KNIGHT-RIDDER INC. announced it will buy the profitable Lesher Communications Inc. in Northern California for $360 million.
The deal, expected to close by the end of the year, will give Knight-Ridder a commanding place in the San Francisco Bay Area, where it also owns the San Jose Mercury News.
Lesher, a privately held company, publishes four dailies in Contra Costa and Alameda counties: its flagship paper, the Contra Costa Times in Walnut Creek, West County Times, Antioch Ledger Dispatch, and San Ramon Valley Times, all in the growing East Bay region. The papers have a combined circulation of more than 190,000 daily, 206,000 Sunday.
Lesher also publishes several weeklies and inserts and operates a commercial printing arm.
"We are delighted to have the Lesher papers join Knight-Ridder," chairman and CEO Tony Ridder said. "We have said for some time we would be interested in acquiring the right paper in the right market."
Ridder called the Lesher chain, led by publisher George Riggs, a "well-managed group of newspapers in an attractive market with good growth potential."
The Knight-Ridder chief flew to California on Aug. 28, the day the deal was announced, to address the Lesher staff in Walnut Creek.
"Basically, he told them, 'You guys are doing a great job. Keep it up,' " Lesher spokeswoman Kathleen Golla said. Ridder and other executives from the Miami-based company toured the other Lesher sites with Riggs.
Polk Laffoon, K-R vice president and corporate relations director, said in an interview that the Lesher management team is expected to remain in place.
Lesher's editor and vice president for news is John Armstrong, who was hired recently to replace editor Clay Haswell. Haswell and two other top editors resigned in a dispute ? reportedly over their bid to buy the company ? with Riggs (E&P, Aug. 19, p. 14).
"Knight-Ridder's style in acquisitions is to work with existing management," Laffoon said, citing one of Lesher's attractions as its commitment to the communities it serves.
"People like the Lesher papers," Laffoon remarked. "They're top quality and we see them as a very good fit for Knight-Ridder."
Armstrong said the staff reaction to the sale was "very favorable."
"I think they recognize that Knight-Ridder is arguably the best newspaper company in the country," he said. "We look forward to its assistance in making very good newspapers great newspapers."
Armstrong stressed that the Lesher group will continue to emphasize "strong community coverage. Our papers will stand or fall on the basis of the quality of our local reporting."
With the Lesher group, K-R's holdings will include 32 dailies, among them the Philadelphia Inquirer, Detroit Free Press, Miami Herald and Long Beach Press-Telegram.
Its Bay Area circulation will increase to 480,657 weekdays and 540,842 on weekends.
Mercury News publisher Jay Harris said that in keeping with K-R practice, the Lesher group will operate completely independent of the Mercury News, which dominates the San Francisco Peninsula across the bay.
"There are no plans for cooperative initiatives between the Mercury News and the Lesher papers," he stated.
Golla said the staff greeted the announcement with relief. "A sale had been in the air for several weeks and everyone is glad that it's over and that it turned out to be Knight-Ridder," she related.
The Lesher chain was founded by the late Dean S. Lesher, a successful lawyer turned publisher. After buying and selling a Nebraska paper, he moved west and bought his first California paper, the Merced Sun-Star, which is now under different ownership.
Envisioning the growth of the East Bay region as a bedroom community for San Francisco and Oakland commuters, Lesher bought a semi-weekly, the 2,000-circulation Walnut Creek Courier, later named the Contra Costa Times. Its current circulation is 96,335.
The Contra Costa County/eastern Alameda County area is the fastest growing section of the Bay Area. The number of households is projected to increase 35% by 2010, and the average household income in 1994 was $57,399, the fifth highest in California. Average per-capita income is $21,268, the second highest in the state.
Dean Lesher's widow, Margaret, LCI's major shareholder, said in an interview that a major reason for selling was Knight-Ridder's ability to deal with the trend toward electronic publishing.
"My husband always told me to look at the big picture, so I had to look down the road for 10 or 20 years to the future of newspapers," she continued. "I gave my vote not so much to Knight-Ridder as to Tony Ridder for being the best person to take our papers down that road."
She recalled how her husband often lauded Ridder and his company for their commitment to quality journalism and their treatment of employees.
She also noted that K-R was the only newspaper company listed in the book The 100 Best Companies to Work for in America and commended the purchaser for retaining Riggs, whom she termed "one of the brightest newspaper publishers in America. They're lucky to get him."
The sale is likely to heat up newspaper competition in the Bay Area, where the San Francisco Chronicle and Dean Singleton's Alameda Newspaper Group also are fighting for circulation and advertising.
Tom Goldstein, dean of the Graduate School of Journalism at the University of California, Berkeley, predicted a lively rivalry.
Newspaper critic Ben Bagdikian predicted the Alameda group, including the Oakland Tribune, will be hardest hit because it will be squeezed from the south by the Mercury News and from the east and north by the Lesher papers.
?( The West County Times, one of the four Bay area dailies Knight-Ridder is buying.) [Photo & Caption]
By: M.L. Stein Nation's second largest newspaper group is spending $360 million for four S.F. Bay Area dailies sp.