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MediaNews buys Mercury, Daily

Hearst Corporation is involved in complex deal; antitrust reviews continue

MediaNews officially announced at 3 p.m. Wednesday it will purchase the San Jose Mercury News, the Contra Costa Times and two other orphaned Knight Ridder papers for $1 billion.

Ending days of speculation, MediaNews announced it would buy the four papers from the Sacramento-based McClatchy Company with surprise backing from the Hearst Corporation, which owns the San Francisco Chronicle.

Exiting the Mercury News offices in San Jose Wednesday afternoon following the announcement, MediaNews CEO Dean Singleton, Mercury News Chairman and Publisher George Riggs, and a relaxed-looking Knight Ridder Chairman and CEO Tony Ridder were mobbed by television and print photographers.

Asked about the effect the MediaNews purchase would have on Bay Area journalism, Singleton said, "It will make it even better." He also said that no layoffs are planned, and then got into Riggs' black Jaguar and drove away.

MediaNews would own the Bay Area papers while Hearst would buy the St. Paul Pioneer Press and the Monterey Herald and then contribute them to MediaNews in return for an equity investment in the non-Bay Area assets of the MediaNews, subject to regulatory approval, according to a statement. Should it not receive approval, MediaNews has agreed to purchase the papers from Hearst.

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The Mercury reported that the Daily News Group -- a Bay Area chain of local tabloids that Knight Ridder purchased a year ago that includes the Palo Alto Daily News and four sister papers -- and the Silicon Valley Community Newspapers will also go to MediaNews. The fate of the smaller newspapers had not been included in the corporations' official announcement of the deal.

Prior to the sale, the Denver-based MediaNews already owned the San Mateo County Times, the Oakland Tribune and 18 other Northern California papers.

Across the Bay Area, MediaNews will now reportedly have a daily circulation of more than 700,000. Only the San Francisco Chronicle, with a daily circulation of approximately 400,000, will even come close to rivaling MediaNews for Bay Area newspaper dominance.

Other MediaNews papers include the Fremont Argus, Hayward Daily Review, Tri-Valley Herald and Marin Independent Journal.

In a final wrinkle to the complex deal, MediaNews plans to contribute the Mercury News and Contra Costa Times to California Newspapers Partnership, owned 54.23 percent by MediaNews. Gannett and Stephens Media, the remaining partners, have committed to contribute their share of the purchase price, according to the announcement.

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When the transactions are finalized, MediaNews will become the nation's fourth largest newspaper company in terms of daily circulation (approximately 2.7 million daily and 3 million Sunday), with 53 daily newspapers.

The announcement apparently ends an unsuccessful bid from Mercury News employees to "save" the paper. They were working with grocery store magnate Ronald Burkle and had hoped his company, Yucaipa Companies LLC, would purchase all 12 papers. The employees had set up a Web site, www.savethemerc.com, to rally community support.

The news was closely guarded all day, and announcements had been put off at the Contra Costa Times three times, the paper reported. "It sounds like more rumors to me," MediaNews President Jody Lodovic told the Weekly at 12:30 p.m. He would neither confirm nor deny reports of a sale.

Among media critics, MediaNews CEO Dean Singleton has a mediocre reputation. Prior to the sale, they predicted that the Mercury News would face layoffs and a continued thinning of its news coverage if MediaNews purchased it. Singleton's critics received new ammunition last week when the Denver Post, MediaNews' flagship paper, announced it was cutting 25 positions.

The Mercury News has suffered financially in recent years as the Silicon Valley economy lagged and online classified sites like Craigslist took away advertising revenue.

Knight Ridder, amidst pressure from shareholders, announced in March it was selling its 32 newspapers to the McClatchy Company for $4.5 billion. McClatchy immediately announced it would sell off 12 of the papers, including those in the Bay Area, to help finance the deal.

The deal will need to receive regulatory approval and regulators are closely watching it. Wednesday, McClatchy announced the U.S. Department of Justice was seeking additional information about its St. Paul Pioneer purchase.

Last week, California Attorney General Bill Lockyer announced he was examining the both the Knight Ridder sale to McClatchy and the then-potential re-sale of some of the newspapers "to determine whether any reduction of competition in those markets would be significant enough to warrant intervention," according to a statement.

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MediaNews buys Mercury, Daily

Hearst Corporation is involved in complex deal; antitrust reviews continue

by Bill D'Agostino / Palo Alto Weekly

Uploaded: Wed, Apr 26, 2006, 3:25 pm

MediaNews officially announced at 3 p.m. Wednesday it will purchase the San Jose Mercury News, the Contra Costa Times and two other orphaned Knight Ridder papers for $1 billion.

Ending days of speculation, MediaNews announced it would buy the four papers from the Sacramento-based McClatchy Company with surprise backing from the Hearst Corporation, which owns the San Francisco Chronicle.

Exiting the Mercury News offices in San Jose Wednesday afternoon following the announcement, MediaNews CEO Dean Singleton, Mercury News Chairman and Publisher George Riggs, and a relaxed-looking Knight Ridder Chairman and CEO Tony Ridder were mobbed by television and print photographers.

Asked about the effect the MediaNews purchase would have on Bay Area journalism, Singleton said, "It will make it even better." He also said that no layoffs are planned, and then got into Riggs' black Jaguar and drove away.

MediaNews would own the Bay Area papers while Hearst would buy the St. Paul Pioneer Press and the Monterey Herald and then contribute them to MediaNews in return for an equity investment in the non-Bay Area assets of the MediaNews, subject to regulatory approval, according to a statement. Should it not receive approval, MediaNews has agreed to purchase the papers from Hearst.

The Mercury reported that the Daily News Group -- a Bay Area chain of local tabloids that Knight Ridder purchased a year ago that includes the Palo Alto Daily News and four sister papers -- and the Silicon Valley Community Newspapers will also go to MediaNews. The fate of the smaller newspapers had not been included in the corporations' official announcement of the deal.

Prior to the sale, the Denver-based MediaNews already owned the San Mateo County Times, the Oakland Tribune and 18 other Northern California papers.

Across the Bay Area, MediaNews will now reportedly have a daily circulation of more than 700,000. Only the San Francisco Chronicle, with a daily circulation of approximately 400,000, will even come close to rivaling MediaNews for Bay Area newspaper dominance.

Other MediaNews papers include the Fremont Argus, Hayward Daily Review, Tri-Valley Herald and Marin Independent Journal.

In a final wrinkle to the complex deal, MediaNews plans to contribute the Mercury News and Contra Costa Times to California Newspapers Partnership, owned 54.23 percent by MediaNews. Gannett and Stephens Media, the remaining partners, have committed to contribute their share of the purchase price, according to the announcement.

When the transactions are finalized, MediaNews will become the nation's fourth largest newspaper company in terms of daily circulation (approximately 2.7 million daily and 3 million Sunday), with 53 daily newspapers.

The announcement apparently ends an unsuccessful bid from Mercury News employees to "save" the paper. They were working with grocery store magnate Ronald Burkle and had hoped his company, Yucaipa Companies LLC, would purchase all 12 papers. The employees had set up a Web site, www.savethemerc.com, to rally community support.

The news was closely guarded all day, and announcements had been put off at the Contra Costa Times three times, the paper reported. "It sounds like more rumors to me," MediaNews President Jody Lodovic told the Weekly at 12:30 p.m. He would neither confirm nor deny reports of a sale.

Among media critics, MediaNews CEO Dean Singleton has a mediocre reputation. Prior to the sale, they predicted that the Mercury News would face layoffs and a continued thinning of its news coverage if MediaNews purchased it. Singleton's critics received new ammunition last week when the Denver Post, MediaNews' flagship paper, announced it was cutting 25 positions.

The Mercury News has suffered financially in recent years as the Silicon Valley economy lagged and online classified sites like Craigslist took away advertising revenue.

Knight Ridder, amidst pressure from shareholders, announced in March it was selling its 32 newspapers to the McClatchy Company for $4.5 billion. McClatchy immediately announced it would sell off 12 of the papers, including those in the Bay Area, to help finance the deal.

The deal will need to receive regulatory approval and regulators are closely watching it. Wednesday, McClatchy announced the U.S. Department of Justice was seeking additional information about its St. Paul Pioneer purchase.

Last week, California Attorney General Bill Lockyer announced he was examining the both the Knight Ridder sale to McClatchy and the then-potential re-sale of some of the newspapers "to determine whether any reduction of competition in those markets would be significant enough to warrant intervention," according to a statement.

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