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Monday, March 13, 2006

Media shakeup: McClatchy to buy Knight Ridder

The New York Times is reporting that Knight Ridder, the second largest newspaper company in the United States, has agreed to sell itself for about $4.5 billion in cash and stock to the McClatchy Company, a fellow newspaper publisher that is half of Knight Ridder's size:
Because Knight Ridder is so much bigger than McClatchy, the merger is likely to create some upheaval for both companies. McClatchy could sell or close some of the Knight Ridder papers and could take further cost-control measures in its own newsrooms to help finance the deal. It was uncertain when the deal would be completed.

Knight Ridder, based in San Jose, Calif., has almost three times as many dailies as the 12 owned by McClatchy. Knight Ridder's $3 billion in revenue for 2005 was more than twice McClatchy's $1.2 billion.

[...]

"McClatchy is a dolphin swallowing a small whale," said Chuck Richard, an analyst at Outsell Inc., a research firm for the information industry.
In the Pacific Northwest, Knight Ridder owns The Olympian, the Bellingham Herald, and the Idaho Statesman in Boise (all of which were recently acquired in a trade with the nation's largest newspaper publisher - Gannett). Knight Ridder also owns a 49.5 stake in the Seattle Times Company.

McClatchy already owns the Tacoma News Tribune, one of the state's biggest dailies, the Tri-City Herald, The Puyallup Herald (not a daily), The Peninsula Gateway (Gig Harbor) and Anchorage Daily News (in Alaska).

The deal gives McClatchy a powerful footing in the Pacific Northwest, and especially in the Evergreen State. It will own or have a stake in a significant number of Washington State's major daily newspapers.

Here's a map which illustrates what I'm talking about:

McClatchy PapersThe newspapers shown in blue are papers that the McClatchy Company already owns or will own when it buys Knight Ridder.

The newspapers in gray are owned by the Seattle Times Company, which McClatchy will acquire a significant stake in (49.5%) when it buys Knight Ridder.


Here's how the major papers in the state currently stack up in terms of circulation (Data from Audit Bureau of Circulations, March 2005). Papers McClatchy owns, will own, or will acquire a stake in are highlighted in bold:
  1. The Seattle Times (Seattle Times Co.) 233,268
  2. Seattle Post-Intelligencer (Hearst; New York, N.Y.) 144,836
  3. The News-Tribune, Tacoma (McClatchy; Sacramento, Calif.) 128,937
  4. The Spokesman-Review, Spokane (Cowles Publishing; Spokane) 115,954
  5. The Herald, Everett (Washington Post Co.; Washington, D.C.) 50,775
  6. The Columbian, Vancouver (Columbian Publishing Co.) 49,726
  7. Tri-City Herald, Kennewick-Richland-Pasco (McClatchy; Sacramento, Calif.) 42,438
  8. King County Journal, Kent-Bellevue (Horvitz Newspapers; Kent) 42,410
  9. Yakima Herald-Republic (Seattle Times Co.) 37,934
  10. The Olympian, Olympia (Knight Ridder; San Jose, Calif.) 33,808
  11. Kitsap Sun, Bremerton (Scripps; Cincinnati, Ohio) 30,270
  12. Wenatchee World (Woods family; Wenatchee) 24,426
  13. Bellingham Herald (Knight Ridder; San Jose, Calif.) 23,928
  14. Longview Daily News (Lee Enterprises; Davenport, Iowa) 21,739
  15. Skagit Valley Herald, Mount Vernon (Skagit Valley Publishing; Mount Vernon) 17,836
  16. Peninsula Daily News, Port Angeles (Horvitz Newspapers; Kent) 17,152
  17. The Chronicle, Centralia-Chehalis (Lafromboise Newspapers; Centralia) 14,183
  18. Walla Walla Union-Bulletin (Seattle Times Co.) 14,103
It'll certainly be interesting to see how the Blethens react to news of this sale. (The Blethens are the majority owners of the Seattle Times Company).

Publisher Frank Blethen has long been a critic of media consolidation, and it's no secret that he isn't exactly friends with Knight Ridder CEO Tony Ridder. What will Blethen's attitude be towards McClatchy - the new minority owners of his company?

This deal certainly has major implications for the region, but unless McClatchy decides to close down one or more of its local papers, we won't be seeing too many repercussions here. According to the New York Times article, McClatchy is supposed to have a reputation in the industry for good management and award-winning journalism, so perhaps this deal may have positive consequences for the region - but we'll see.

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