McClatchy to close deal for Knight Ridder

The national landscape for newspapers changes today when the McClatchy Co., parent of the Star Tribune, closes its $4 billion acquisition of Knight Ridder Inc., the longtime owner of the St. Paul Pioneer Press.

The transaction is especially meaningful in the Twin Cities, where the Star Tribune will become the largest newspaper in the nation's second-largest newspaper chain and the Pioneer Press will get a new owner, Denver-based MediaNews Group. McClatchy sold the Pioneer Press as well as 11 other Knight Ridder papers because they didn't fit McClatchy's standards for profitability. McClatchy also cited the potential for antitrust issues in its decision to sell the Pioneer Press.

For Star Tribune readers, the merger means more access to national and international news from the more than two dozen national and international reporters based in Washington who worked for Knight Ridder. The Knight Ridder bureau is considered one of the best news operations in the country.

Previously, McClatchy had three national reporters in Washington, in addition to eight others who followed regional issues for its newspapers. The newly merged bureau will consist of 17 regional, 17 national and 10 foreign-posted reporters, who can be tapped by local editors to produce stories for the Star Tribune.

Sacramento, Calif.-based McClatchy also will gain access to what has been known as the Knight Ridder/Tribune News Service. It offers specialized news, features and columns from 60 newspapers, including the Chicago Tribune, Dallas Morning News, New York Daily News, Seattle Times and Orange County Register.

The number of McClatchy-owned dailies will increase from 12 to 32, and the company will add 34 non-dailies to the 16 it already owns. The Star Tribune, with a weekday circulation of about 360,000, remains McClatchy's largest newspaper.

McClatchy's daily paid circulation will rise from 1.4 million to 3.2 million, making it second only to Gannett Co. Inc., which has 90 daily newspapers and paid daily circulation of 7.3 million.

Shareholders of San Jose, Calif.-based Knight Ridder formally approved the sale Monday, though they are getting less than they originally accepted. In March, McClatchy offered cash and stock worth $67.25 per share, or $4.5 billion. McClatchy stock has sunk since the deal was announced, making it worth $61 a share to Knight Ridder holders, or about $4.1 billion. Knight Ridder CEO Tony Ridder joins the McClatchy board.

McClatchy is assuming $2 billion in Knight Ridder debt and is taking on $3.5 billion in new debt to complete the transaction, but its sale of a dozen Knight Ridder papers will help to defray those costs.

McClatchy stands to receive about $2.1 billion from the buyers of those 12 papers.

Besides the $1 billion that McClatchy will raise with the sale of the Pioneer Press and three California dailies, including the San Jose Mercury News, it will get more than $560 million from a Philadelphia investment group for that city's dailies, the Inquirer and Daily News.

The Duluth News Tribune and Grand Forks (N.D.) Herald are being bought by Fargo, N.D.-based Forum Communications for $70 million and $65 million, respectively. The Aberdeen, S.D., American News is being sold for $28 million to Indiana-based Schurz Communications Inc.

The company expects to close on six of those transactions this week, including the papers in Duluth, Grand Forks, Aberdeen and Philadelphia. The rest are pending. McClatchy agreed to sell the Pioneer Press to avoid antitrust concerns.

McClatchy spokeswoman Elaine Lintecum said no decision has been made about the future of CareerBuilder.com, the online employment site owned equally by Gannett, the Tribune Co. and Knight Ridder.

Because of a change-of-ownership provision, Gannett and Tribune have 10 days after the McClatchy-Knight Ridder deal closes to keep McClatchy as a partner in CareerBuilder or buy out its share. Both have indicated that they want to buy out McClatchy.

Pioneer Press changes

The Pioneer Press, after 79 years of being owned by Knight Ridder and predecessor Ridder Publications, will pass to MediaNews, run by feisty, rags-to-riches media baron William Dean Singleton. Before its latest acquisitions, MediaNews owned 49 dailies, including the Denver Post, the Detroit News and the Daily News of Los Angeles, and more than 100 non-daily papers.

The acquisition of the Pioneer Press, San Jose Mercury News, Contra Costa Times and the Monterey County Herald will make MediaNews the nation's fourth-biggest newspaper company, up from seventh.

At an April meeting with Pioneer Press employees, after the sale was announced, Singleton said he had no plans for significant changes. "You will barely know it happens," he reportedly said about the ownership change.

Singleton is retaining Publisher Par Ridder and voiced support for the paper's focus on local news.

Editor Thom Fladung said the Pioneer's readers shouldn't notice much difference under the new ownership. "It doesn't really change anything for us."

He said stories from the New York Times, Los Angeles Times and Washington Post wire services will compensate for the loss of the Knight Ridder Washington bureau and news service.

Fladung said he has heard little from MediaNews management. "They've been pretty clear that they leave most news decisions to the local level. ... I like the emphasis on local news, and that's where I plan to keep going."

The Star Tribune also will keep its focus on Minnesota, said Editor Anders Gyllenhaal. "In most ways, the deal won't change the paper. Our focus remains on local news," he said.

Having Singleton -- known as a ferocious competitor-owning the paper across the river is "certainly something to pay attention to," Gyllenhaal said. "But it's always been a competitive situation with the Pioneer Press."

Terry Fiedler • tfiedler@startribune.com Deborah Caulfield Rybak • dcrybak@startribune.com