McClatchy Co., led by chief executive Gary Pruitt (pictured), was the high bidder yesterday for Knight Ridder, offering more than $65 a share, according to the Wall Street Journal and New York Times. A lower bid came in from a private equity group, and that it was unclear whether an expected joint bid by Billy Dean Singleton’s MediaNews Group and Gannett even arrived at KR on time. KR’s board will meet Sunday to consider the offers, but the Journal warned that there could still be “a surprise development or a dark-horse bidder that emerges.” Locally, KR owns the San Jose Mercury News, Contra Costa Times in Walnut Creek, the Palo Alto-based Daily News Group and the Monterey Herald.

CHANGE AT THE TOP: If McClatchy’s bid is accepted, KR’s corporate office in downtown San Jose will close and the executives there will lose their jobs since McClatchy already has its own corporate staff that oversees 12 daily and 17 weekly newspapers. KR’s key executives are guaranteed three-year’s pay, bonuses, life and health insurance. While it is customary that local publishers are replaced by an acquiring company, finding publishers for KR’s 32 dailies might take some time for McClatchy.

JOURNALISTIC TEST: One hitch in the sale process came when it was revealed in Feburary that the top bidder would be subjected to scrutiny by a committee of outside journalists, who would determine if the would-be buyer meets Knight Ridder’s high standards of journalism. McClatchy should be able to pass that test. Consider this: McClatchy’s Sacramento Bee and KR’s San Jose Mercury News are about the same size, yet the Bee has won three Pulitzers since 1992 while the Merc hasn’t won one since 1990.

FACTS ABOUT McCLATCHY: 9,300 employees compared to 18,000 for KR; 13.5% profit margin compared to 15.6% for KR (according to Yahoo Finance); $2.43 billion market cap vs. $4.2 billion for KR.

McCLATCHY’S DAILIES Sacramento Bee, Fresno Bee, Modesto Bee and Merced Sun-Star, Minneapolis Star Tribune, Raleigh (N.C.) News & Observer, Beaufort (S.C.) Gazette, Rocky Hil (S.C.) Herald, The Bluffton (S.C.) Island Packet, Tacoma (Wash.) News Tribune, Kennewick (Wash.) Tri-City Hearld, and the Anchorage Daily News.

[NY Times: McClatchy emerges as leading bidder for KR] [LA Times: Readers and community leaders around the country worry.] [McClatchy shares hit 52-week low as it bids for KR] [Merc: KR board to meet this weekend] [Long weekend ahead for newspaper industry] [AP’s version] [A discussion about the KR sale on “News Hour with Jim Lehrer”]

SF Press Club News


  1. Yes, Bruce Sherman’s Private Capital Management, who led the shareholder revolt that forced KR to put itself on the block, does control 35% of McClatchy’s stock, but those are non-voting shares.

    McClatchy (like other family-owned publicly-held newspaper companies like NYT, Tribune, Lee, etc.) has two classes of stock — voting shares held by family members and non-voting shares held by the public. So it doesn’t matter how many non-voting shares Sherman owns, he has no power over McClatchy’s management.

    KR, several years ago in the interest of good corporate governance, decided to have only one class of stock so all shareholders would have the same rights. But this decision proved to be KR’s undoing because it wasn’t able to fight off a “greenmailer” like Sherman.

    Good question.

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