Topic: Word Press NewsMedia
McClatchy Buys Knight Ridder for $ 4.4 Billion in Cash and Stock
The Fate of 32 High-flying Knight Ridder Papers is Sealed
When it was announced that Knight Ridder was forced by its biggest shareholder to go on sale, many companies and other newspaper organizations became interested in the Knight Ridder holdings. McClatchy which is based in Sacramento is also assuming $2 billion in Knight Ridder debt. All of a sudden, Gary Pruitt, McClatchy’s president, became the chair and chief executive of a much larger company. Tony Ridder, Knight Ridder’s chief executive, is happy with the deal he got. Gary Pruitt has to act quickly to sell some of the large urban papers that do not fit what the company considers as important future growth criteria.
Some of the papers that have to be sold are: The San Jose Mercury News and Contra Costa Times, The Philadelphia Inquirer, the Philadelphia Daily News and the Akron Beacon Journal, The Monterey Herald, The Wilkes Barre Times Leader, the Aberdeen American News, the Grand Forks (N.D) Herald, the Fort Wayne (Ind) News-Sentinel, and the Duluth News and Tribune. The St. Paul Pioneer Press in Minnesota will be sold to avoid antitrust issues because McClatchy already owns Minneapolis Star Tribune. Some of the newspaper organizations that are interested in buying some of the papers for sale include Denver-based MediaNews which would like to place a bid for some of the papers. Also, the Newspaper Guild wants to come up with its own investor to buy some of the papers for sale.
It has been known in the newspaper industry that McClatchy has a strong history of financial discipline. If a company is not going to be profitable, McClatchy will most likely get rid of it. That is the situation in which The San Jose Mercury News finds itself. Yes, it is located in the Silicon Valley, but the predictions for growth in that market are not high. So McClatchy wants to get rid of it as soon as possible. It is all about making a few bucks for all the shareholders including McClatchy and Knight Ridder’s top investor Private Capital Management (PCM). It is interesting that this huge investor was pressuring Knight Ridder to explore sales. It is also the same company which is behind McClatchy. Does this mean that in the near future McClatchy is going to suffer the same fate that Knight Ridder is currently suffering? Knight Ridder journalists should write about this. McClatchy journalists should not think about certainty and job security the way things are going. In a sense, the days of McClatchy may be numbered too. If PCM does not get the rate of returns it wants, it may force McClatchy to go up for sale too. Once again, readers will lose. They will have to gravitate toward the Internet newspapers. That seems to be the way things are going any way.
So folks, McClatchy got a good deal. It is going to shore up its investments by liquidating some of the flagship papers of Knight Ridder which was founded in 1974. It was created when the Knight and Ridder newspaper groups merged. Over the years, it grew to a total of 32 papers in various areas of the country. From Miami, the company moved its headquarters to San Jose, the heart of the Silicon Valley. Once the deal is over, the San Jose Corporate offices will be closed. No corporate officers will go to Sacramento-based McClatchy corporate centers. With a $3.75 billion in bank debt and commitments from Bank of America and JP Morgan Chase Bank, McClatchy will finalize the purchase.
What is in this deal for consumers, readers of McClatchy papers?
We just hope that Gary Pruitt will be wise enough to keep some great writers and webmasters from the papers that are scheduled to be sold. As subscribers of the McClatchy papers in various areas of the country, we would like to continue reading the Pulitzer prize-winning journalists who were with Knight Ridder. Why not? We are paying top money for the service. It is time we ask for some improvement. There is no need to let these guys and gals go. Absorb them and put them to work. Now, if they do not want to work for McClatchy, that is something else. We still think that newspapers such as The San Jose Mercury News and the Philadelphia Inquirer should not be put up for sale. We understand the business. Declines in sale and circulation by the Philadelphia Inquirer and its huge staff may seal its fate right off the bat. McClatchy has a history of focusing on high-growth communities. That is why it is keeping 20 daily Knight Ridder papers. We are still puzzled by why the San Jose Mercury did not make the cut. Even Gary Pruitt called these papers “Terrific Publications” but they just do not fit into McClatchy’s strategy of buying papers in growing markets. For sure, the news of the sales of the 12 papers surprised many journalists. They did not expect this quick announcement. McClatchy’s Pruitt is calling the shots now. But, who are we? McClatchy is not going to listen to its loyal users. Now, our choices are limited. McClatchy controls the market with this deal.
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