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February 18, 2005

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Palo Alto Online

Publication Date: Friday, February 18, 2005

Knight Ridder CEO says no changes planned for Daily News Knight Ridder CEO says no changes planned for Daily News (February 18, 2005)

Immediate plans call for present management to continue despite corporate buyout of scrappy five-paper chain

by Jay Thorwaldson

Tony Ridder, president and CEO of the giant Knight Ridder newspaper chain, said he plans to make no changes in the operations of the Palo Alto Daily News and its four sister papers in Burlingame, San Mateo, Redwood City and Los Gatos.

"We plan to let them continue to run the paper," Ridder told the Weekly, a day after the national chain purchased the independently-owned Daily News group for an undisclosed sum.

The San Jose-based Knight Ridder is the second largest newspaper chain in the country, behind Gannett Co. Inc. Its publications include the San Jose Mercury News, the Philadelphia Inquirer and the Miami Herald.

Although the Daily News is often criticized for pushing editorial opinions in its news columns, Ridder expressed confidence in the scrappy chain's management.

"We think they're successful. ... I have a lot of confidence in them," he said, acknowledging there are differences between the two companies..

"We still have the values we care about and plan to live by," Ridder said of Knight Ridder's professional standards. "But not everything we do is the same," he said, citing many small weeklies already within the large chain across the nation.

Daily News publishers Dave Price and Jim Pavelich have declined to comment on the sale. The parent organization of the small chain is Priceless LLC.

Differences between Knight Ridder and Priceless LLC were already apparent when the sale was made public. The buyout announcement cited the circulation for all five Daily News papers at 55,000, while the papers themselves a circulation of 59,000 on their front pages -- with no indication that it means all five papers.

The circulation of the Palo Alto Daily News was pegged at 24,000, well below the 29,000 claimed in an earlier audit report.

Ridder said he was unfamiliar with how Knight Ridder determined circulation numbers for the combined papers, and was unaware there was a discrepancy between the announced figures and figures claimed by the papers.

Ridder was earlier quoted by the Reuters news agency that his chain planned to experiment in the area of "free dailies" that have cropped up across the nation -- some of them created by larger papers as specialty publications aimed at commuters, younger persons in the 18-30 age range or narrow geographical markets.

Ridder said the Daily News publications fit the narrow geographical area, and is targeted at small businesses and real estate advertisers. He said the papers have a narrow focus and appeal to "people in barbershops, restaurants, coffee houses. There's clearly a market for it.

"I think it's really for a different market than the Mercury News and Chronicle market," he said, discounting the small papers' impact on declining single-copy sales of the larger papers.

"The Internet is a factor" in that decline, and in dropping readership generally, he said.

"On any given day, only 53 or 54 percent of adults read a daily newspaper. There are a lot of people who don't want the full-line daily newspaper, so I think it's a separate market," he said.

Price and Pavelich are to report to Hilary Schneider, who in January was named a Knight Ridder senior vice president and assigned to operations.

Schneider in the announcement said the newspapers "provide the kind of 'micro-local' coverage that larger metro dailies often do not, but that many consumers and small advertisers clearly seek."

The Palo Alto Daily News was founded in 1995 by Price, Pavelich and David Danforth (who broke with the other two publishers in a bitter dispute in 1998). In 2000, they launched the San Mateo, Burlingame and Redwood City papers in a move that some observers interpreted as positioning the papers for a future sale.

The Los Gatos Daily News was added in 2002.

Ridder said Knight Ridder's "media strategy is to give customers what they want, in print and online. In today's world, customers want many kinds of publications, as evidenced by the great proliferation of free-distribution newspapers, shoppers, lifestyle magazines and publications specializing in autos, real estate and employment.

"Increasingly, Knight Ridder is all of those businesses ... and will become more so in the near future."

Palo Alto Daily News staff members were informed of the acquisition late Tuesday afternoon, and an official announcement was issued by Knight Ridder at 5:30 p.m. through PR Newswire.

A Palo Alto Daily News staff member said Price called a staff meeting late Tuesday and Ridder walked in, along with several other Knight Ridder executives.

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