The U.S. Justice Department said it had ended an investigation into the 3-month-old deal involving the San Jose Mercury News, Contra Costa Times and The Herald in northern California and the St. Paul Pioneer Press in Minnesota.
”After a careful investigation … the antitrust division determined that the transaction if not likely to reduce competition substantially,” the Justice Department said in a statement.
McClatchy took control of the papers a month ago when the Sacramento-based company bought their former owner, Knight Ridder Inc., for $4 billion.
Before that acquisition closed, McClatchy worked out a complex deal that also involved Hearst Corp. to turn over the papers to Denver-based MediaNews.
But the handoff couldn’t be completed until the Justice Department was satisfied the sale wouldn’t harm Bay Area readers and advertisers.
As the review dragged on, McClatchy was left in the awkward position of owning four papers that it didn’t want. That situation threatened to become particularly thorny at San Jose Mercury News, where labor contracts with about 600 workers expired June 30.
The Justice Department’s blessing came on the same day that MediaNews’ financing for the deal was set to expire. MediaNews warned it might incur more than $20 million in additional expenses if its financing package unraveled.
McClatchy plans to use the $1 billion to lower the debt that it took on in the Knight Ridder acquisition, saving the company’s about $163,000 per day in interest expense.
MediaNews already owns the Oakland Tribune and a cluster of suburban papers in the Bay Area. Adding the San Jose Mercury News and Contra Costa Times will give MediaNews more than 700,000 subscribers in the region, substantially more than the Hearst-owned San Francisco Chronicle.