's in and who's out, because everyone's sworn to secrecy. Leonard Stern and Stern Publishing president David Schneiderman would not talk on or off the record, though they did nothing to interfere with this article. But they clearly anticipated questions from the press. In a September 22 statement to Voice staffers, Schneiderman announced he was going into no-comment mode and warned, "There will be a lot of rumors, stated particularly by people who like to present themselves publicly as 'players.' "
So far, the loudest rumors have come from Russ Smith, editor in chief and CEO of the New York Press, and from New Times, a chain of 11 alternative weeklies based in Phoenix, both of which are longtime Voice competitors. Smith has yet to write about the sale in his Mugger column. But Smith and New Times owners Mike Lacey and Jim Larkin have been floating takeover scenarios to friends, one of which involves the Stern group being bought by Russ's deep-pocketed brother, Randy Smith, who then cherry-picks the Voice for Russ and sells the rest to New Times. Another scenario has New Times coming in as a silent partner with Yahoo!, which similarly hacks it up.
Stern has always said he doesn't want to sell to the Smiths or New Times, but those lusty suitors insist that Stern will sell to the highest bidder, period. Smith also claims that Stern has been shopping the papers around quietly for months, to no avail. A Stern spokesperson denies the latter, insisting that Stern first put the Voice on the block September 22. An industry source says that Smith's claim is typical of a lurking buyer, who implies that a property is damaged goods in order to drive the price down.
One source in the Stern camp says the hitch in the Smith brothers' plan is that, as of October 13, they still didn't have "the book." Assembled by Veronis, Suhler & Associates, the bank handling the sale, this black monolith contains sections on each paper, including financial minutiae. Because each paper has a different financial structure, it would be impossible to place a value on Stern Publishing without it. The books are kept under lock and key, and anyone who gets one must sign a nondisclosure agreement. So it seems that Smith & Co. are just blowing smoke for now.
The next step in the process is due diligence, a pas de deux in which the seller and buyers inspect each other at close range. While the bank is deciding who has enough capital to close the deal, on October 25, a team including David Schneiderman and LA Weekly publisher Mike Sigman will take questions from a handful of suitors, who will then be able to adjust their bids. The final bids are due in November; Stern plans to close the deal in January.
Industry sources point out that because the company is privately held, Stern is not obliged to sell to the highest bidder. "If you own the property, you set the rules," says one. Presumably, he takes the highest bid from the person with the most secure financing, but he could end up taking a slightly lower bid from a buyer who he feels could perform better. On the other hand, just because an aspiring suitor hasn't got the book yet doesn't mean he can't drop in at the last minute. "If a Saudi prince called tomorrow and offered a billion dollars," one source predicts, "he'd take it."
Or would he? Stern has said he seeks a buyer who will keep the chain together, in order to preserve his legacy. That would disfavor an Internet company, whose main goal would likely be to convert the ads and listings to the Web. It also bodes poorly for a status-seeking buyer who might dump everything but New York and L.A., then refurbish the staffs with new people. An upscale newspaper chain would be least likely to change management and editorial, says one industry source. Why would anyone who could pony up $200 million want to risk his profits by disturbing the status quo?
Other factors that point to a buyer like Times Mirror or The New York Times Company: Stern wants to see his empire grow, and a big chain is likely to seek a national platform from which to expand. Indeed, Times Mirror already staked a claim in the alternative world in April, when it bought New Mass Media, a chain of newspapers in the Northeast. A mere month later, Stern began telling people of his decision to sell. (Times Mirror and the Times declined to comment. Knight Ridder and Conrad Black won't be submitting bids, according to spokespeople.)