Times sold to MediaNews [McClatchy bought from Knight-Ridder]

Contra Costa Times ^ | 4/26/6 | George Avalos and James Temple

[SmithL]

The McClatchy Co. announced an agreement to sell the Times and three other newspapers for $1 billion to MediaNews Group Inc. and Hearst Corp.

Denver-based MediaNews, publisher of the Oakland Tribune and other East Bay papers, will purchase the Times and San Jose Mercury News. New York City-based Hearst, owner of the San Francisco Chronicle, will buy the Monterey Herald and St. Paul Pioneer Press in St. Paul, Minn.

Hearst has agreed to "contribute" the St. Paul Pioneer Press and Monterey Herald to MediaNews in return for an equity investment in MediaNews assets outside of the Bay Area. If the transacton isn't completed, for regulatory issues or otherwise, MediaNews has agreed to acquire the two newspapers from Hearst.

The four newspapers are owned by Knight-Ridder Inc., which McClatchy agreed to acquire in March. The parties expect to close the transaction soon after the close of McClatchy's purchase, which is expected this summer.

The deal hands a vast swath of the Bay Area newspaper market to William Dean Singleton, a media mogul who has earned a reputation both for slashing costs and jobs at some newspapers he acquires, as well as increasing salaries and beefing up staffing at other papers he buys.

The sale of the Times became increasingly certain starting last October when several big shareholders rebelled at the lackluster stock performance of its parent, San Jose-based Knight Ridder, and eventually forced Knight Ridder to put itself on the block.

Sacramento-based McClatchy announced it had won the sparsely contested auction on March 12, in a stock and cash deal then worth $4.5 billion. The news was greeted with optimism by Times reporters and employees, given McClatchy's reputation for quality journalism and financial stability.

But the following day, the company announced plans to discard a dozen papers, including the Times and Mercury News, that did not fit McClatchy's strategy. McClatchy has been seeking buyers for the papers since the first deal was announced.

With the deal, which would include the Contra Costa Times, Valley Times, San Ramon Valley Times, East County Times, West County Times, and other East Bay publications, Denver-based MediaNews would be able to encircle the San Francisco Chronicle.

MediaNews would have more than 700,000 paid subscribers to about 419,000 for the Chronicle, enabling MediaNews to assault the Chronicle with an array of editorial, advertising, circulation and marketing resources.

Separately on Wednesday, McClatchy Corp. said that the U.S. Department of Justice is seeking additional information regarding its pending purchase of Knight-Ridder.The DOJ's request is limited to the St. Paul Pioneer-Press, but McClatchy said it extends the waiting period under antitrust law, giving the government additional time to review the transaction -- and potentially holding up any deal.

The DOJ inquiry follows an announcement last week by California Attorney General Bill Lockyer that his office is launching an antitrust review of the Knight Ridder sale to McClatchy Co.

McClatchy said it intends to respond promptly to the DOJ request.

"This represents a step forward in our effort to close our deal with Knight Ridder in a timely manner," said Karole Morgan-Prager, vice president and general counsel of McClatchy, in a prepared statement. "We are delighted that the Department of Justice review confirms our belief that there would be no antitrust concerns other than in the twin cities of Minneapolis and St. Paul, where we intend to sell the Pioneer Press to remove any concern."

Soon after the divestiture was announced, Knight Ridder Chairman and CEO Tony Ridder expressed shock that McClatchy planned to jettison the papers. Gary Pruitt, the chairman and chief executive of the McClatchy Co., defended the decision, saying the papers did not fit into the company's strategy to focus on high-growth communities.

Reports quickly pegged MediaNews as a serious contender for the California publications, given its existing Bay Area presence and known strategy of clustering in geographic regions.

Other interested parties included Los Angeles-based investment firm Yucaipa Cos., which made a bid for all 12 papers in partnership with the Newspaper Guild-Communications Workers of America. Knight Ridder Chairman and Chief Executive Tony Ridder also reportedly began raising funds to buy the California papers, but dropped the effort at the urging of his lawyers and bankers.

Wall Street hasn't reacted kindly to McClatchy's deal. Late last month, Moody's Investors Service lowered McClatchy's credit rating the lowest investment-grade rating and threatened to drop it into junk-bond status. Since the deal was announced, McClatchy's stock has fallen 18.5 percent, which has sliced several hundred million off the value of the deal.

MediaNews had also expressed interest in the initial Knight-Ridder deal. It teamed up with several private equity firms and Singleton himself toured several papers including the Times. Several private equity bidders also failed to follow through on offers.

The only other actual bid came from a private equity group comprised of Texas Pacific Group, Thomas H. Lee Partners, Hellman & Friedman, though its offer was reportedly lower.

[SmithL]

Legacy Media - rearranging the deck chairs.

[abb]

I predict Singleton will close either the CC Times or the SJ Merc and will also close the St. Paul Pioneer press...

[SmithL]

From the:

Newspapers

Alaska

• Fairbanks Daily News-Miner
  
• Kodiak Daily Mirror
  

California

• Alameda Times-Star, Oakland
  
• Argus (Fremont)
  
• Chico Enterprise-Record
  
• Daily Democrat (Woodland)
  
• Daily Review (Hayward)
  
• Eureka Times-Standard
  
• Inland Valley Daily Bulletin (Ontario)
  
• L.A. Daily News
  
• Lompoc Record (Lompoc)
  
• Long Beach Press-Telegram
  
• Marin Independent Journal
  
• Oakland Tribune
  
• Oroville Mercury-Register
  
• Pasadena Star-News
  
• Red Bluff Daily News
  
• Redlands Daily Facts
  
• San Bernardino County Sun
  
• San Gabriel Valley Tribune
  
• San Mateo County Times
  
• Times-Herald (Vallejo)
  
• Tri-Valley Herald (Pleasanton)
  
• Ukiah Daily Journal (Ukiah)
  
• Whittier Daily News
  

Colorado

• The Denver Post
  
• Fort Morgan Times
  
• Journal Advocate (Sterling)
  
• Lamar Daily News
  

Connecticut

• Connecticut Post (Bridgeport)
  
• Darien News-Review
  
• Fairfield Citizen-News
  
• Norwalk Citizen-News
  
• Westport-News
  

Massachusetts

• Berkshire Eagle (Pittsfield)
  
• Devens Commerce Journal
  
• The Groton Landmark
  
• The Harvard Hillside
  
• Lowell Sun
  
• North Adams Transcript
  
• Pepperell Free Press
  
• Sentinel and Enterprise (Fitchburg)
  

Nevada

• The Humboldt Sun, Winnemucca
  

Pennsylvania

• Evening Sun (Hanover)
  
• Lebanon Daily News
  
• York Daily Record (part of a JOA)
  
• York Dispatch
  
• York Sunday News
  

Utah

• The Park Record
  
• Salt Lake Tribune
  

Vermont

• Bennington Banner
  
• Brattleboro Reformer
  

West Virginia

• Charleston Daily Mail (JOA - 50%)
  

[Mo1]

Ping

[Grampa Dave]

The Contra Costra Times market includes the new mega growth metro area of Antioch/Pittsberg/Martinez and Brentwood and the well heeled older areas of Walnut Creek, Crows Canyon and Concord.

San Jose is a typical "diversified" blue city/county area. A sane person will sell the Merc to a left wing billionaire thug like Burkle who will loot Calpers and Union retirement funds to buy the Merc.

If there is no elite left wing limo driven buyer, there may be a fire sale on the buildings, presses and office equipment.

[onyx]

My eldest man child is stuck living in San Jose.

[abb]

Ever how they do it is fine with me. Just so they keep dying.....

[Political Junkie Too]

With the deal, which would include the Contra Costa Times, Valley Times, San Ramon Valley Times, East County Times, West County Times...

Isn't this really just one paper? They all run the same stories, maybe on different pages, with a "local" sheet inserted somewhere. Close the CC Times and you close them all.

-PJ

[Grampa Dave]

"My eldest man child is stuck living in San Jose."

If he is a conservative, he might be a lonely puppy.

[onyx]

Indeed he is and indeed he is lonely.