GANNETT, MEDIA GENERAL STILL INTERESTED IN THOMSON

By: Joe Strupp After CNHI's First Move



Now that Community Newspaper Holdings Inc. (CNHI) of Alabama has taken
the first bite out of the Thomson Corp.'s smorgasbord offerings with a
bid to buy about a third of Thomson's newspapers, speculation has
increased on how the remaining papers will be sold and which media
groups might buy them.



While CNHI has confirmed a bid of between $400 million and $500 million
for dozens of Thomson newspapers in Georgia, Indiana, and West
Virginia, other potential suitors for the remaining Thomson papers -
such as Gannett Co. Inc. and Media General Inc. - said they remain
interested, but declined to confirm any specific offers.



'We are no longer bidding on the whole [Thomson group], but we are
still interested in smaller parts,' said Tara Connell, a Gannett
spokeswoman. 'You can assume we put in bids, but on what or how much,
we wouldn't talk about.'



J. Stewart Bryan III, chairman and CEO of Media General Inc. of
Virginia, also declined to provide any details, but said his company is
interested in acquisitions in the Southeast. 'We have a Southeast
focus, and we look at every media property in the Southeast that is
available,' he said. 'We have looked at [Thomson's papers].'



Three other potential bidders reportedly are Knight Ridder of
California, Cox Newspapers Inc. of Georgia, and Lee Enterprises Inc. of
Iowa. Spokesman Dan Hayes declined to comment on Lee's possible
interest, while Cox and Knight Ridder representatives also remained
mum.



Thomson Corp., owner of 130 daily and nondaily newspapers in the United
States and Canada, plans to sell all but The Globe and Mail of
Toronto. Company officials have said they want to shift its emphasis to
its growing electronic and print information services.



The sell-off comes at a time industry experts see a prime market for
newspaper sales, especially in mid-level markets. 'The fundamental
market is excellent, and these are great cash businesses,' said Bob
Bek, an analyst with CIBC World Markets in Toronto. 'Thomson runs lean
papers, and buyers know that.'



CNHI, which has 92 dailies and more than 200 weeklies from Texas to
Kentucky and across the Southeast, announced last week it had put in a
bid for 16 Thomson dailies and a string of nondailies, according to
David Bronner, investment director of Retirement Systems of Alabama, a
major CNHI lender. He said the acquisition, which is expected to be
completed within two to four months, would help the chain increase its
market strength. 'They fit into our pattern of where we have papers,'
Bronner told E&P. 'They complement the pattern of our existing
papers very nicely.'



Mike Reed, president and CEO of CNHI, declined to comment on the
specifics of the Thomson bid, but said the kinds of papers that Thomson
is selling - midsize dailies in the South and Midwest - would help CNHI
expand its advertising power. 'The kind of papers we are looking at are
those that cluster well with our existing papers and allow us to expand
our national sales power,' he said. 'Midsize papers are best for that.'
Reed also said adding mid-market dailies increases CNHI's overall
talent pool, making it easier to move staff from one paper to another
when needed. 'They can be spread within the organization,' he said.



Thomson Newspapers President Stuart Garner declined to speculate on any
bidders, citing a confidentiality agreement. 'That's policy,' he said.



Initially, Thomson indicated it wanted to sell its entire newspaper
group - valued at more than $2 billion - to one buyer. But company
officials changed that strategy recently, seeking a break-up approach
that observers said would likely make more money.



However, noted Media General's Bryan: 'The list of potential buyers for
the whole group was limited. I think Thomson has all of the cards in
their favor in terms of getting full value. They have more flexibility
with more buyers.'