First Responses to Big MediaNews Deal

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By: E&P Staff

As they tried to figure out the complex MediaNews deal, also involving the Hearst Corp., for four Knight Ridder papers now handled by McClatchy, analysts, reporters and others started to respond.

E&P will add to the following extracts from newspapers all evening.

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“I think this is a good outcome to a lousy situation,” Pioneer Press publisher Par Ridder told employees at a companywide meeting this afternoon, according to the newspaper.

Dean Singleton, MediaNews chief executive, said he plans to retain Ridder as publisher. He pledged to compete vigorously with the larger Star Tribune, and would not seek a joint operating agreement.

He said decisions about labor contracts ? which could be set aside under the type of transaction used to acquire to Pioneer Press ? would be left up to the local management team.

“We sign off on them, but Par and his team will make those decisions,” he said in an interview this evening.
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San Jose Mercury News: “The deal creates a powerful new media giant in Northern California by combining ownership of MediaNews’ eight local daily newspapers with Knight Ridder’s Mercury News, Contra Costa Times and Monterey County Herald. MediaNews also is acquiring Knight Ridder’s smaller Bay Area publications, such as the Palo Alto Daily News group and the Silicon Valley Community Newspapers. As part of the deal, MediaNews is also buying the St. Paul Pioneer Press.

“The announcement signals an end to months of uncertainty in the San Jose community, which has worried about the impact — and identity — of a new owner for the newspaper.

“The three Bay Area newspapers MediaNews is buying bring 463,737 new daily readers to the company. Its Alameda Newspaper Group includes eight suburban Bay Area dailies that have 220,273 daily subscribers, including the Fremont Argus and the San Mateo Times. The 11 newspapers will now have a combined circulation of 702,738. The San Francisco Chronicle has a daily circulation of 400,906.”

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Contra Costa Times: “In a visit to the Times newsroom in Walnut Creek, MediaNews CEO William Dean Singleton said that both of the papers will continue to operate independently. He did not anticipate layoffs as a result of the deal.

“Singleton, a media mogul who has earned a reputation for slashing costs and jobs at some newspapers he acquires and increasing salaries and staffing at others, said the deal will provide MediaNews with a big piece of Bay Area market. Indeed, the combined circulation of the company’s regional papers will exceed 700,000, compared to the San Francisco Chronicle’s 419,000.

“‘We still have a competitor across the Bay that is very fierce in the Chronicle,’ Singleton said. ‘They’re the big bad metro and we’re the little guys chipping at their heels. I just hope we can chip a little harder now.'”

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The New York Times: “Hearst, which owns the San Francisco Chronicle, appears to be taking the Monterey Herald, at least temporarily, to alleviate potential government anti-trust concerns, although Monterey is farther geographically from Mr. Singleton’s cluster of Bay Area papers than the San Jose and Contra Costa papers.

“The participation of Gannett and Stephens may also ease the anti-trust questions that the sale raises for Mr. Singleton.

“It was not immediately clear why Hearst would be buying the St. Paul paper, only to turn it over to Mr. Singleton….

“Today’s deals work out well financially for McClatchy, which has fallen in Wall Street’s estimation since the Knight Ridder purchase. The company acquired Knight Ridder for 9.5 times its cashflow, while today’s sales work out to 11.5 times cashflow.”
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St. Paul Pioneer Press: “William Dean Singleton, the CEO of MediaNews, owns papers that include the Detroit News and the Denver Post. He has a mixed record with big-city newspapers.

“In years past he has shut down newspapers in Texas including the Houston Post, and he took the Long Beach Press-Telegram through deep cost cutting after he acquired that paper in the late 1990s. In his more recent big-city acquisitions in Denver and Detroit, he has honored union contracts and kept the operations mostly intact.

“Singleton’s name was one of the first to surface as a prospective buyer for the Pioneer Press. Earlier this year, when Knight Ridder was still on the auction block in its entirety, Singleton toured the Pioneer Press’s facilities in St. Paul.”
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Larry Grimes, president of W.B. Grimes, a media investment bank in Gaithersburg, Md., described the purchase “as a logical move” for MediaNews, in the Denver Post. “It’s a great add-on for them,” Grimes said of MediaNews. “It strengthens their position in California.”

Grimes said “it looks like a good deal” for McClatchy. “That spread pays off a lot of debt for McClatchy,” he said.

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