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California and the West

3-Member Alliance May Seek Papers

Gannett and Stephens Media are expected to team with MediaNews to bid for three dailies in Northern California.

April 21, 2006|James Rainey and Joseph Menn | Times Staff Writers

Newspaper magnate William Dean Singleton is likely to be joined by two partners -- industry giant Gannett Inc. and privately held Stephens Media Group -- in his attempted purchase of three Northern California newspapers, people familiar with the pending acquisition said Thursday.

Singleton's offer of up to $1 billion has put his MediaNews Group Inc. in prime position to buy the San Jose Mercury News, Contra Costa Times, Monterey County Herald and St. Paul (Minn.) Pioneer Press from McClatchy Co.

Under a 1999 alliance with Gannett and Stephens known as the California Newspapers Partnership, MediaNews is required to give its partners the option to participate in any newspaper acquisitions in California.

Both Gannett and Stephens have told Singleton that they want a piece of all three of the California papers MediaNews is trying to buy from McClatchy, according to two people familiar with the negotiations.

"Everybody involved sees this as a good deal," one said. "This is a real great market consolidator in the Bay Area. Getting the money won't be a problem on this at all."

The partnership currently owns 23 papers in the state -- mostly in suburbs ringing San Francisco Bay and downtown Los Angeles. Among the publications are the Oakland Tribune, Hayward Daily Review, Pasadena Star-News and San Bernardino Sun.

Denver-based MediaNews is the majority owner and operates the publications. Stephens holds a 26.3% interest and McLean, Va.-based Gannett 19.5%.

MediaNews owns other California papers outside the partnership, including the Long Beach Press-Telegram and the Daily News in the San Fernando Valley.

A successful bid by the partnership for the three papers would bring Gannett, the nation's largest newspaper chain, back into the mix of companies vying for some or all of the 12 papers that McClatchy is selling as part of its acquisition of Knight Ridder Inc.

Gannett previously had been described by industry observers as sitting out the bidding for the papers. But the partnership with Singleton's MediaNews opens a less risky avenue for Gannett to expand its holdings in California.

The participation of the newspaper behemoth, with annual revenue of $7.6 billion, also lends considerable financial clout to the partnership's bid.

Gannett publishes 90 daily newspapers including USA Today, with a total circulation of more than 8 million. It owns four California dailies, including the Desert Sun of Palm Springs and the Visalia Times-Delta.

Privately held Stephens is a lesser-known player outside the industry. It owns about two dozen relatively small papers, many of them in Arkansas. The flagship of the chain is the advertising-fat Las Vegas Review-Journal, with a weekday circulation of about 165,000. Stephens is headquartered in Las Vegas.

The acquisition of the San Jose and Contra Costa papers is expected to give the partners a dominant position in the Bay Area, leaving the Hearst Corp.'s San Francisco Chronicle as virtually the only significant print competitor in the region.

The partners see the same advantages as Singleton -- linking the two large papers, with a total weekday circulation of more than 430,000, to nine other papers they already own in the Bay Area.

All three companies made their mark more for tough cost cutting than for journalism. They would be expected to combine editorial, advertising and production with the papers they already own. That would allow them, among other benefits, to offer businesses a one-stop way to place ads that would reach readers around the Bay Area.

MediaNews has been negotiating exclusively with McClatchy on behalf of the partnership in hopes of closing the deal this week.

But several sources said many details remained to be ironed out and that a final agreement was unlikely until next week at the earliest.

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