Speculation Swirls Around Possible Knight Ridder Sale

By: E&P Staff While there is no specific new news today on the possible Knight Ridder Inc. sale, the analysis and commentary continues. Here is a sampling from various sources:

-- "This is Tony Ridder's worst nightmare," industry analyst John Morton tells the Los Angeles Times today, referring to the CEO who sent a memo to employees yesterday explaining the situation. "This is exactly what he's been striving to avoid for years. ? Tony doesn't want anybody to buy the company but when you hire an investment banker [Goldman Sachs], it opens the door not just to the Gannetts of the world but to anyone else."

-- In a note to investors, Steven N. Barlow, an analyst with Prudential Equity Group, said a financially oriented buyer is more likely to prevail in the bidding than another media company. "The company could fetch between $70 and $100 per share based upon previous transactions in the space but we see the low-to-mid end of that range as most likely," he wrote.

-- "We are not convinced a deal is forthcoming," Merrill Lynch & Co. analyst Lauren Rich Fine wrote in a report to investors on Monday. UBS Warburg and Lehman Bros. analysts were similarly pessimistic.

-- Morgan Stanley analyst Doug Arthur said one new possibility included a big investment firm teaming up with Ridder or a smaller newspaper company to buy Knight Ridder. "It's an opportunity for some of the smaller publicly traded companies to get a piece of the rock without buying the whole thing" by themselves, Arthur told the L.A. Times. "There's tons and tons of companies that want to buy newspapers, but at the right price."

-- Gannett Co. may be best positioned ?to swallow Knight Ridder whole,? the Wall Street Journal observes today. ?But the more likely scenario, say those most familiar with the sector, involves a handful of private-equity players potentially pairing with smaller newspaper owners to bid on large chunks of the company or select assets. ?

Likely to look at Knight Ridder's "book" are Blackstone Group LP and Providence Equity Partners Inc., which took a 40% stake in family-owned newspaper company Freedom Communications Inc. in 2003, ? Another scenario places the private-equity firms as backers to such operators as McClatchy Co. or MediaNews Group Inc., injecting equity into a newly combined company in exchange for board seats and a plan to cash out in the future.?

-- Larry Grimes, who heads an investment banking firm with a media focus, told The Washington Post that night Ridder would be a good geographic fit for the New York Times Co. since it publishes newspapers on the East Coast, including Florida, where the Times already owns major papers. He also said Gannett, the nation's largest newspaper company, would probably be interested in buying Knight Ridder, but noted that antitrust issues could force it to sell off some newspapers and television stations. He said that the Tribune Co. has shown a healthy appetite for large newspaper acquisitions and that The Washington Post Co. and Richmond-based Media General may also show interest.