A FAMILY TRADITION GOES ON UNDER A NEW NAME Guy Gannett's five papers in Maine are purchased by the Blethen-owned Seattle Times Co.

The sale of Guy Gannett Communications' five newspapers to the Seattle Times Co. was "serendipity," says Madeleine Corson, chairman of the family-owned Maine media group.

The process of selling the newspapers, whose flagship is the 72,000-circulation Portland Press Herald, followed a strict auction procedure conducted by Lazard, Freres & Co., a New York investment bank. But Guy Gannett had hoped from the day the properties went on the market March 31 that the Blethen family, majority owner of the Seattle Times and three other Washington state papers, would prevail.

James Shaffer, president of Guy Gannett, says he called Seattle on April 2 to talk with his old friend Frank Blethen, CEO and publisher of the Times, whose family has roots in Maine. While the company had to be sold to the highest bidder, Shaffer says that "as CEO, I could influence that process" by encouraging the Blethens to bid.

Times Vice President of Marketing Robert Blethen acknowledges the company received a call, notifying it that Guy Gannett was going to be sold "because no heirs were interested" in carrying on the 110-year-old publishing tradition.

While Maine citizens were vocal about their fears that the papers would be sold to a media company interested more in the bottom line than in the interests of the community, their concerns were irrelevant. "No matter what the public did, we had to do what we had to," Corson says, citing the strict rules of conducting an auction.

The company decided to market its seven television stations separately from the newspapers and its new media operation, Shaffer says, because "we thought there would be higher prices and more bidders with the pure-play TV separated from the rest of the media."

Media cross-ownership rules also pointed in this direction (Guy Gannett owned Portland's WGME-TV) so splitting the sales was "kind of a no-brainer," Shaffer says. On Sept. 8, Guy Gannett announced the sale of the stations for $310 million to Sinclair Broadcast Group Inc. of Baltimore.

Under the auction process, Guy Gannett produced "big thick books that we sent out representing the company's facts and material situation," Shaffer says. More than 50 companies submitted preliminary bids for the print properties. "We winnowed down those bids and chose a more limited number to enter into a Phase Two discussion," Shaffer says.

The trustees considered three factors: price, terms and "ability to close," Shaffer says. This "level playing field" sidelined an offer from Guy Gannett employees and their unions. "Their price was not competitive. We certainly weren't discriminating against them."

Shaffer denied reports that the first round ended with Guy Gannett seeking additional interested parties. "At no time did we go back to somebody that was out and invite them back in," he says. In the end, five bidders made the cut; only the Seattle Times Co. has been publicly identified.

While the price of the cash sale was not disclosed, media reports have speculated the properties brought between $170 million and $200 million. "If there was any surprise," Shaffer says, "it was that we were able to get the best buyer in terms of values to step forward with the best price."

"That was thrilling," Corson says. She and others had worried "some other buyers might not see the value in what we were doing."

Shaffer explains that Guy Gannett was concerned whether "the buyer would see value" in its budding on-line enterprise, the New Media Development Group, which recently launched Maine Communities Online, a statewide effort to funnel local groups into one community publishing site on the World-Wide Web.

With most of the company's cash flow generated by its newspapers, the on-line effort's contribution to the bottom line would appear to be "not significant," Shaffer says. However, while it is "still absorbing cash" now, he says, "we expect a million a year on Maine Communities Online."

In addition to the Portland daily, the Seattle Times Co. is buying the 120,000-circulation Maine Sunday Telegram of Portland, 16,000-circulation morning Kennebec Journal of Augusta, 21,000-circulation Morning Sentinel of Waterville and a weekly, the Coastal Journal in Bath.

When the deal is completed in October, the papers will gain a new corporate identity -- Blethen Maine Newspapers, so named "because family ownership is so important to that area," Blethen says. The Seattle Times Co. is 49 percent owned by Knight Ridder, so the Miami-based publicly-traded company also will have "a stakehold" in Maine, he adds.

"We'll operate just like we do here, by being the majority owner," Blethen says. Charles Cochrane, a senior vice president of the Times Co., will move to Maine to oversee the transition and manage the papers as publisher and chief executive officer. Meg Weston will continue as president of the Portland papers, Michael Sexton will stay as president of Central Maine Newspapers and current labor contracts will be honored.

(Robert Blethen says whether the Maine papers will carry ads against federal estate taxes, which Frank Blethen has been buying in the Seattle Times, "would be a decision for Frank to make.")

As the Blethens expand their reach from coast to coast, Corson will preside over the end of her family's newspaper role, an event she calls "unhappy" but inevitable and, with the Blethens, acceptable. "These buyers are wonderful and they're going to make us proud. Frank Blethen told me that."

-- Pete Wetmore