MediaNews To Pay $736 million for 'Merc News' and 'Contra Costa Times'

Posted Tuesday, May 2, 2006 12:00 am

By: Jennifer Saba MediaNews Group has agreed to buy the California papers the San Jose Mercury News and the Contra Costa Times from McClatchy for $736.8 million, according to a filing with the Securities and Exchange Commission.

Hearst will pay McClatchy $263.2 million for The Monterey County (Calif.) Herald and the St. Paul Pioneer Press in Minnesota.

On April 26, McClatchy agreed to sell the four Knight Ridder papers to MediaNews and Hearst for $1 billion. Hearst then plans to sell MediaNews the Monterey Herald and the Pioneer Press in exchange for equity in MediaNews' non-Bay Area properties.

Additionally, Gannett and Stephens Group, which are in a partnership with MediaNews in California, have committed $325 million to Media News for the purchase of California papers. MediaNews controls 54.23% of the California Newspapers Partnership.

The filing also said that MediaNews Group and Hearst will honor Newspaper Guild contracts and will employ all nonunion members at the paper paying them similar wages to those in the Bay Area.

Contracts at the San Jose Mercury News and Monterey Herald are due to expire at the end of June. Luther Jackson, executive officer of the San Jose Newspaper Guild, said there is an "evergreen" clause that extends the negotiation process should talks need to continue after the expiration date.

For example, the last San Jose Mercury News contract expired in November of 1998. Because of the evergreen clause, Knight Ridder management honored the contract until a new one was ratified in July of 2000.

Until the McClatchy/MediaNews deal closes, the guild negotiates with Knight Ridder for new contracts. Jackson said they are in talks in Monterey and could come to agreement soon.

If the guild is still in talks after the close, because of the evergreen clause, MediaNews will take over the negotiations.

The Contra Costa Times is the only paper of the four that is not a union shop.

The guild contract for the Pioneer Press expires in July 2007.

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MediaNews To Pay $736 million for 'Merc News' and 'Contra Costa Times'

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