Knight Ridder Newspaper Chain Finds a Buyer: [1]

STEVE INSKEEP, host:

This is MORNING EDITION from NPR News. Im Steve Inskeep.

RENEE MONTAGNE, host:

And Im Renee Montagne. The nations second largest newspaper company, KnightRidder, is being sold to rival publisher. The McClatchey Company announcedtoday 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 its just acquired. NPRs mediacorrespondent, David Folkenflik, has been covering this story, and he joins menow.

And David, lets get behind the numbers in the deal. How did it get to thispoint?

DAVID FOLKENFLIK reporting:

Well, Knight Ridder is one of the most storied media companies in the country.Its owned some of the most prestigious and proud regional newspapers around:the Miami Herald, the Philadelphia Enquirer, the San Jose Mercury News. Theseare papers that have a reputation for brash, hard-hitting journalism,interesting story telling--they set the standard, in many ways. But theyvebeen afflicted, particularly if theyre larger papers, by some of the samethings besetting the newspaper industry as a whole: declined income fromclassified ads, youve had sharp drops in circulation. And theyve come underreal pressure from investors to keep their profit margins even higher than theyare, and to also lift their share price.

One of their largest investors, even after they had done a series of justwrenching and very deep cuts last year, throughout their major newsrooms, theirlargest investor said its not good enough. In November, he said, we want youto solicit bids for a sale, and a couple other of the large institutionalinvestors followed him up. Knight Ridder really didnt have much choice.

MONTAGNE: Is it all bad news then, David, for Knight Ridder, and, I guess, forthose reading its newspapers?

FOLKENFLIK: No, its not all bad news. In fact, McClatchey is a company thatsvery well respected within the journalistic community. It runs qualitynewspapers: its Sacramento Bee, the Minneapolis Star Tribune, the Raleigh Newsand Observer. And theyre expected to maintain that high-caliber of journalismat their new regional newspapers. In addition, its something of an endorsementof the financial underpinnings, in some way, of old-fashioned media. Theyreacquiring a bunch of new daily and weekly newspapers, and theyve always beenvery careful to make to please Wall Street. Theyve always made sure to keeptheir profit margins considerable. So, in that sense, it would seem to offersome good news, given the wrenching, wrenching times that these have been forpeople in Knight Ridder itself.

MONTAGNE: So, lets get back to the fact that McClatchey has already announcedthat it will sell some key Knight Ridder holdings.

FOLKENFLIK: Well, thats right. I mean, theres a major caveat to the relieffelt to people in Knight Ridder. McClatchey announced this morning that theyintend sell off 12 Knight Ridder newspapers, including some of the most famousones: the Philadelphia Enquirer, the San Jose Mercury News. In addition,McClatchey owns the Minneapolis Star Tribune. By acquiring the St. Paul PioneerPress, it may trigger anti-trust concerns, and so its going to sell the St.Paul paper as well. So, some of these large papers will have to go, and thereare a couple of possible suitors. The Newspaper Guild of America representsworkers in nine Knight Ridder papers. Theyve attracted investors who will wantto 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, andPhiladelphia. Hes interested as well.

MONTAGNE: David, thanks.

FOLKENFLIK: Good to join you.

MONTAGNE: Thats NPRs Media Correspondent, David Folkenflik. Again, KnightRidder, the nations second largest newspaper company, has agreed to be sold torival publisher, the McClatchey Company, for about four and a half billiondollars in cash and stock.

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