Continuation of Is McClatchy Different?   

Besides having the dominant paper in Sacramento, the McClatchy family owned dailies in Fresno and Modesto, Central Valley farming communities John Steinbeck used as backdrops in "The Grapes of Wrath." C.K. McClatchy was the great-grandson of James, an Irish immigrant who escaped the potato famine, landed in New York, worked for Horace Greeley and decided to take his advice to go West. After months of deprivation, a shipwreck that landed him in Mexico and a long walk north, James settled in Sacramento about the time of the Gold Rush. An astute businessman, he gained control of the Bee, one of a dozen papers in the city.

The McClatchys--first James, then his son Charles--were staunchly progressive, championing the cause of squatters' rights, printing tirades against the corrupting influence of the railroad monopolies and launching uncompromising campaigns on issues ranging from keeping utilities public to planting shade trees throughout Sacramento. On his deathbed in 1936, Charles ordered his unmarried daughter Eleanor to return to the city from Greenwich Village, where she was an aspiring playwright. Promising to carry on the family ideals, she took over the three Bees and gave editorial control of the papers to Walter P. Jones.

Jones covered haystack burnings and falling birds; his was a "highly conscientious, small-town journalism that had worked for 50 years," says Frank McCulloch, who became managing editor of the Sacramento Bee in the mid-'70s. "Why should he change?" But change was intruding on Sacramento, and the Bee could no longer stay the way it had been, with its Disney-designed bee logo and its penchant to portray itself as "The Valley of the Bees isolated from all other media influence!" as Joan Didion noted in her 1965 essay "Notes from a Native Daughter."

Though the Coast Range cut off Sacramento from San Francisco, and the Sierras isolated it from the East, bulldozers massing on its borders, flattening farmland into housing tracts, portended a new city, one that had yet to be reflected in the Bee or Union. "There is something about the Sacramento papers that does not quite connect with the way Sacramento lives now," Didion wrote, "something pronouncedly beside the point." By 1974, the newspapers were threadbare operations devoted to paying employees the highest possible salaries and to absolute independence run by Eleanor McClatchy, a septuagenarian spinster working from behind a rickety old card table. Eleanor had let the company's financial performance lag far below the industry standard; to fix the problem, she named a successor from among her nephews, choosing Charles Kenny, C.K.

In 1974, Jones died, and C.K. became editor of the three Bees. He deplored much of what was happening in the world of corporate journalism, especially those chains whose primary purpose, he once said, was "to be ever faithful cash cows for the owners." He decided instead to assemble a roundtable of executives who sought truth, editorial quality and public service above profit, calling first upon Frank McCulloch.

McCulloch had been a respected senior reporter at Time magazine, a Marine drill instructor as journalist who, as managing editor of the Los Angeles Times in the early '60s, began turning it from a corrupt cog of the Republican Party into a great newspaper. He was "a fearless hunter of sacred cows," wrote David Halberstam in "The Powers That Be," "always out on the newsroom floor pushing reporters, getting them out of the office, making them look for news."

Legendary among Vietnam War correspondents, he scored scoop after scoop for Time, but left Southeast Asia disillusioned, eventually drifting to Palo Alto in the early '70s, where C.K. McClatchy found him editing an education magazine. "I was bored out of my mind," McCulloch recalls, when the phone rang. It was C.K. McClatchy, offering him a job.

He became managing editor in Sacramento, reporting directly to C.K., starting work on Valentine's Day 1975, unveiling the same vision he articulated at the Los Angeles Times: " 'We're going to try to report every story better. We're going to try to edit every story better. We're going to try to place every story better. And we're going to try to illustrate every story better.' That's what I told them, and that's what we did."

McClatchy's reputation soared with its circulation, but the business side continued to languish. Amid the worst ad slump in memory, C.K. approached newspaper executives across the country, searching for someone to make the company profitable. Everyone turned him down, including Erwin Potts, general manager of Knight Ridder's Charlotte Observer. "I'd never even heard of McClatchy," he says. But McClatchy kept calling, at a time when Knight Ridder was taking away autonomy from its newspapers. "It was driving me crazy just to do the basic job," Potts recalls; he was seeing creeping corporatism that "sort of bothered me." Potts agreed to visit Sacramento, arriving on July 4th weekend, 1975. "This was the capital of the largest state in the union, and it was the deadest town I'd ever seen," he remembers. McClatchy headquarters and the flagship Bee were falling down. Potts walked into Eleanor's closet-size office and found her behind the card table, a tiny lady with white hair and twinkling eyes.

"The more I talked to them, the more intrigued I became," Potts says. McClatchy had a "wonderful sense of values, but a real head-in-the-sand kind of approach toward newspapering." As long as nobody spent more than the company took in, "that was fine with Eleanor. Financial management was just about that sophisticated."

At one point, Potts asked Eleanor, "What are the top five qualifications you're looking for in this person you're trying to hire?

"You know," she said, "I think we just need somebody with a good sense of humor."

It didn't take Potts long to realize anyone who took the job would have to embrace Emerson's notion of immortal hilarity to succeed. The clumps of corporate turf had grown so thick they required a machete to penetrate. A calcified Old Guard presided, entirely resistant to change, old and trusted "friends of Eleanor," Potts recalls. And those friends unfailingly supported Eleanor, whose attitude was "my father wanted me to keep these newspapers the way they are."

To keep up with its competitors, McClatchy required enormous and expensive improvements in technology, buildings and equipment, to attack what Potts called the "wall-to-wall" labor unions. Potts saw the coming tempest of competition, not only from other newspapers, but also from other media taking away readers' time, and from corporations bent on expanding, gobbling up the weak in their way. Somebody needed to protect McClatchy. But it wasn't going to be him. He left Sacramento figuring he'd never come back.

But C.K., at McCulloch's urging, kept calling, promising Potts total authority. "That was critical, absolutely critical, because without that authority, I'd have been dead in the water." Potts took "a leap of faith," he says, moved his family to Sacramento and made his first misstep: He approved a request to replace the cafeteria's wallpaper, chosen by a friend of Eleanor. "All hell broke loose."

Potts eventually turned the Old Guard into allies, assembling a corporate team to shake up the McClatchy culture without alienating the friends of Eleanor he needed to make the change happen. "Over time it worked out," he says. "But it wasn't easy."

Around the newsroom, C.K. and Eleanor were revered, a couple of Old Money oddities who ate lunch in the cafeteria and knew everyone's name. C.K. answered his own phone and wore Sears suits and sweaters with holes. Legend has it Eleanor once loaned money to the Union so Sacramento would remain a two-newspaper town; she had party leftovers boxed to send to local homeless shelters, and issued quirky orders never to refer to the city as hot or to one cent as a penny. They were noblesse oblige, not nouveaux riches like the Chandlers and the Hearsts, and the city they helped build reflected their graciousness with its Victorian homes, stately capital buildings and miles of boulevards lined with enormous shade trees planted and preserved largely due to the editorial harangues of C.K.'s grandfather and great-grandfather. C.K. was thin--"frail looking" is how Potts described him--"Fred Astaire without the dancing," said another executive. Traveling south to Fresno and Modesto, he was not only a presence in the newsroom, but the ranking editor. The three Bees' managing editors reported directly to him, a fan of old-fashioned, hard-hitting journalism that was as likely to expose greedy developers as it was corrupt politicians.

In Septmber 1976, four Fresno Bee staff members--including Managing Editor George Gruner--went to jail rather than reveal their source for a government corruption story. C.K. spent hundreds of thousands of dollars fighting court battles that eventually led the state Legislature to change the constitution to include reporters' shield laws, says Gruner, retired and living in Fresno. "That was C.K.--he was always concerned with the public interest. There was no news organization ever more supportive of reporters and editors than C.K. McClatchy and the McClatchy company."

He put former New York Times reporter Denny Walsh on the corporate payroll, setting him loose on the Valley's sacred cows. From 1978 to 1983, Walsh and two other reporters wrote more than 300 stories for the Fresno Bee investigating widespread corruption in the San Joaquin Valley establishment, practicing a brand of journalism that Walsh describes as "just digging. You're digging to find the culprits, not to find some amorphous cosmic villain--like pollution or bad policy. You're digging to find the bad guys. And if they're capable of giving you a bad time, you don't back off."

Over time, the Disney logo vanished, the libel suits increased and the Old Guard became increasingly rebellious. "I'm sure there were points when C.K. said to himself: 'My God, what have you done?' " McCulloch says. But the closest he came to complaining was this warning: "You're not going to crank up any more libel suits, are you? I got about as much as I can handle on my plate right now, so be careful."

On the business side, Potts' strategies led to a strike at the Sacramento Bee; the strike produced a "dramatic change in culture that left hard feelings, feelings of abandonment," says veteran Bee editor Paul Clegg.

It all started when Potts switched Modesto to morning delivery and added a Saturday edition, with instant circulation gains. A few months later, he flipped the Fresno Bee to morning, too, pushing forward, figuring out a way to force Sacramento into the morning market. Then the mailers threatened to strike. "Nobody believed we'd go to the wire on anything, because they'd said that for years upon years upon years and never had a strike," Potts says. When they struck, the other unions, including the newsroom, joined in.

"Everybody figured as soon as the family finds out how upset we are, they'll give in to our demands," Clegg recalls. "People were horrified when the family hard-lined it." Chaos ensued--600 marchers singing "We Shall Overcome." Nails scattered over driveways, threats to break C.K.'s legs and phone calls hostile enough to provoke Potts to send his wife and children to Florida. In the midst of it, Potts switched the Sacramento Bee from afternoon to morning and told everyone to reclaim their jobs or lose them.

Potts won, and his enemies thereafter branded him a Southern strikebreaker. In the wake of the strike, Eleanor found herself engulfed in the "biggest storm [she'd] ever seen. I know it had to be a terrible thing for her," Potts muses. "And she never said anything negative to me about it." Less than two years later, Eleanor was dead; the courtly parlor game between the Bee and the Union had become an all-out war.

With the power--and promise--of the McClatchys behind him, McCulloch gave the Bee national cachet, ushering in a Golden Age of journalism. He hired creative, divergent thinkers with degrees from Stanford, Harvard and Berkeley, paid them well and pointed them toward greatness. They brought an unmatched passion to the job, rousing--and horrifying--veterans. It was a collection of colorful personalities, wildly confident, take-no-prisoners reporters. McCulloch created an ombudsman's position, killed the women's section and encouraged Peter Schrag to reinvigorate the opinion pages, continuing the tradition that the three Bees publish the same editorial for state, national and foreign issues, further strengthening the influence of the company's liberal voice.

The Sacramento Bee solidified its position as the capital's paper of record, investigating local and state politicians, schools, developers, the federal government and the mob. In the early '80s, C.K. promoted McCulloch to oversee the three Bees and his latest acquisition, the Anchorage Daily News, bought in 1979 from Kay Fanning, the former wife of department store magnate Marshall Field. Several years later, he bought the News Tribune in Tacoma, over time pouring millions into both for new production plants, presses and personnel.

As the '80s advanced, though, a few noticed C.K. becoming "more and more detached," recalls an editor who worked at McClatchy at the time. "Erwin Potts seemed to obtain a firmer grip all the time. The perception was that Potts was really in charge of the chain during those years"-- with Gary Pruitt as his protégé.

In 1984, Potts, searching for a new corporate attorney, found Pruitt working at a boutique First Amendment law firm in Miami. A graduate of the University of Florida and the son of an Army lieutenant colonel-turned-motel-manager, Pruitt held a joint degree in law and public policy from the University of California, Berkeley. He "looked about 14," says McCulloch, a beach boy with a mop of blond hair in a dark suit, so inexperienced he misspelled the company's name in his initial application. Despite some doubts, they flew him out for an interview.

On the drive from the San Francisco airport to Sacramento, Pruitt noticed tape holding Jim McClatchy's glasses together. Bill Coblentz, a McClatchy board member also in the car, urging Jim to buy a new pair, proudly showed him his own. "I got these at Woolworth's waiting in line for the cable car!"

"My God," Pruitt remembers thinking, "how much does this job pay?"

Back in Florida, Pruitt worried that he wasn't qualified for the position, and that that fact would be painfully apparent once he got hired. When C.K. offered him the job, he was scared to death to take it. But he did, and was loved, working elbow to elbow with hardened, hunched-over reporters and editors in rumpled clothes and rolled-up sleeves. "His push was always: 'How can we get these stories in the paper?' " Clegg says. "It was never, 'What can we do to keep them out?' "

The same year C.K. hired Pruitt, he asked Frank McCulloch to retire. Hurt and stunned, McCulloch resigned, and became managing editor of the San Francisco Examiner for a decade. To this day, McCulloch remains unsure why C.K. asked him to go. But his friend Leo Rennert has a theory: McCulloch wanted the authority to impose a single vision on the company's top editors; C.K. was adamant about giving editors autonomy. That decision--to decentralize power--was a fundamental cultural shift at McClatchy whose impact is still felt.

C.K. and Potts made an unbeatable team. C.K.'s devotion to journalism and Potts' instinct for improving margins transformed McClatchy into a gem of a newspaper company, a sought-after destination where journalists were given enormous creative freedom to pursue innovative projects. Everything at McClatchy became professional, from the sleekly designed newspapers to the modern glass and steel buildings in Anchorage and Tacoma--where a two-story glass sculpture hangs in the lobby like an enormous half-million-dollar Christmas ornament.

In Sacramento, former Chicago Sun-Times Managing Editor Gregory Favre became executive editor in 1984, adding entertainment sections and a Sunday magazine, increasing sports and metropolitan coverage with larger newshole and staff, sending reporters across the country and abroad on assignments--to Somalia, El Salvador and the Philippines. Dale Maharidge drove around the country, writing three stories a week for a series called "The Pulse of America;" he went to Alabama to find the children of the impoverished farmers featured in the James Agee classic "Let Us Now Praise Famous Men" and turned the ensuing series into a Pulitzer Prize-winning book. Favre gave bonuses to managers for hiring minorities and lured to the paper best-selling author and freewheeling columnist Pete Dexter, "a bulldog who would go after anyone, with Favre's blessings," recalls Paul Clegg.

In late '87, C.K. decided it was time to move the company from private to public ownership, keeping most of the controlling stock in family hands. The family wanted more cash, and they were worried about succession.

A few months before the sale, C.K. made a speech that stunned the industry. Speaking at the University of California, Riverside, he blasted corporate greed and group ownership, explaining McClatchy's most significant difference: "We have never felt there was any intrinsic virtue in great size," he said, articulating a vision that clearly saw McClatchy as a company apart.

"I was surprised he'd speak that way," says former Knight Ridder executive Larry Jinks, now a McClatchy board member. "Not many people do. There's a general understanding in the newspaper world that you don't go around publicly criticizing people." C.K. didn't care. "C.K. was all newsroom, really," recalls Potts. "He didn't like the [idea] of owning a whole bunch of newspapers and treating them like McDonald's franchises."

And then, a few months later, he died, on April 16, 1989, at age 62. His heart attack so stunned and saddened reporters and editors, no one touched his office for nearly a year. The funeral brought journalism's luminaries and California's ruling elite to Sacramento to eulogize the man distinguished University of North Carolina journalism professor Philip Meyer once called "a philosopher king of the media."

With the board's blessing, Potts took over. By 1991, his compensation had soared to nearly $1 million, while the company's net income dropped, prompting Guild members to picket the annual shareholders' meeting to protest five years of stalled contract negotiations.

Nearing retirement age, Potts looked around for a partner. He immediately focused on Pruitt. "We saw he had greater potential, and he thought so, too," Potts says. "He's good with people, No. 1. That may be the most important thing. He understands the newsroom side of the business, which is very [important] in this company. [He] has an instinct for commercial; he understands what's important and what's not. There has to be a commercial instinct somewhere if you're going to succeed on the business end of the news. To me, the guy has everything. He really does."

Pruitt became the first of the Bee publishers in Fresno in 1991, an appointment that signaled the end of the McClatchy tradition of giving Bee editors and general managers equal footing. Pruitt quickly won over reporters and editors, settling Guild contracts that had languished for years, strolling among the desks, learning everybody's name, returning phone calls, engaging in long conversations with reporters about everything from rock music to problems with supervisors.

After first being impressed with Pruitt, Editor Beverly Kees became uncomfortable when he started making "all the decisions out of his office, including newsroom decisions," she says. Within two years, Kees was gone; Pruitt, she says, "wanted someone else as editor." (Pruitt declines to discuss her departure.) By the time Potts called Pruitt back to corporate in 1994, the Fresno Bee had weathered the recession with revenue and circulation growth, and had "made budget every year," Pruitt says. "It was successful.... I had fun." The paper won several state awards, but had three editors in three years, the third one appointed after Pruitt's departure.

By 1995, the year Potts made Pruitt president and chief operating officer, McClatchy had won three Pulitzer Prizes (in addition to the one won in 1935), killed the competition in Anchorage and Sacramento, and acquired more than a half-dozen daily and weekly papers, the largest one being the then-153,000-circulation News & Observer in Raleigh.

A decade-long battle against the unions ended in the mid-to-late '90s with McClatchy winning significant concessions. Through it all, Potts' steely resolve never wavered. "I knew," he says, "what had to be done."

In Anchorage, after the Times shut down, there were no spoils, no bonuses for winning the war, no more travel to wherever whenever, according to reporters who worked there at the time. It was a clear shift from war to business mode, recalls one senior editor. "From the company's point of view, it was time to start making money. Well, of course! But it was a surprise to a lot of people."

In Fresno, Gannett veterans Bob Weil and Keith Moyer took over, winning awards but bringing with them what critics call "the Gannett mentality": a pro-business approach; boosting local sports coverage; and running editorials with headlines like "Let's Go, 'Dogs!" while promoting a downtown stadium.

Perhaps the most dramatic revolution occurred in Tacoma, where Executive Editor David Zeeck's arrival in 1994 marked a fundamental change for the newspaper. Within a year, he had completely redefined the News Tribune's journalism to become "intensely local," says Tracy A. Thompson, a business professor at the University of Washington, Tacoma, who documented the change in a case study for Northwestern University's Media Management Center.

Over the years, Zeeck has ordered reporters and editors to embrace civic mapping, an exercise consultant Richard Harwood developed to find more diverse, grassroots sources, and to cover large-scale community events the paper had tended to play down--the Western Washington Fair, the daffodil festival, the Miss Washington contest. The transition increased productivity, but prompted a newsroom exodus.

"Managers are carrying a crushing load," one reporter told Thompson for her study. "Anything that isn't an emergency gets ignored." The switch to teams, the case study showed, produced familiar problems: "an overemphasis on quick and easy stories over quality enterprise pieces, poor editing due to team leaders being overworked, and stories falling through the cracks due to the lack of 'bridges between teams.' "

Zeeck came to realize the team system "wasn't working as well" as he had hoped, he says, and he is returning the newsroom to a more traditional structure, consolidating the entertainment and Body and Soul team into a features department, for instance. "We're trying to hold on to the parts of teams that work, and eliminate the parts that don't," he says, adding the Thompson case study "doesn't reflect the paper we are today."

The march to ever-increasing profitability continued from 1991 to 1994, with the company's margins increasing steadily from 11.5 percent to 15.2 percent. In 1996, Potts stepped down but remained chairman of the board, and Pruitt became CEO at 38, one of the youngest in the industry. Despite McClatchy's historic distrust of growth, Pruitt sought out the Cowles, as respected a publishing family in Minnesota as the Binghams were in Louisville, when they put Minneapolis' Star Tribune and its subsidiaries on the market in September 1997. Analysts estimated the selling price at anywhere from $850 million to $1.3 billion; the net revenues from its newspapers alone were larger than McClatchy's.

If Pruitt pulled off a deal of that magnitude, he could step out of Potts' shadow, become a Wall Street player, and be wealthy beyond the wildest imaginings of a motel owner's son. He went to the board and proposed spending $1.4 billion. "They laughed at me," he says. After thoroughly dissecting McClatchy finances, the board finally agreed to allow Pruitt to pursue the deal. But the Cowles family refused to let him bid. "They thought we were too small," Pruitt says. So he turned his considerable charm on Elizabeth Ballantine, one of the Cowles family trust managers, now a member of the McClatchy board.

Impressed by McClatchy's independence, she persuaded her family to let Pruitt compete. The McClatchy team moved aggressively, evaluating every aspect of the Cowles business. At the Star Tribune, unions dominated, but the company had lots of deadwood to cut and subsidiaries to sell off. The paper had declining circulation but a good market--growing, affluent, educated. Its retail sales were increasing faster than the national average and the competition marginal: The Star Tribune had a much larger share of the advertising market than the Knight Ridder-owned St. Paul Pioneer Press, separated from the Star Tribune's territory by the Mississippi River.

Still, $1.4 billion was "a transformational deal," Pruitt recalls. He submitted the bid and went to New York to sell it. He remembers lunch at 21, with its solid brass doors and soft leather chairs, sitting around an enormous table with the analysts, pitching the buy. When he got up to leave, one of them quipped: "That guy just bet his career on this deal."

Pruitt and his top lieutenants kept the negotiations secret and "tried to carry on our regular jobs," he says, until he got a call one early November evening. Cowles accepted the $1.4 billion bid, contingent upon a contract agreement. "Holy shit," he thought. "You'd better deliver. If you don't, you're going to screw up this great company that took 140 years to build."

He flew to Minneapolis, worked to negotiate and sign the contract in a day that lasted well into the night, and refused to budge when Cowles executives urged him to forgo meeting with employees the next day because they'd ask about layoffs. "I can answer that: There are not going to be layoffs," he told them. He went back to his hotel room, ordered a pizza at 2 a.m., and while it snowed, prepared remarks for a 7 a.m. conference call with analysts, an employee meeting to follow and a press briefing after that.

The sale stunned Star Tribune employees. "No one--not even the beat writer covering the sale--knew McClatchy was a potential buyer," reported the city's alternative weekly, City Pages.

At the next day's meet and greet, McClatchy's newest employees clamored to get a look at their boss. The meeting was like nothing Pruitt had ever experienced. Hundreds stood before him, judging him, their jobs and futures hanging on his words. He took the podium knowing a lot rested on his performance. "If you can get out of the blocks cleanly and do well, it starts the momentum going smoothly," he says. "If you stumble, Wall Street punishes you going forward."

He so impressed them with his one-liners, boy-band bearing and nonchalance, someone in the audience felt comfortable enough to suggest the women wanted to know if he was married. "I am," Pruitt replied, blushing. "But I appreciate the sentiment."

The next day, the analysts crucified him for overpaying. McClatchy's stock dropped 14 percent to $28 a share. "Who can say who's right at that point?" he figured. With that, he flew back to California, and the next day went to see Pearl Jam and the Rolling Stones in Oakland.

Within months, analysts were praising Pruitt for acquiring a plum property in a growing market. He removed the Star Tribune's top business executives, hiring John Schueler from the Orange County Register as publisher. Under Schueler and a new executive team, the Star Tribune realized steady margin increases from the mid-20s, and came to control nearly 35 percent of the region's advertising dollars, compared with about 10 percent for the rival Pioneer Press in St. Paul.

While other companies endured merciless criticism for cost-cutting and newsroom layoffs, McClatchy would be different, the newspaper equivalent of the "City Upon a Hill." "I know a lot of people feel that the demands of the public marketplace are inconsistent with quality newspapers," Pruitt says, but he is not among them. "We want to be recognized as one of the best news companies in America."

With renewed vigor from his Minnesota upset, Pruitt assembled his own team of editors, largely baby-boomer, upper-middle-class white men, well-liked, industrious pragmatists with impressive credentials, willing to work for publishers in a way their predecessors had not been. In 1998, the company hired Janis Heaphy to take over the Sacramento Bee, the first publisher in the paper's 141-year history. Almost immediately, Heaphy looked for someone to replace Executive Editor Gregory Favre, who left within months of her arrival to become the company's vice president of news. During his interview for the executive editor's job, Sacramento Bee Managing Editor Rick Rodriguez, a 20-year veteran, told Heaphy, "We wouldn't always agree, but that she'd be the boss in the end."

Heaphy hired him. Agreeing the paper needed to change focus, they shifted resources to accommodate the demands of the market: more suburban, business and entertainment coverage, and a page three devoted to capital news. "I say the 'what' and [Rodriguez] does the 'how,' " Heaphy says. "And we evaluate it together."

In Anchorage, Pruitt's new publisher, Mike Sexton, killed the Sunday magazine a few months after he arrived, imposed a dress code and drug testing, and eliminated the managing editor's job, a post vacated when Pat Dougherty became editor in 1998. In Fresno, Publisher Keith Moyer so effectively neutralized the unions that when a contingent of Minneapolis reporters came in the fall of 1999 to encourage solidarity, local Guild officials asked them to leave the building.

In Minneapolis, Publisher Schueler cut the company workforce over three years through attrition, reducing expenses without lowering the newsroom headcount. But he collided early on with Editor Tim McGuire, whose team approach to journalism was a failure, Schueler says, something McGuire denies and says Schueler never told him. In 2000, Schueler emerged at the center of controversy for trying to build a new baseball stadium in Minneapolis--a plan his own paper exposed.

Not long after, Schueler resigned, due to both family considerations and "philosophical differences" with Pruitt's No. 2, Bob Weil, who filled in as publisher for a month before hiring Keith Moyer from Fresno to fill the position permanently. Weil and Moyer presided over a 10.3 percent drop in advertising revenue during 2001; Weil, now McClatchy's vice president for operations and one of Pruitt's top lieutenants, says Schueler was "successful" at the Star Tribune, but declined further comment.

Throughout 2001, Pruitt faced the greatest leadership crisis of his career. The seemingly endless prosperity and economic expansion of the '90s ended, and he found himself locked in a Wall Street squeeze play. As the high-tech industry unraveled, profits plummeting with the Dow, Pruitt promised more hiring freezes, capital-spending cuts, severely limited travel and no training money. Writing in Harvard's Nieman Reports, Pruitt announced his "athletic" approach to financial management, intended to "strengthen our muscles at the points they're needed most--in reporting and sales"--even though that "means that to some events we won't send as many reporters as we might have during more prosperous times."

At the same time, union leaders complained that the company was posting record profits while forcing workers to do more with less. More and more reporters and midlevel editors began questioning why their paper's profits were being siphoned off to pay down debt or shore up another newspaper's flagging revenues.

The "year was a real struggle," the pressure to remain profitable unrelenting, Pruitt says, quoting the company's motto at the time: "Relatively less bad." With Wall Street, "You've got to have a consistent message. The phrase I used was 'athletic.' I can remember I talked to the Fidelity analyst and he said, 'Man, I was out at all these conferences. I heard all these numbers and the only thing I really remember is that your papers are athletic.'

"I said, 'That's right, man. Don't forget it.' "

On September 10, 2001, a cover story far more People than Editor & Publisher, where it appeared, featured Pruitt in a five-page spread with 12 photos, chronicling his life from middle-class adolescence (tennis team, surfer dude) to law school and multimillionaire chief executive, playing soccer with two adorable daughters on the lawn à la John F. Kennedy, hanging out backstage with Mick Jagger and Keith Richards. A "rising star among newspaper CEOs," the magazine touted him, the "industry's Golden Boy," lauded by Arthur Sulzberger Jr. for leading a company that "holds the same set of values...the New York Times Co. holds."

In the nearly two years since the World Trade Center's collapse, Pruitt has battled back against the economic downturn, proving he could cut costs as well as any CEO: In 2002, despite a 2.7 percent decrease in revenues, McClatchy reported a 22.6 percent margin, thanks to Pruitt's relentless expense controls, all done without layoffs, endearing himself to those grateful to have jobs.

"McClatchy has done the sort of tap dance not too many other companies have done very successfully," says Merrill Lynch analyst Lauren Rich Fine. Since 1995, the stock price has nearly tripled, and the company's margins have climbed steadily from 12 percent to that 22.6 percent mark last year (up from 19.3 percent in '01, according to Morton Research Inc.). In 2002, Pruitt's compensation increased 42 percent from the previous year to $1.6 million; he also earned $4.05 million from exercising stock options.

In his office, Pruitt sits as straight as an altar boy at a gleaming, polished stone conference table, dressed in pinstriped pants, starched blue shirt and red power tie, his blond hair ever so slightly graying, a few fine lines ever so slightly appearing, his demeanor ever so slightly betraying a Janus-like duality on an otherwise perfectly pitched Chief Executive Officer. Although he manages a multibillion-dollar company, Pruitt claims to have little understanding of McClatchy's short-term stock price fluctuations. "I can't tell you on any given day or any discrete period of time exactly why the stock has performed the way it has. I don't mean to sound like an idiot when I say 'I don't know.' But it's hard to put your finger on any particular factor."

A multimillionaire the Sacramento Business Journal has regularly named the highest-paid executive of any local public company, Pruitt flies around in McClatchy's Hawker jet but presents himself as a salary man, making appearances in the newsroom, answering reporters' e-mails and phone calls, endearing himself to editors who universally hold him in the highest regard. Twice a year, he presides over the President Awards, which honor stories senior executives choose as McClatchy's best. "That Gary Pruitt--the CEO--would come, to have him give out this acrylic obelisk--it means a lot to people," says Peggy Bellows, who became senior editor in Tacoma after 18 years at Gannett and three at Lee Enterprises. "When I was considering other jobs, this was the only public company I'd be willing to go to."

While preaching the gospel of local autonomy, Pruitt participates in bimonthly corporate content reviews of McClatchy's papers, aimed at monitoring quality. His 100-word definition of journalism that serves the public interest ("thorough coverage" "informing readers" "creating a sense of cohesion in the community") makes no mention of what patriarch Jim McClatchy calls the family's historic fight against "the exploiters--the financial, political and business powers whose goal [it] was to deny the ordinary family their dreams and needs in order to divert to themselves a disproportionate share of the productive wealth of the country."

But by redefining McClatchy's mission, Pruitt has perhaps seized upon the secret of feeding the Wall Street beast and serving the public interest: Let quality journalism fit the needs of the communities the newspapers serve. If that means "providing thorough coverage so that people can be fully informed and live a better life--from recipes to the city council," as he characterizes it; or providing "news, information and service that exceed our customers' expectations," the vision statement on Modesto Bee reporters' business cards; or vanquishing "inside inefficiency, discourtesy and bad service," as the sign outside the publisher's office in Anchorage reads--let the market define how to reach the goal.

Jim McClatchy has a vision, too, passed from his father, grandfather and great-grandfather, a connection that binds the newspapers' past to the present. There are seven members of the fifth generation (including C.K.'s son Kevin, owner of the Pittsburgh Pirates) in their 40s and 50s and five members of the sixth generation--the youngest is 10--to carry the McClatchy ideals into the future. "There's been a bond," Jim McClatchy says, his voice softening. "It's a real challenge to keep it alive, and to make sure all of our people understand it."

Once he goes, who will bond McClatchy's past to its future? "Well," he says drawing a short breath. "I don't know."