JimmyCsays: At the juncture of journalism and daily life in KC

I see from a story in the morning paper that Quinton Lucas is trying to make points by criticizing Jolie Justus’s acquiescence in the Sly James-Burns & McDonnell gambit to build a new KCI terminal without bids.

Lucas is a smart guy, and that is an exploitable issue, but I don’t think it’s going to get him very many votes. Here’s why…

For starters, Lucas, like the 11 other council members (besides James and Justus) had every chance at the time to jump up in the spring of 2017 and say, “Hell, no, we’re not going to proceed with a no-bid contract!”

But they didn’t. A strong majority was poised to go along with the no-bid contract until, basically, The Star’s editorial page blasted the deal and demanded that proposals be solicited from other companies. That resulted in several months of reconsideration and, ultimately, the council tossing out Burns & McDonnell’s proposal and going with that of Edgemoor Infrastructure and Real Estate.

Like The Star, I was one of the lone voices expressing skepticism about the Burns and Mac deal. On May 18, 2017, the day Burns and Mac officials first addressed the full council about the deal, I published a post asking, among other things, “how much of a voice…would the public, or even the city, have in design of the terminal” and “how much money would Burns and Mac stand to make.”

Quinton Lucas asked several questions that day, too, including who would control the revenue flow — the city or the developer — but before he asked any questions, he declared, “I love the project!”

…The crux of the matter is the Burns and Mac deal was born of frustration and opportunity. The frustration lay with Sly, Jolie and others who realized KCI was a disaster and needed to be razed but were confronted with surveys showing large swaths of voters were dead set against a new terminal. That opened the door for “the hometown team” to seize opportunity and present city leaders and the public with a deal that would pluck the project from the dead-wood pile.

So, for Lucas to say now that Jolie and Sly should have rebuffed Burns and Mac’s overture — and that he would have done so — should be dismissed out of hand. I think every council member except Teresa Loar, who had her head in the sand, badly wanted to see a new terminal at KCI, and Burns and Mac’s proposal appeared to them to be a way to move forward when hope appeared to be lost.

…The airport project will now move ahead under Jolie’s capable leadership. She’s going to be our next mayor, and KC residents will get the benefit of her grace, equanimity and vast political experience for at least four years. Go Jolie!

**

I hope most of you read Andy Marso’s excellent take-out Sunday on the Johnson County hospital “building boom.” It was very long — nearly 3,800 words — but an easy and interesting read.

The gist, as captured by the headline, was that Johnson County was getting the lion’s share of hospital construction, while large parts of Wyandotte and Jackson counties are going “medically underserved.”

Marso is right on target, and it’s too bad, in some ways, that the biggest proportion of privately insured people — those who provide hospitals their biggest profit margins — is in Johnson County. At the same time, though, many of us benefit from the disparity.

I recently got pulled, somewhat reluctantly, into the Johnson County medical industrial complex after doing most of my medical business at facilities and with doctors connected with North Kansas City Hospital.

Here’s how that came about…

I was at Kansas City Orthopaedic Institute — a small, specialty hospital on College Boulevard — for a knee replacement in February. I was supposed to spend two nights at KCOI and then go home. But the day after surgery, I experienced an episode of heart failure. When EMTs arrived, the lead EMT asked me which full-service hospital I’d prefer to go to. Now, I don’t know why she asked me that because she already had made up her mind where I was going. But, anyway, I said, “St. Luke’s on the Plaza.”

That’s when she said, “We’ve got to take you to the nearest full-service hospital, and that’s St. Luke’s South.”

I once again requested St. Luke’s on the Plaza but she was firm, and off we headed to 123rd and Metcalf (lights not flashing and sirens not blaring, thankfully).

Over the next five days, I made the acquaintance of several physicians at that hospital, including an ER doctor, a hospitalist, a cardiologist and a pulmonologist.

The cardiologist became my cardiologist, and the pulmonologist became my pulmonologist. In addition, I’ve had to make two additional ER runs since then, and both times — by my choice and to Patty’s chagrin — I chose St. Luke’s South.

Those are my guys out there now, and I’m grateful Johnson County has a boat load of top-notch medical facilities.

…Oh, if you’re worried about me, stop. I’m still kickin’ and fully expect to be doing so for quite a few more years…

The loud gulp you heard today was the McClatchy Co. swallowing another big egg representing millions of dollars of continuing losses going back to its ill-fated purchase of Knight Ridder in 2006.

Last week, on the basis of McClatchy’s conference call regarding its first quarter financial results, I said it appeared the company was close to selling the Kansas City Star printing plant, McClatchy’s last big real estate plum.

This afternoon, The Star posted a five-paragraph story saying the printing plant was being sold to a “hospitality” company for $30.1 million — about 15 percent of what it cost to build the plant ($200 million) in the mid-2000s. The Star will lease the building back for 15 years with annual, initial payments of $2.8 million.

The “good news” here is that the $30 million will reduce McClatchy’s debt to about $715 million.

In one of the worst newspaper deals ever, McClatchy paid $4.5 billion for Knight Ridder in 2006 and also assumed $2 billion in debt.

Pushed to sell by a major, disgruntled stockholder, Knight Ridder fell into a fantastic deal, while McClatchy bought at the worst possible time — when the newspaper industry was starting to fall off an enormous cliff.

In a quote that should live in infamy, then-McClatchy chairman and CEO Gary Pruitt, said, “Opportunities like this come perhaps once in a company’s lifetime…”

Six years later, Pruitt was gone, and McClatchy has been buffeted by big losses and unrealized dreams of a successful print-to-digital transformation. Last year, McClatchy had a net loss of nearly $80 million. For the first quarter of this year, it posted a loss of $42 million.

No wonder, then, that The Star reported the printing-plant sale as almost an afterthought. Better not to call any more attention to this horror show than is absolutely necessary.

…This is the second time in two years The Star reached a deal to sell the printing plant. It backed out of the first deal.

This time, as then, the deal is hazy. Back in 2017, The Star said it was selling to an entity out of Chicago called R2 Capital LLC. In its report on the deal, The Star said nothing about R2’s background or even where it was from.

Today’s report was similarly spare, saying: “The agreement transfers ownership of the building to Ambassador Hospitality, LLC for a price of $30.1 million. The sale closed Wednesday.”

When you Google Ambassador Hospitality, the first listing is to Ambassador Hotel Collection, and there is nothing close to Ambassador Hospitality thereafter. Kansas City has an Ambassador Hotel that is part of the “Collection,” but I wouldn’t think that’s the company that bought the printing plant…Why would a hotel group be buying a printing plant? Menus, maybe?

The mission of The Star and McClatchy is to dig deep and tell readers what’s going on in their communities. The Star, then, should tell its readers more about Ambassador Hospitality — what it is, where it is, what it owns — so people know what’s going on with one of Kansas City’s most prominent and attractive downtown buildings. (P.S. See my Ambassador comment, which I posted a few hours after publishing this piece.) 

Once again, The Star has disappointed when it comes to covering itself. But is it any wonder? This is a media company in steep decline — owned by an umbrella company in steeper decline.

The leading McClatchy executives — CEO Pat Talamantes, CFO Elaine Lintecum and VP of Operations Mark Zieman — must think they’re smart, playing some cat-and-mouse game, holding back information.

But I think within a year or two some bigger cat is going to devour the mouse. Yes, Talamantes, Lintecum and Zieman will probably float away on big, golden parachutes. But maybe we’ll be able to finally put this mess of a company in our rear view mirror.

I think most of you know one of the things that really galls me is lazy reporting.

Regardless of how few editorial staff members The Star gets down to and how thin they are stretched, it is never acceptable, on a story that cries out for explanation, to regurgitate a few paragraphs from a press release and slap the story on the website.

But that’s what happened Friday with a story about a conviction in a 2017 Jackson County murder case.

The story caught my eye partly because the defendant looked creepy in his mugshot and partly because of the headline — “Raytown man sentenced to 22 years for murder, robbery in Blue Springs.”

The headline piqued my interest because 1) you see very few murders out of Blue Springs and 2) you don’t see a lot of murderers coming out of Raytown.

When I clicked on the story, by a reporter named Katie Moore, I saw that it was only four paragraphs. Here’s how it read…

A man was sentenced Friday to 22 years in prison for a shooting outside a Blue Springs restaurant that left one person dead in November 2017.

John D. Jeffries, 26, of Raytown, pleaded guilty to second-degree murder and robbery. A judge sentenced him to 22 years in prison, Jackson County prosecutor Jean Peters Baker said.

Police responded to the incident outside Bethlehem Cafe in the 1500 block of N.W. Woods Chapel Road. Witnesses gave a description of the shooter and officers spotted a man in the area who matched the description. Jeffries was taken into custody and charged.

Clinton Peckman, of Paola, was killed.

What bothered me about this story from the get-go was the lack of clarity and detail, particularly relating to what connection there was, if any, between Jeffries and Peckman.

Jeffries

Wouldn’t you agree that from the context, it appears this was a case of a man approaching a stranger outside a restaurant, robbing or trying to rob him, and then killing him?

It’s hard to read it any other way.

Now, there are few things that alarm the public more than random robbery-murders because they happen too often and we can all envision it happening to us. So, it is very important in reporting cases of violent crime to let the readers know, to the best of your ability, if violent crimes are random or if the principals knew each other and the crime was the culmination of some previous interaction.

As it turns out, this was not a random robbery-murder.

Moore, the reporter, had simply grabbed a press release from the Jackson County Prosecutor’s Office website and dashed off a story without bothering to go to a link called “charging documents” that offered much more detail about the case.

The charging document is a police “probable cause” statement that explains the murder evolved from events that took place earlier the day of Nov. 9. It started shortly after 7 a.m. with a report of shots being fired in Independence, apparently by Jeffries. About three hours later, a woman whose car Jeffries had damaged called police to say Jeffries was at an apartment complex called Autumn Place in Blue Springs.

The statement does not say what Jeffries was doing at Autumn Place but it says Peckman worked there, and at some point that morning Peckman’s and Jeffries’ paths crossed. They apparently did not know each other before that day.

Shortly after 11 a.m. the two men arrived in the Bethlehem Cafe parking lot in a mini van. Jeffries then shot Peckman, who was in the driver’s seat, jumped out of the car and carjacked a nearby couple at gunpoint. He quickly wrecked the car, however, and took off on foot but was soon caught by police after a brief chase.

Jeffries was charged with second-degree murder for killing Peckman, and he was charged with robbery for taking the couple’s car at gunpoint. Peckman was the victim of murder but not of a robbery.

**

The press release was deceiving. It raised obvious questions. The reporter needed to go beyond it to find out what happened and clear up the mystery. The information was at her fingertips. All she had to do was click on the link and she would have known what happened and could have explained it to her readers in a couple of additional sentences.

Too bad for Kansas City Star readers she took the lazy approach. Her story left the readers in a fog.

The McClatchy Co. appears to have a deal to sell The Kansas City Star’s printing plant for about $32 million, about 15 percent of what it cost to construct the plant before it opened in 2006.

In announcing its first-quarter financial results this morning, McClatchy reported this under the heading of “real estate activity”:

“On April 26, 2019, the company completed the sale of a small distribution center in Miami, FL, and expects to complete another sale of real property that will allow it to reduce first lien debt by approximately $32 million by the end of the second quarter of 2019.”

In March, the Kansas City Business Journal reported that the printing plant was for sale for $31 million. As far as I know, McClatchy has no other building worth close to $30 million.

During today’s conference call, Elaine Lintecum, McClatchy CFO and vice president of finance, said she would not reveal any details about the pending deal, including identifying the prospective buyer.

McClatchy has planned for bout two years to sell the building to reduce debt, which now stands at $745 million, and lease it back from the new owner. In addition to printing The Star, the building at 16th and McGee prints several other papers and publications.

Two years ago McClatchy reached an agreement to sell the printing plant for an unspecified price to a nebulous entity called R2 Capital LLC, which may have been out of Chicago. But McClatchy backed out of that deal, with one commercial realtor, Jerry Fogel, speculating McClatchy decided it wasn’t getting an adequate price for the plant.

The decision to build the plant was made by The Star’s previous owner, Knight Ridder, in the early 2000s. At the time, Art Brisbane was publisher of The Star. The plant opened about the time McClatchy closed on the purchase of the Knight Ridder properties in June 2006.

McClatchy sold The Star’s longtime headquarters building at 1729 Grand for $12 million in 2017. The buyers, local developer Vincent Bryant and several partners, are redeveloping the property for a variety of uses, including retail.

When it put both buildings up for sale in 2017, McClatchy was asking for a combined $46 million. It subsequently agreed to sell the two buildings — to different buyers — for $42 million.

With the headquarters building going for $12 million, that meant the price for the printing plant, back then, was about $30 million. If the new, proposed sale of the printing plant should go through at $32 million, it would be only a $1 million increase over the previous agreed-upon price.

**

As usual, McClatchy’s quarterly results were more bad than good.

Some of the lowlights…

:: The red ink continues to flow, with McClatchy reporting a net loss of $42 million for the first three months of 2019, or $5.34 per share of stock. In the first quarter of 2018, the company reported a net loss of $38.9 million, of $5.04 per share.

:: For the first time since it embarked on its transition from print to digital, digital-only advertising revenue was down — down by 5.2 percent against the first quarter of 2018. McClatchy CEO Craig Forman attributed the dip to a “softer news cycle” in the first quarter of this year and “a strategic tightening of website paywalls.”

:: Total advertising revenue was $85.2 million, down 14.7% compared to the first quarter of 2018.

Some of the highlights:

:: The number of digital-only subscribers rose nearly 60 percent from the first quarter of 2018. McClatchy now has 179,100 digital-only subscribers…although that is an average of only about 6,175 for each of of the company’s 29 papers. (The Star has about 12,000 digital-only subscribers. People who take the print edition automatically have digital access.)

:: It was the twelfth consecutive quarter of growth in digital only-subscriptions for McClatchy.

:: The company significantly improved its performance in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which the company called a “key metric.”

In news that could be described as good or bad, depending on one’s perspective, the company expects to save about $12 million this year as a result of its 2018 early-retirement program.

Eleven longtime editorial employees were among Kansas City Star staff members who accepted buyouts. The 11 included political columnist and editorial writer Steve Kraske, Johnson County government and business-development reporter Lynn Horsley and photographers John Sleezer and Keith Myers.

The 11 editorial staff members were all earning significant salaries — probably $80,000 or more each. The Star has been hiring new, younger staff members this year. The new new staff members are being paid significantly less, perhaps as little as $35,000 a year, I understand.

…To work for that kind of salary, you have to really be hungry to break into the newspaper business. But it’s certainly a good thing for all of us news consumers that some people are willing to do it. Getting good, accurate information about our communities, nation and world has never been more important.

One of my difficult duties as self-anointed watchdog of journalism in Kansas City is to track circulation at The Kansas City Star, from which I retired as an assignment editor in 2006.

I say difficult because, as everyone knows, circulation of print newspapers has been steadily dropping since it peaked, nationally, in the mid-1980s.

I don’t know what The Star’s circulation was back then, but I can give you some figures from more recent times.

:: In 2004, Sunday print circulation was about 388,000.

:: By 2010, the number was down to about 283,000.

:: Last August, it stood at about 80,000.

:: As of Dec. 31, 2018, the number was 67,889.

That’s what you call a cliff drop. It’s also the main reason executives at parent company McClatchy have been mulling when to call a halt to the blood-letting, ceasing print publication and going exclusively digital.

Rumor has it that could occur in 2020. McClatchy CEO Craig Forman was asked about that in a conference call a few months ago but wouldn’t comment.

On May 9, McClatchy executives will have a conference call to announce the company’s financial performance for the first quarter of this year, and it wouldn’t surprise me if Forman is asked about that again; it’s the elephant in the room.

For years, McClatchy executives have stressed the future of its journalism lies in transitioning from print to digital. The problem is they haven’t been very successful at it, and there are few indications that they’ve found the combination to the lock.

According to the Alliance for Audited Media, a newspaper trade group, The Star had only about 12,300 stand-alone digital subscribers on March 31 of this year. (Print subscribers automatically get the digital product.)

In fairness, many other metro dailies are having similar problems making the transition. The Los Angeles Times, for example, has only 160,000 digital subscribers, and that is in a metro area of 15 million. More successful has been The Boston Globe, which has more than 100,000 digital subscribers in a metro area of 4.7 million.

(Far and away the most successful paper, in terms of digital subscriptions, is The New York Times, which has more than 2.6 million online subscribers.)

A positive for both The Globe and The LA Times is that they are now privately owned, and their owners are free of the pressure that comes with ownership by companies whose stock is publicly traded. As Jeff Bezos has done at The Washington Post, Patrick Soon-Shiong, who bought the LA Times for $500 million last June, has invested heavily in The Times and is willing to lose tens of millions attempting to rebuild and revive the paper in his vision. He has said his goal is to have 2 million to 4 million digital subscribers by 2022 or 2023.

No such investment will be forthcoming, however, at publicly owned companies like McClatchy, Tribune Publishing (Chicago Tribune and other papers) and Gannett, the largest newspaper chain. Those three companies appear to be holding weak hands, with no good options for getting new cards. For that reason, speculation abounds in the industry that those companies might be in play for some sort of consolidation.

McClatchy made an unsuccessful run at Tribune last year, so it is now more likely to be in the category of the pursued than the suitor. Further complicating the picture, hedge funds are — or have been — knocking at the door of two of those companies. Alden Global Capital attempted a hostile takeover of Gannett in January, and Chatham Asset Management has been steadily buying up shares of McClatchy and is the company’s largest creditor. Chatham’s ownership share of McClatchy has gone from about 20 to 25 percent within a matter of months.

I have no idea what’s going to happen with McClatchy. I think there’s a good chance Gannett, which fended off Alden, will buy the 29-paper chain. It could end up in bankruptcy. In any event, the future looks bleak. On Jan. 1, McClatchy’s stock price (under the MNI symbol) was about $8 a share. It closed today at $3.12.

Today, the investment research firm Zacks said it was likely that on May 9 McClatchy would announce a year-over-year earnings increase but on lower revenue. It will be interesting to hear how Forman and his henchmen, including former KC Star publisher Mark Zieman, cast that as a positive, but I’m confident they will…They’ve been pitching poor financial results as good news for years now.

**

When I got my first newspaper job, in September 1969, it was in Covington, KY, at a paper called The Kentucky Post and Times-Star. It was a one-section paper delivered to northern Kentucky residents as a “wrap-around” to The Cincinnati Post and Times-Star.

I would have preferred to start at a major metro daily, like The Cincinnati Post or the Louisville Courier-Journal, my hometown paper, but I realized my best bet was to start at a smaller paper and then try to move up. At the time, The Kentucky Post’s weekday circulation was about 50,000, which, I thought, was decent. My goal, though, was to get to a paper that went to hundreds of thousands of people.

I realized that goal a year later when I came to Kansas City. I tell you, I was absolutely thrilled that I’d reached “the big time.”

…I talked about The Star’s Sunday circulation above, but I didn’t mention weekday print circulation. Well, as of March 31, it was down to 53,112, just about the size of my first paper back in northern Kentucky.

For a day or so a couple of weeks ago, I was briefly second-guessing my commitment to Jolie Justus for mayor.

I’ve heard several people, mostly from Midtown, say her responsiveness to constituents has faltered and that she’s too willing to go along with the developers and the development attorneys — big sources of campaign contributions.

My own feeling — overriding those legitimate concerns — has been that she would represent our city well at the state and national levels; that her eight years’ experience in the Republican-dominated Missouri Senate has given her a depth of political experience that her opponent Quinton Lucas lacks; and that she is very good at listening to people on all sides of issues and arriving at reasonable positions.

On the latter point, for example, some people are angry at her for supporting Quik Trip’s successful push to expand its store on Westport Road west of the Trafficway. But who’s to say that won’t turn out to be a positive for the area? Tons of people patronize that location, and it may well be a safer and smoother operation with the pumps on one side of Mercier and the store on the other.

Anyway, like I say, my equivocation was short lived.

About the time I was having second thoughts, The Star came out with an editorial asking, “Should City Manager Troy Schulte be replaced.”

In response to The Star, Justus was generally supportive, saying, “I happen to think Troy has been a strong city manager for Kansas City.”

Lucas, on the other hand, seemed to be open to the idea of replacing Schulte — which would require a majority vote of the 13-member City Council. He was quoted as saying…

“There have been several areas in which I have disagreed mightily with Mayor (Sly) James and by default, I have disagreed on those topics with what the city manager has been directed to do.”

Lucas — who teaches law classes at the University of Kansas — is a smart man, but that was a jaw-droppingly off base statement to make.

First, a city manager isn’t going to last long if he doesn’t keep the peace with the mayor, particularly a very strong mayor, like James has been.

Second, in my view Schulte has been the best city manager since “good government” advocates displaced the Pendergast machine in 1940 and installed L.P. (Perry) Cookingham in the city manager’s office. During his unmatched 19 years as city manager, the stage was set for development of Kansas City International Airport, and the city doubled in geographic size, from 60 to 130 square miles. (It’s now 319 square miles.)

Schulte has now been city manager for nearly a decade, and I don’t see why he couldn’t — and shouldn’t — go on another decade and surpass Cookingham. Under Schulte, city services have improved by leaps and bounds. Among other things, the 3-1-1 call-in and online complaint-and-request system used to be maddeningly bad, but it now runs flawlessly (at least in my experience).

In addition, Schulte is a friend of the fountains, which, as many of you know, are close to my heart. From the $800 million G.O. bond issue that voters approved in April 2017, Schulte allocated several hundred thousand dollars to renovate the Spirit of Freedom Fountain on Brush Creek and several hundred thousand to augment private funds to renovate Haff Circle Fountain at the Meyer Boulevard entrance to Swope Park.

Flashy projects or nuts and bolts, Schulte gets things done. Just a few weeks ago, for example, Ward Parkway from about 59th to Gregory was a demolition-derby area, with almost more potholes and gouges than flat surface. But the city repaved it just in time for the Rock the Parkway half marathon on April 13…I credit Schulte.

So, for Lucas to intimate that he would consider leading an effort to oust Schulte is out of bounds for me. What that sounds like is a guy who is getting ahead of himself and who might be prone to bad judgment on important matters. There’s absolutely no reason to consider removing Troy Schulte. We’re very fortunate to have him, and firing him would be a colossal mistake and could begin to undo a lot of progress the city has made the last 10 years on delivery of basic services.

**

Over and above the Schulte issue, a story in today’s KC Star further affirmed my commitment to Justus. City Hall reporter Allison Kite wrote about the problem of the city’s underfunded pension plans. While it’s not an issue that gets a lot of attention from the public, it is extremely important because it could mean the city will have to significantly reduce services in the future in order to live up to its pension obligations.

The story said that 10 years ago, pensions accounted for 8.5 percent of spending from the city’s general fund, but it now absorbs more than 13 percent and is expected to rise to 15 percent by 2024.

The city has four pension funds, covering police officers, civilian police employees, firefighters and non-public-safety city employees.

What aroused my political genes was the fact that Lucas was “nowhere to be found” on the pension issue.

Kite had no trouble getting a quote from Justus, who said she would defer for now to a task force that is studying the issue. But Lucas, Kite wrote, “did not respond to a voicemail or text messages requesting comment.”

That was not only surprising but worrisome — worrisome because Lucas has the backing of the police and fire fighter unions.

His reluctance to respond to Kite is attributable, in my view, to not wanting to say anything to upset the police or fire fighters. In other words, let that sleeping dog lie.

Those pension funds are sorely underfunded for one reason: Those two groups of employees have scratched and clawed for good salaries and great benefits for decades — they have routinely worn down the City Council — and the city, consequently, has postponed the day of reckoning.

If Lucas should get elected mayor, you can bet he will further postpone that day…Justus just might do that, too, but because she is running without the support of the police and fire fighters, we the citizens just might have a better chance of seeing her take on the issue. Someday fairly soon, some mayor is going to have to deal with it.