MediaNews Buys 4 Papers From McClatchy

The Associated Press
Thursday, April 27, 2006; 2:57 AM

NEW YORK -- Six weeks after it agreed to buy Knight Ridder Inc., the second-largest newspaper publisher in the country, McClatchy Co. said Wednesday it has reached a deal to sell four of the 12 Knight Ridder papers it doesn't plan to keep to MediaNews Group Inc. for $1 billion.

Once the deal closes for the San Jose Mercury News, the Contra Costa Times, the Monterey County Herald and the St. Paul Pioneer Press, McClatchy will have eight other Knight Ridder newspapers to sell.

The MediaNews deal, which involves financial backing from Hearst Corp., will give the Denver-based MediaNews an even stronger presence in northern California, where it already owns several newspapers ringing the San Francisco Bay Area. MediaNews is a privately held company based in Denver and run by William Dean Singleton.

McClatchy has said the 12 papers don't meet the company's strict acquisition criteria, which include being located in rapidly growing markets. But Singleton said the four papers would help expand his company's reach in California plus give it entry into the expanding St. Paul market.

Singleton'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.

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.

As he prepared to leave the Mercury News to drive to a meeting at the Contra Costa Times, Singleton said no layoffs are currently planned at the Bay area paper.

Knight Ridder CEO Tony Ridder said he will closely monitor how the deal affects the Mercury News _ his hometown paper. "I think Dean will do a good job," Ridder said outside the Mercury News. "I have his cell phone and e-mail addresses and if I see anything I don't like I plan to let him know."

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 percent stake.

The other two stakeholders in the partnership, industry leader Gannett Co. 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.

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