Knight-Ridder newspaper chain bought out
Knight-Ridder, the #2 newspaper publisher in the US, was bought out by rival McClatchy Co. in a $6.5 billion deal (cash, stock, and debt assumption). The move follows a bidding war between McClatchy and a consortium of equity funds. Knight-Ridder has been under serious pressure from key investors.
But the story does not end there. Three of the main Knight-Ridder newspapers, the Philadelphia Inquirer, Philadelphia Daily News, and the San Jose Mercury-News, along with 0 others will be sold off either together or piecemeal by McClatchy. That firm noted that it is interested in buying papers in growing cities, mostly in the Sunbelt, and that those papers do not fit in.
The buyout makes McClatchy the new #2 newspaper publisher (it was #8), behind Gannet, the publisher of USA Today and 90 other daily papers. McClatchy will own, after the deal and the sell-off, 32 daily newspapers and around 50 non-dailies.
The rapidly dwindling US newspaper market is in a seeming death spiral, especially in big cities. Fewer readers means fewer ads and massive layoffs of reporters, fewer reporters means less worth reading. Add to that the growth of the Internet and the indifference of young people, and the sector looks progressively weaker. The only saving grace is the ability in one-paper towns (most of them now) to charge big advertisers (like department stores) higher prices for lower circulation. But even there, the consolidation of the department store business puts limits on that strategy.
Who will buy the Inquirer, the Daily News, and the Mercury-News? Presumably McClatchy had some offers before it went ahead. It might be another news chain, such the Tribune, Newhouse, or Times groups. Or it may be an equity company, looking to remake the papers then selling or spinning them off. But the basic problem remains: can these and other once-proud newspapers avoid shrinking into much more than sports pages, a few headlines, movie listings, and lots of ads?
8:10:27 PM 
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