Buyer of Knight Ridder may sell off 12 papers

first_imgPHILADELPHIA – The union of the McClatchy Co. and Knight Ridder Inc. will result in the sale of a dozen newspapers whose growth potential isn’t considered up to snuff, further pressuring the publications at a time when the industry is scrambling to improve profits. It didn’t matter that several of the newspapers to be jettisoned have won Pulitzer Prizes, journalism’s highest honor. The Philadelphia Inquirer, for one, has garnered 18 Pulitzers since its founding in 1829. Other buyers are out there – William Dean Singleton of MediaNews Group Inc., which owns the Daily News of Los Angeles, has visited Philadelphia, the biggest of the papers. But the uncertainty over what’s next has made all the papers a bit nervous, and analysts say the publications won’t escape changes in ownership without some pain, in the form of job cuts, wage concessions and reduced benefits. McClatchy said it will shed 12 of the 32 newspapers it plans to acquire because they don’t meet the company’s strategy of owning publications in rapidly growing markets. Those to be resold include the Akron Beacon Journal in Ohio, Contra Costa Times in California, Philadelphia Daily News, San Jose Mercury News in California and St. Paul Pioneer Press in Minnesota. “These are terrific publications but simply do not fit with our long-standing acquisition and operating strategies,” Gary Pruitt, McClatchy’s chairman, president and chief executive, said in a statement. “For the 12 newspapers that will be sold, the uncertainty is not over and I regret that very much.” McClatchy, a 149-year-old newspaper publisher based in Sacramento, is buying Knight-Ridder of San Jose for $4.5 billion in what would create the nation’s second-largest newspaper chain. The company has a reputation for being a shrewd financial manager. “They’re very disciplined,” said Donald Wong, an analyst with Standard & Poor’s in New York. “Newspapers that are on their list of divestitures don’t fit their acquisition criteria.” McClatchy said the newspapers being sold are in markets where household growth is projected to be 4.8 percent from 2004 to 2009. McClatchy’s own properties are in communities where the growth is 11.9 percent; the 20 Knight-Ridder properties it will keep are in areas with a forecast growth rate of 11.1 percent. “This wasn’t a rejection of those papers, but of those cities,” said Lauren Rich Fine, an analyst at Merrill Lynch in New York. The News-Sentinel of Fort Wayne, Ind., another of the papers to be sold off, is in the Rust Belt and its economy is dependent upon the eroding automotive industry. That’s not to say that there won’t be buyers for the 12 papers. “Not all newspaper companies have McClatchy’s strategy of only owning newspapers in growing markets,” said John Morton, president of Morton Research Inc. in Silver Spring, Md. In Philadelphia, at least two potential buyers have come over to kick the tires – Singleton and also a group comprising The Newspaper Guild and investment group Yucaipa Cos. of Los Angeles. The Guild had expressed interest in buying eight of the 12 newspapers on the block but wasn’t successful. On Monday, the union said it would consider buying all the publications being divested. Analysts said Gannett Co. might also want to enter a big market like Philadelphia. But whichever company ends up buying the newspapers, there’s bound to be some cost-cutting, Morton said. The Philadelphia Inquirer is vulnerable because it has a “fairly fat staff by newspaper standards,” said Morton, who predicts the new owner will close the Philadelphia Daily News. The Inquirer has already been cutting jobs due to declines in circulation and revenue. Last fall, the paper and its sister publication, the Philadelphia Daily News, cut 100 newsroom positions. In the six months ended Sept. 25, the Inquirer’s weekday circulation was nearly 358,000, according to the Audit Bureau of Circulations. That’s down 7.5 percent from March 2003. AD Quality Auto 360p 720p 1080p Top articles1/5READ MORECasino Insider: Here’s a look at San Manuel’s new high limit rooms, Asian restaurant160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img

Leave a Reply

Your email address will not be published. Required fields are marked *