New StarTrib Management to Emphasize Paid Content

New board of directors proposed
for Star Tribune

Lenders have chosen a former Wall
Street Journal publisher, the head of a
major newspaper company and two
local businessmen. A publisher has
yet to be named.

By JENNIFER BJORHUS, Star Tribune

The Star Tribune's proposed board of directors
will include former Wall Street Journal publisher L.
Gordon Crovitz, the newspaper will announce
today.

Crovitz is one of four well-connected executives
that the newspaper's major secured lenders,
slated to own the Star Tribune after it exits
bankruptcy, have named to its proposed board.
The other three are Michael Sweeney, managing
partner of the Minneapolis private equity firm of
Goldner Hawn Johnson & Morrison; former
banker and investor William Farley of Minneapolis,
principal of Livingston Capital; and Michael Reed,
head of Fairport, N.Y.-based GateHouse Media
Inc., which owns hundreds of small newspapers
across the country.

Sweeney is to be the chairman of the board.

None of the four could immediately be reached
for comment.

The group of secured lenders will probably name
two more board members later, and pick a new
CEO for the Star Tribune before Sept. 17, when a
federal bankruptcy judge is expected to confirm
the company's plan of reorganization, said Brad
Pattelli, managing director of Angelo Gordon & Co.
Several internal and external candidates for CEO
have been interviewed.

Referring to the two open board spots, Pattelli
said: "I think we could use more strengths in
social networking and the online community
experience."

The Star Tribune's reorganization plan calls for its
major secured creditors to swap $430 million in
debt for control of the newspaper company plus
$100 million in new debt. If the reorganization
plan is confirmed, the newspaper will probably
emerge from Chapter 11 protection later in
September.

Angelo Gordon, a private equity group in New
York, is one of the largest holders of Star Tribune
secured debt and has been leading the group of
secured lenders in finding new management for
the newspaper. The group includes Wayzata
Investment Partners, a private equity firm in
Wayzata; investment bank Credit Suisse Group;
CIT Bank; and an affiliate of GE Capital. It's not
clear who the largest shareholder will be because
the Star Tribune's debt can continue to be traded
until it exits bankruptcy, Pattelli said.

Pattelli said he was "thrilled" with the board
decisions.

"We've got people who have figured out how to
build paid-content models. We've got people who
have built out strong local news organizations
and we've got guys with strong connections in the
local community," Pattelli said. "Collectively, it's
just a great skill set to have to provide the
guidance to the next management team."

Gordon Crovitz is credited with building the paid-
content model at the Wall Street Journal. "The
trick will be figuring out how to replicate that at a
metropolitan newspaper," Patelli said. "I know
Gordon has some ideas about that."

Crovitz was at Dow Jones & Co., owner of the
Wall Street Journal, for more than 25 years. He left
in 2007. Most recently he co-founded a startup in
New York called Journalism Online aimed at
helping publishers charge people for reading
stories online.

Angelo Gordon has attracted attention because of
its interest in distressed print media companies.
The firm is a lead secured creditor in the
bankruptcies of the Star Tribune, Philadelphia
Inquirer and the Tribune Co., which owns the
Chicago Tribune and Los Angeles Times. It also
has a stake in American Media Inc., publisher of
the National Enquirer.

Pattelli said Angelo Gordon has no plans to push
for combining any of the publications.

"We view each of these situations as
independent," he said.

While he said it "makes a lot of sense" to combine
the Star Tribune with its crosstown rival, the St.
Paul Pioneer Press, he said that the group of Star
Tribune lenders has not spoken with Pioneer
Press owner MediaNews Group about that.

Pattelli said Angelo Gordon has been investing in
troubled news publications because it believes
that certain ones have a future.

"It's often times difficult being a contrarian," he
said. "We're certainly going into it with our eyes
wide open. We're believers in that form of media."

Pattelli said he considers the media
investments long term, but for an investment fund
such as his that could mean five to seven years.

"If we're being fair and rational about it, you have
to own this for the long term in order to be
successful," he said. "I don't think there's a near-
term strategy for success."

Pattelli said that the Star Tribune was attractive
because of its dominant position in the market
but that it needed to build a paid content model