MediaNews To Buy Four KR Papers
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MediaNews Group, publisher of The Denver Post and other newspapers, is acquiring four newspapers from the McClatchy Company for $1 billion in cash with backing from Hearst Corporation, another publishing company.
The four papers – the San Jose Mercury News, the Contra Costa Times, the Monterey County Herald, and the St. Paul Pioneer Press – are currently owned by Knight Ridder, which Mc-Clatchy is in the process of buying.
The deal announced late yesterday will strengthen MediaNews’s presence in northern California, where it already owns several papers in the San Francisco Bay Area. MediaNews is a privately held company based in Denver and run by William Dean Singleton.
The four papers are among the 12 Knight Ridder properties that Mc-Clatchy has said it intends to sell since they don’t meet McClatchy’s acquisition criteria, which include being located in rapidly growing markets.
MediaNews’s interest in the newspapers had been widely known. The three northern California papers would complement the company’s existing holdings, which include the Oakland Tribune and the Marin Independent Journal. MediaNews owns a number of newspapers in geographic clusters, which helps reduce production and other costs and also allows for group advertising sales.
“These were the newspapers that excited us the most about Knight Ridder,” Mr. Singleton said in a statement, calling the deal “a wonderful opportunity at a fair price.”
McClatchy would have faced antitrust difficulties owning the St. Paul, Minn. paper since it already owns the Star Tribune in the neighboring city of Minneapolis.
McClatchy said yesterday that the Department of Justice told the company it would only seek additional information regarding the Minneapolis/St. Paul area, indicating that regulators didn’t see other antitrust concerns with the Knight Ridder takeover.
The agreement calls for MediaNews to acquire the San Jose Mercury News and the Contra Costa Times, which will then be folded into the California Newspaper Partnership, an entity in which it has a 54% stake.
The other two stakeholders in the partnership, industry leader Gannett Company and the privately held Stephens Media Group, have agreed to contribute their share of paying for the two papers, according to a joint statement from McClatchy and MediaNews.
Separately, Hearst, publisher of the San Francisco Chronicle, will buy the Monterey County Herald in California and the St. Paul Pioneer Press and then transfer them to MediaNews in exchange for a stake in all newspapers MediaNews owns outside of the Bay Area.
Once the deal closes, MediaNews would become the fourth-largest newspaper company in the country in terms of circulation, with about 2.7 million daily circulation and 53 daily newspapers.
The deal had little appreciable effect on McClatchy shares, which were unchanged in late trading, after falling 7 cents to $44.71 yesterday on the New York Stock Exchange.
The news comes a day after Mr. Singleton and the CEO of McClatchy, Gary Pruitt, avoided questions about the status of the negotiations during a joint appearance at an annual conference of newspaper editors in Seattle.