KR destroyer Bruce Sherman retires

Next week, the slow, inexorable decline of newspapers will be marked by another datapoint when Bruce Sherman, the 61-year-old CEO of Private Capital Management, retires. For those who have followed the newspaper industry's financial travails, Sherman was the money manager who forced the merger of Knight Ridder to McClatchy back in 2006, and then, along with Morgan Stanley fund manager Hassan Elmasry, took on Arthur Sulzberger at the New York Times Company.

In the debut issue of Condé Nast Portfolio in May 2007, a profile of Sherman. noted that for months, the press had been labeling the legendary value investor as "secretive" and "shy" since he wouldn't grant interviews even as he forced Knight Ridder to sell itself to McClatchy for $6.5 billion. Sherman didn't follow the maxim that if you're going to invest in media, you better be prepared to talk to reporters.

At the time, Knight Ridder owned the Philadelphia Inquirer, the Miami Herald along with 30 other dailies and Sherman was portrayed as the scourge of journalism, for precipitating the shotgun marriage of the two newspaper chains. As part of the deal, McClatchy put the Inquirer on the market, and also sold off the Minneapolis Star Tribune to raise cash. In January, the Star Tribune filed for bankruptcy, and the Inquirer has continued to struggle under its new owners, Philadelphia businessman Brian Tierney.

For everyone involved, the deal was a disaster. McClatchy's stock has dropped from the $40s at the time of the merger in June 2006, to 55-cents as of yesterday's close. For Sherman, his newspaper investments were one of his few missteps in an acclaimed career. Many investors heralded him for his ability to put money into undervalued companies. His firm made early investments in the telecom firm Qualcomm that returned more than 1500 percent, and he made another fortune in Apple's stock as it surged on sales of the iPod.

He spent more than $1.5 billion of his clients' money on newspaper companies, owning some 10 percent of the New York Times, 3 percent of Gannett and 12 percent of McClatchy. Sherman eventually sold off all of his newspaper investments at a loss. His firm, PCM, once managed more than $30 billion, but saw client money dwindle as his performance suffered.