Prime Mover in Knight Ridder Sale Cuts Newspaper Holdings

By: E&P Staff As Knight Ridder's decision on whether to put all or some of itself up for sale remains in the spotlight, one of the big shareholders that forced the nation's second-largest newspaper chain to make the decision has reduced its holdings, according to a filing with the U.S. Securities and Exchange Commission (SEC).

In its Schedule 13D filing, Private Capital Management LP (PCM), the Naples, Fla., fund headed by Bruce Sherman, said that, at client direction, it had reduced its holdings in Knight Ridder by 610,297 shares, or approximately 1% of the company's outstanding shares as of Oct. 20, 2005.

PCM's holdings as of last Sept. 30 had been reported at 19.18%. It also cut its share in most other newspaper companies in its portfolio.

Dissatisfied with Knight Ridder's share price over the past year, PCM in November wrote its board of directors demanding the chain "aggressively pursue the competitive sale of the company." Knight Ridder subsequently hired two firms to investigate "strategic alternatives" including a sale.

In recent days, there have been reports of possible bidders including a joint bid by Gannett Co. and MediaNews Group, and a possible partnership between The McClatchy Co. and The New York Times Co. The Newspaper Guild has also been working on a possible bid for some of Knight Ridder's 32 dailies, E&P has reported.

The Philadelphia Inquirer reported today that overall PCM had cut its investment in nine national newspaper chains from 16% of the company's portfolio in late 2004 and early 2005, to 13.8% as of Dec. 31.

"Other Knight Ridder investors, including Parnassus Investments, of San Francisco, and Wachovia Corp., of Charlotte, N.C., also sold Knight Ridder holdings in the fourth quarter," the Inquirer revealed. "The company has attracted other investors, including Highfields Capital Management L.P., of Boston, which bought 3.3 percent of Knight Ridder during the fourth quarter, and Franklin Mutual Advisers L.L.C., of Short Hills, N.J., which bought 1.3 percent of the company, according to SEC filings."

During the fourth quarter, all Private Capital assets fell to $27.9 billion from $29.9 billion three months earlier. A spokesman for the firm told the Inquirer he could not comment.