Knight Ridder Newspaper Chain Finds a Buyer
STEVE INSKEEP, host:
This is MORNING EDITION from NPR News. I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne. The nation's second largest newspaper company, Knight Ridder, is being sold to rival publisher. The McClatchey Company announced today it will pay about four and half billion dollars in cash and stock. McClatchey will also assume about two billion dollars in Knight Ridder debt, and intends to sell some of the newspapers it's just acquired. NPR's media correspondent, David Folkenflik, has been covering this story, and he joins me now.
And David, let's get behind the numbers in the deal. How did it get to this point?
DAVID FOLKENFLIK reporting:
Well, Knight Ridder is one of the most storied media companies in the country. It's owned some of the most prestigious and proud regional newspapers around: the Miami Herald, the Philadelphia Enquirer, the San Jose Mercury News. These are papers that have a reputation for brash, hard-hitting journalism, interesting story telling--they set the standard, in many ways. But they've been afflicted, particularly if they're larger papers, by some of the same things besetting the newspaper industry as a whole: declined income from classified ads, you've had sharp drops in circulation. And they've come under real pressure from investors to keep their profit margins even higher than they are, and to also lift their share price.
One of their largest investors, even after they had done a series of just wrenching and very deep cuts last year, throughout their major newsrooms, their largest investor said it's not good enough. In November, he said, we want you to solicit bids for a sale, and a couple other of the large institutional investors followed him up. Knight Ridder really didn't have much choice.
MONTAGNE: Is it all bad news then, David, for Knight Ridder, and, I guess, for those reading its newspapers?
FOLKENFLIK: No, it's not all bad news. In fact, McClatchey is a company that's very well respected within the journalistic community. It runs quality newspapers: it's Sacramento Bee, the Minneapolis Star Tribune, the Raleigh News and Observer. And they're expected to maintain that high-caliber of journalism at their new regional newspapers. In addition, it's something of an endorsement of the financial underpinnings, in some way, of old-fashioned media. They're acquiring a bunch of new daily and weekly newspapers, and they've always been very careful to make to please Wall Street. They've always made sure to keep their profit margins considerable. So, in that sense, it would seem to offer some good news, given the wrenching, wrenching times that these have been for people in Knight Ridder itself.
MONTAGNE: So, let's get back to the fact that McClatchey has already announced that it will sell some key Knight Ridder holdings.
FOLKENFLIK: Well, that's right. I mean, there's a major caveat to the relief felt to people in Knight Ridder. McClatchey announced this morning that they intend sell off 12 Knight Ridder newspapers, including some of the most famous ones: the Philadelphia Enquirer, the San Jose Mercury News. In addition, McClatchey owns the Minneapolis Star Tribune. By acquiring the St. Paul Pioneer Press, it may trigger anti-trust concerns, and so it's going to sell the St. Paul paper as well. So, some of these large papers will have to go, and there are a couple of possible suitors. The Newspaper Guild of America represents workers in nine Knight Ridder papers. They've attracted investors who will want to help them purchase it. In addition, Dean Singleton, the CEO of Media News, has kicked the tires at some of the larger papers in St. Paul, San Jose, and Philadelphia. He's interested as well.
MONTAGNE: David, thanks.
FOLKENFLIK: Good to join you.
MONTAGNE: That's NPR's Media Correspondent, David Folkenflik. Again, Knight Ridder, the nation's second largest newspaper company, has agreed to be sold to rival publisher, the McClatchey Company, for about four and a half billion dollars in cash and stock.
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