MediaNews Group Inc., the Denver company that owns the Daily News and seven other Southland newspapers, is emerging as a leading contender to snap up some of the papers being put on the auction block as a result of Monday's sale of Knight Ridder Inc.
McClatchy Co. said it would buy the larger Knight Ridder for $4.5 billion in cash and stock, making the owner of the Sacramento Bee, the Fresno Bee and 10 other daily papers the second-largest newspaper chain in the nation based on circulation. McClatchy, now the No. 8 chain, will get 32 daily papers and their websites, a string of other publications and Knight Ridder's one-third stake in online employment site CareerBuilder.com.
To finance the sale, McClatchy plans to unload 12 Knight Ridder papers that are in slower-growing markets, including three of the San Jose-based chain's four California newspapers -- the San Jose Mercury News, the Monterey County Herald and the Contra Costa Times.
MediaNews Chief Executive William Dean Singleton has toured the Mercury News, the Philadelphia Inquirer and other Knight Ridder papers that McClatchy wants to sell, and he is expected to bid for many or even all of them, according to people familiar with the auction process.
Singleton's company owns a controlling stake in more than 30 California publications in addition to the Daily News, including the Long Beach Press-Telegram, the Pasadena Star-News and the Oakland Tribune. Singleton typically buys small or struggling papers and has a reputation for cutting expenses rather than investing in news gathering, said Ben Bagdikian, former dean of the journalism graduate school at UC Berkeley.
"He's a low-cost, high-profit operator," Bagdikian said.
MediaNews unexpectedly dropped out of the bidding for all of Knight Ridder at the last minute because it saw a way to get just the papers it wanted most, said two people involved in the process. "MediaNews has put a lot of work into this thing," said an industry executive, who spoke on condition of anonymity because the bidding process is supposed to remain confidential.
Another possible buyer is the Newspaper Guild-Communications Workers of America. Nine of Knight Ridder's 32 daily papers are unionized, and eight of those are on McClatchy's "for sale" list. The guild has found a deep-pocketed partner in Yucaipa Cos., a Los Angeles investment firm run by former supermarket magnate Ron Burkle.
