Posted on 03/13/2006 4:30:49 AM PST by abb
No deal is hatched without a wider meaning to be gleaned on Wall Street and in the media, and that's all the more true for the ever-reinventing media industries themselves. The latest, the sale of Knight Ridder to McClatchy, presents a Rorschach-like finale that reconfirms both hopes and fears for the newspaper business.
Knight Ridder, the nation's second-largest newspaper company agreed to be purchased by McClatchy, ending a corporate drama that began almost five months ago with a revolt of major Knight Ridder shareholders, according to Knight Ridder's own San Jose Mercury News and other media. A source tells the Mercury News that the company had agreed to sell itself for about $4.5 billion, or roughly $67 a share, for a combination of 60% cash and 40% McClatchy stock, and the companies are expected to announce the deals today. The Mercury News calls the sale a watershed in a media industry that has seen advertising, readership and glamour on Wall Street all fade under the pressure of the digital age. It will mark the end of Knight Ridder, created in 1974 by a merger of the Knight and Ridder newspaper groups and which eventually grew to its current total of 32 daily newspapers. The deal also ushers in a new media landscape, especially in California, where McClatchy, owner of the Sacramento Bee and Fresno Bee, also picks up the Contra Costa Times, Monterey Herald and the San Luis Obispo Tribune.
(Excerpt) Read more at online.wsj.com ...
NY Slimes' spin on the story...more wailing and moaning...
http://www.nytimes.com/2006/03/13/business/media/13press.html?_r=1&oref=login
Knight Ridder ended up attracting only one newspaper bidder in its highly publicized auction, underscoring the fog hanging over the industry and the unique challenges facing the company.
It was not much of an auction. No other newspaper company ended up submitting a formal offer for Knight Ridder, including Gannett, the nation's largest publisher, which had looked at it closely. Analysts and industry executives said they were also surprised that various consortia of private equity firms also demurred. Newspapers, these executives noted, have the capacity to generate large amounts of cash flow that can be used to pay down debt.
Not long ago the second-biggest newspaper company in the country would undoubtedly have drawn a fair amount of interest. That it did not does not speak well for newspaper companies; their stock prices have already fallen because of the Internet's increasing popularity with readers and advertisers. But the auction, and its meaning for the newspaper industry, could have been worse: at least Knight Ridder found an acceptable offer.
As the operator of 32 daily newspapers, Knight Ridder offered potential buyers access to major newspapers in such markets as Fort Worth, St. Paul, Kansas City and Miami. Yet over all, the company has underperformed other large newspaper groups as it has struggled to make a financial success of some of its biggest markets, including Philadelphia, where it owns both of the city's major dailies.
And despite the decision of the chief executive, P. Anthony Ridder, to move the company's headquarters to San Jose, Calif., from Miami in 1998 to be closer to Silicon Valley, the company has failed to reassure investors that the digital age represents more of an opportunity than a threat to its business.
snip...
you should start an FR pool..to guess the number of layoffs that will be annouced..
THIS JUST IN!!! (God, I love saying that...mocking the bastards....)
UPDATE: McClatchy Buys Knight Ridder, But Will Sell 12 Papers
By E&P Staff
Published: March 12, 2006 10:05 PM ET updated Monday
NEW YORK Early Monday, Knight Ridder and McClatchy Co. confirmed the deal revealed by The New York Times late Sunday. The Knight Ridder board has accepted the McClatchy buy offer of $4.5 billion.
McClatchy said it will now sell 12 KR papers, including the two Philadelphia papers and former flagship San Jose Mercury News. The company said in a statement that these papers are located in cities that "do not fit the company's longstanding acquisition criteria, chiefly involving growing markets."
The other papers to be divested by McClatchy are: Akron Beacon Journal (OH); Wilkes Barre Times Leader (PA); Aberdeen American News (SD); Grand Forks Herald (ND); Ft. Wayne News - Sentinel (IN); Contra Costa Times
(CA); Monterey Herald (CA); and Duluth News Tribune (MN). The St. Paul Pioneer Press (MN) is to be sold due to anticipated anti-trust concerns involving McClatchy's (Minneapolis) Star Tribune.
"These are terrific publications but simply do not fit with our long-standing acquisition and operating strategies," said Gary Pruitt, the McClatchy chairman and CEO, in a statement.
McClatchy will be adding two Knight Ridder directors to its board. The transaction is subject to customary terms and conditions, including approval by the Knight Ridder
shareholders and is expected to close in three to four months.
"Opportunities like this come perhaps once in a company's lifetime, and we're thrilled to have this chance to extend McClatchy journalism and our proven newspaper operations to 20 high-quality newspapers in high-growth
markets," said Pruitt.
"Our two companies operate in the finest traditions of American journalism, devoted to independent, public interest reporting and the highest ethical values. Combining the two creates a company particularly well-positioned to lead the way in a changing media landscape. It's truly a chance for McClatchy
to do more of what it does best....
"This deal is a vote of confidence in the newspaper industry as well as our mission-driven commitment to public interest journalism," Pruitt added.
After the purchase of Knight-Ridder and the sale of the 12 papers, McClatchy will end up with 32 daily newspapers and roughly 50 non-dailies.
Knight Ridder Chairman and CEO Tony Ridder said, "Knight Ridder and McClatchy share many similar -- and important -- values, most notably a commitment to quality journalism, fairness to our employees and service to our communities. The joining of so many Knight Ridder newspapers under
McClatchy's banner will enable them to continue to flourish in an environment of excellence and integrity. This transaction, which represents an excellent outcome for shareholders, also concludes a period of considerable uncertainty for many of Knight Ridder's valued and dedicated employees, and I thank them for their perseverance through it.
"For the 12 newspapers that will be sold, the uncertainty is not over and I regret that very much."
In the end, neither Gannett nor MediaNews made a firm offer, sources say.
The deal involves $4.5 billlon in cash and stock, according to a McClatchy release on Monday. It will also assume $2 billion in KR debt.
"We strongly believe that good journalism is good business, but that doesn't mean business as usual," Pruitt said. "We have the opportunity to apply tested, successful management in some of the most promising markets in the country. Although audiences get news in many new ways today, the appetite for independent, useful information is greater than ever, and the opportunities for a news company that meets these needs is unlimited."
Knight Ridder's home paper, the San Jose Mercury News, revealed just before midnight that "executives at Knight Ridder papers were told directly by Knight Ridder executives involved in Sunday's meeting regarding the sale that Knight Ridder and McClatchy had struck a deal.
"An e-mail circulated by top Knight Ridder executives also said that a conference call had been scheduled for 6 a.m. Monday involving its newspaper companies' publishers."
Under the terms of the reported deal, McClatchy agreed to pay about $67 a share in cash and stock for Knight Ridder, sources said. About 60 percent of the payment will be in cash, while the rest will be in McClatchy shares.
The AP report at 11 p.m. Sunday noted the Times scoop but added it had not yet confirmed the board's decision.
It related:
"McClatchy has punched above its weight before, sealing a $1.4 billion deal in 1997 to acquire the Cowles Media Co., the parent company of the Star Tribune in Minneapolis. This deal, however, represents a much bigger bite for the company and its highly regarded chief executive, Gary Pruitt.
"While McClatchy is smaller than Knight Ridder, it has a strong balance sheet and is admired for both its business acumen as well as its commitment to quality journalism. McClatchy had long bucked an industry trend of circulation losses, posting annual gains in circulation for 20 years in a streak that finally ended last year.
"Acquiring Knight Ridder would mark a break from McClatchy's usual pattern of investing in growing markets. Knight Ridder's papers in both San Jose and Philadelphia have both struggled in recent years.
"McClatchy beat out a rival bid from a consortium of private-equity buyout firms that included Texas Pacific Group, Bain Capital, Thomas H. Lee Partners, Hellman & Friedman and Oak Hill Partners."
An article in the Star Tribune earlier raised the issue of whether McClatchy, in the event of the deal, would have any money left to invest in the papers: "Some analysts believe a sizable new debt load would leave McClatchy with little option but to cut jobs and expenses companywide, sell off some papers or both.
"'The question is, how much money will [McClatchy] have left over to invest in these newspapers if it needs so much cash to pay down this debt?' asked James Naughton, former executive editor of the Philadelphia Inquirer.'"
MSM ping
This still seems like a very high price to pay for a industry that has been hemoraging money from the loss of advertizing dollars. It has been more and more common that the print media has fudged their ad-revenue stats in recent years. If that is the case here how would ou know what to pay for a large media company like KR?
Check this out...
McClatchy to sell 12 KR newspapers. Betcha there's a bunch of layoffs coming...
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1002157391
The entire "Mainstream Newsmedia" had access to this address. Its executives and journalists should have paid attention.
The Mainstream Newsmedia foreordained its doom when it abandoned truth in favor of propaganda.
Not a word about fair, honest and balance reporting. I especially like the reference to "public interest reporting", this is newspaper speak for we have an agenda, and we will push it.
Once again I will state the obvious, the "new journalism" that came of age in the 1970s is what is killing the old media. They simply forgot what business newspapers were in. It is not news, it is advertising. The product is not the printed page, the product is eyeballs, yours and mine.
The more eyeballs that look at their pages, the more money they make.
Once newspapers decided to take a side in the cultural war, they were guranteed to lose readers. In the pre-internet day, people like myself just went without the latest news, but now, I no longer need a newspaper to find out what is going on in the world, and better yet, I can find out things the old media did not want me to know.
There is still a need for reporters, but the power has shifted. They must be careful, in the past it was not possible to know things they did not want us to know, and it was easy to present one side as if that was the only side. With the internet, and with places like FreeRepublic, the "news" is no longer a one way street.
Spot on... Do you have a link to that transcript?
Yaaawwnnnnnnn...The domino are tumbling on a bunch of sleeze balls..........crickets chirping.
McClatchy is an even more determined left-wing operation than Knight-Ridder. Perhaps, Jim Robinson would like to comment on the Fresno Bee?
Thanks, Abb. I somehow misplaced my copy of this classic. I will not do that again. ~S
A 'no wonder they're dumping the Philly papers' Ping.
I just wish the same thing would happen to the TV broadcast news -- they are still way too influential.
I guess soon the Pioneer Press will be as rotten as the MPLS Star & Sickle .
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