Par Ridder Lawsuit Settlement Helps Push MediaNews Profit Up 34%

By: E&P Staff Privately held MediaNews Group Inc. reported rising profit on falling revenue in its fiscal second-quarter ended Dec. 31 thanks in part to its settlement with former St. Paul Pioneer Press Publisher Par Ridder, who last year defected to the rival Minneapolis Star Tribune taking key executives and allegedly confidential documents with him.

In a voluntary filing with the Securities and Exchange Commission (SEC), Denver-based MediaNews reported net income in the quarter of $17.4 million, up 34% from the year-ago result of $12.96 million. That includes one-time gains of $3.8 million in the Ridder lawsuit and non-cash gains totaling $12.5 million for the sale of stakes in three papers.

MediaNews said its revenue fell to $345.2 million compared to $372.5 million a year ago.

Same-property advertising revenues dropped 14.0% for the quarter -- including a rare decrease of 8.3% in Internet revenues, usually the one bright category for newspapers.

Internet ad revenues were down 4.9% for the six months ended Dec. 31, MediaNews said.

For the quarter classified revenue plunged 30.3%, retail fell 16.0%, national was down 18.8%, and preprint was off 4.0%.

Classified was down in all categories, led by real estate, MediaNews said.

Same-paper circulation revenues fell by 6.5% for the quarter, largely on home delivery discounts that MediaNews said it is gradually discontinuing.

MediaNews also disclosed that on Oct. 19, 2007 it consummated its deal with The Hearst Corporation, in which it purchased The Monterey County (Calif.) Herald and the Pioneer Press from Hearst in exchange for an equity investment in MediaNews properties located outside the San Francisco Bay area. MediaNews said it issued 100 shares of newly created Class C common stock to Hearst providing Hearst with 31% equity interest in the non-Bay Area publications. The purchase price, as previously disclosed, was $317.6 million, of which $290.6 million was applied to the purchase price of the newspapers.