Knight Ridder sacked,
the New York Times Co. under pressure,
layoffs pummeling newsrooms:
How enigmatic asset manager Bruce Sherman became the scariest guy in journalism.
Author of the article is Gabriel Sherman who has the unfortunate honor of bearing the same last name.
Here are the salient graphs:
On a balmy evening in late January, Bruce Sherman, C.E.O. of Private Capital Management, hosted a dinner for 36 guests at his 12,050-square-foot penthouse overlooking the Gulf of Mexico in Naples, Florida. It was a party with a title—“Essential Indulgence”—held on the eve of th
e Naples Winter Wine Festival, an annual charity-auction-cum-fete that draws the elite to the city’s Ritz-Carlton Golf Resort. Indulged, indeed, were the attendees, including Martha Stewart, wine critic Robert Parker, and Judith Sheindlin, Sherman’s cousin, better known as television personality Judge Judy. Master chef Daniel Boulud flew to Naples to prepare an elaborate menu that featured foie gras tartlets with quince.The 58-year-old Sherman was in good spirits. Surrounded by friends and family, he exuded the confident contentment of someone who had ascended to rarefied heights of money and power—a middle-class public school kid from Queens, New York, now managing $24 billion, with deepening roots in the Naples philanthropic scene. But the evening’s festivities belied a more turbulent reality: Sherman’s billion-dollar-plus newspaper investments in a landscape shifting toward digital media had cost his clients plenty. Long accustomed to betting correctly, Sherman was moving to rectify this uncharacteristic state of affairs with actions that have cast him uncomfortably as a central figure in the drama now upending American journalism.
Sherman (no relation to this writer) is the mysterious investor who forced Knight Ridder to sell itself last year to the McClatchy Co. in a $6.5 billion deal. Journalism has since suffered what might best be described as a collective panic attack. After all, Knight Ridder, owner of the Philadelphia Inquirer, the Miami Herald, and 30 other daily papers, had been the second-largest newspaper publisher in the country, with 2005 revenues of $3 billion, and it was bought by a company half its size. Moreover, it was the first time that an activist shareholder had successfully engineered the breakup of a publicly traded newspaper company, and it left Knight Ridder C.E.O. Anthony Ridder reeling from the rope-a-dope tactics Sherman used to oust him. Sherman, it turns out, is a guy who doesn’t like surprises but who is adept at springing them.
As part of the deal, McClatchy promptly put 12 of Knight Ridder’s papers up for sale, roiling their newsrooms with uncertainty. Other large publicly traded newspaper chains that were cobbled together in the 1970s and 1980s may soon face similar pressures. Not even the most vaunted press institutions are immune.
Sherman has since joined with other large shareholders, such as Hassan Elmasry of Morgan Stanley’s $11.5 billion Global Franchise Fund, to wage a proxy campaign against chairman Arthur Sulzberger Jr.'s dynastic control of the New York Times Co.
Since Sherman felled Knight Ridder, the press has labeled him as reclusive. Actually, he has always operated outside the power orbits of the Ivy League, Wall Street, and the media, and he relishes the freedom that doing business in Naples affords. There, Sherman has carved out his social and financial fiefdom. And it’s some life.
Twice divorced, Sherman finally met a woman of his disposition: Cynthia Kahn, a flaxen-haired media lawyer. They wed in 1999 at the Pierre, in New York City, seven and a half months after Sherman’s second divorce. Kahn, now 51, quit practicing law, and the two wove themselves tightly into Naples’ moneyed fabric of real estate, philanthropy, and politics.. In 2003, they bought their $9.5 million penthouse at the Regent, a 37-unit high-rise on Gulfshore Boulevard, and commissioned a multimillion-dollar renovation.
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