4 Knight Ridder Papers Cut Sunday Price

By: Michael Liedtke, AP Business Writer (AP) Four Knight Ridder newspapers have reduced their Sunday newsstand price during the past two months in a push to attract more readers and reverse a prolonged circulation slide at the nation's second-largest newspaper company.

The price cuts represent the most tangible evidence yet of San Jose-based Knight Ridder's resolve to stop a slow but steady erosion in circulation that has occurred in recent years while management catered to investors by trimming expenses to boost profit margins.

The papers that have lowered their Sunday prices by 25 cents to 50 cents since April include the St. Paul Pioneer Press in Minnesota; the Contra Costa Times in Walnut Creek, Calif.; the Akron Beacon Journal in Ohio; and The Kansas City Star.

Although that's only a handful of Knight Ridder's 32 daily newspapers, industry analysts believe the discounts will become more widespread.

After engineering an 11% work force reduction that cut 2,200 jobs last year, Knight Ridder CEO Tony Ridder made readership growth a top priority this year.

To emphasize the point, Ridder tied a larger portion of management's bonuses to circulation gains and last month appointed a new vice president of circulation, Arden Dickey.

Ridder "is 100% focused on getting circulation growing again," said analyst Peter Appert of Deutsche Bank Securities.

Contacted Tuesday, a Knight Ridder official declined to comment on the company's plans, citing competitive reasons.

Ridder told shareholders at the company's annual meeting in late April that the company planned to build circulation "through a combination of content improvement, increased promotion, more thoughtful pricing (and) discount strategies."

While declining readership has plagued the industry for decades, the problem has been more acute at Knight Ridder in recent years.

In the six months ended March 31, the total daily circulation of Knight Ridder newspapers dipped 1.2%, double the industry average. Since Ridder became CEO in 1995, the daily circulation at the company's newspapers has dropped by about 10%.

Thanks in part to cost-cutting efforts, the eroding readership hasn't hurt Knight Ridder's stock, which has climbed by 125% under Ridder's leadership. The company's shares fell 58 cents to close at $62.73 Tuesday on the New York Stock Exchange.

Attracting more readers could provide an additional boost to Knight Ridder's profits if the circulation gains translate into higher prices for advertising, which generate the bulk of the newspaper industry's revenue.

Advertising accounted for 78% of Knight Ridder's total revenue of $2.9 billion last year. Meanwhile, Knight Ridder's circulation revenue declined for the third consecutive year to $512.3 million, down 4% from a 1998 peak of $533.3 million.

Based on anticipated price cuts, Knight Ridder's circulation revenue will fall to $501 million, estimated Thomas Weisel Partners analyst Christa Sobel.

Sobel is worried the discounts will backfire on Knight Ridder by making it difficult to raise prices in the future. Lower prices also tend to attract less loyal readers and less affluent households that aren't as appealing to advertisers, Sobel said. "It's a risky strategy," she said.