Discarded Links: Buyers Bid for Knight Ridder’s Castoffs

By Richard Brenneman
Tuesday April 04, 2006

As the dismembering of the once-mighty Knight Ridder newspaper chain progresses, a leading shareholder of one of the nation’s leading homebuilding companies has emerged as a potential buyer of two papers. 

Bruce Toll, one of the owners and founders of Toll Brothers—a Horsham, Pa.-based home-building company that is one of the Bay Area’s largest builders—is a key member of a consortium making bids on two Knight Ridder papers in Philadelphia. 

Toll Brothers is the major builder of new homes in Richmond and has projects throughout the Bay Area. Toll’s group is not bidding on any of the chain’s Bay Area papers—though another homebuilder wants the paper in Monterey. 

The fates of the Bay Area’s second- and third-largest papers remain uncertain, as does the fate of a host of smaller publications. 

Sacramento-based McClatchy Corp., publishers of the Sacramento Bee, 11 other dailies, and 16 community papers, bought the 32-paper Knight Ridder chain last month in a $3.75 billion deal. 

Because the purchase included $2 billion in Knight Ridder debt, McClatchy promptly announced it would sell a dozen of its new dailies, including the Contra Costa Times (circulation 182,000), San Jose Mercury News (circulation 249,000) and the Monterey County Herald (circulation 32,000). 


Unmentioned papers 

McClatchy officials said papers selected for sale were those that didn’t meet the chain’s growth expectations. 

In addition to the three Bay Area and two Philadelphia papers on the block, McClatchy is peddling the Aberdeen American News, the Akron Beacon Journal, the Duluth News Tribune, the Fort Wayne News-Sentinel, the Grand Forks Herald, the Saint Paul Pioneer Press and the Wilkes-Barre Times Leader.  

Besides the 12 paid-circulation daily papers up for sale, McClatchy is also selling a collection of other publications, including the free-distribution Daily News papers, based in Palo Alto, as well as papers published under the umbrella of the paid dailies. 

Sarah Lubman, of New York’s Brunswick Group public relations firm, is representing McClatchy in the sale. She declined to comment about any offers pending for the papers. 

As for the so-called “community papers” published on the turf of the large dailies, Lubman said they “will generally be considered along with the daily newspapers when we are selling the dailies.” 

Publications under the Contra Costa Times umbrella include: the Alameda Journal, Antioch News, Berkeley Voice, Brentwood News, Concord Transcript, Contra Costa Sun, Danville Times, East County Times, The Montclarion, Oakley News, The Piedmonter, Pleasant Hill/Martinez Record, Pleasanton Times, San Ramon Valley Times, The Journal (Albany/El Cerrito), Valley Times, Walnut Creek Journal, and the West County Times. 

Also for sale is the 50,000-circulation chain of Daily News papers, headquartered in Palo Alto, which includes the East Bay Daily News. According to last Wednesday’s Palo Alto Weekly, Diana Diamond, who served as executive editor of all the Daily News papers, was fired last week, and the chain has been operating under a hiring freeze. 

Palo Alto Weekly editor Jay Thorwaldson wrote that Knight Ridder CEO Tony Ridder had praised Diamond after he bought the ten-year-old chain on Feb. 15, 2005, for running “the paper of the future.” Three months later, Knight Ridder launched the mini-chain’s East Bay edition. 


The contenders 

Two groups have entered bids for all 12 of the Knight Ridder paid dailies, one the proposed employee-owned ValuePlus Media and the other MediaNews, a Denver-based chain that already owns the Oakland Tribune and a collection of other Bay Area papers. 

ValePlus Media, the employee group, was launched after Mercury News reporters Julie Patel and Rick Tulsky began email discussions with other staff journalists and the president of the local chapter of the American Newspaper Guild—an employee union.  

Two Employee Stock Ownership Plan (ESOP) experts helped formed ValuePlus to buy the paper, and Yucaipa Companies, a labor-friendly pension fund investment firm, offered the financial clout to make the bid. 

If successful, the resulting company would become the nation’s first employee-owned media chain. 

MediaNews is the creation of media magnate Dean Singleton whose firm is renowned for what some consider ruthless cost-cutting and layoffs—although his reputation has been rising, reported a 2003 article in Columbia Journalism Review that carried the subhead, “Once, Angry Reporters Threw Beer Cans at Him. Now He’s Reaching for Journalistic Respect-ability.” 

Were MediaNews to win, the chain would control daily and weekly papers circling the bay with a combined circulation of more than 800,000, double the average daily figure for the San Francisco Chronicle. 

Concerns about the implications of such regional dominance have prompted a preliminary investigation by the U.S. Department of Justice’s Antitrust Division, reports John McManus of Grade the News, an on-line media monitoring web site (www.gradethenews.org) in an item posted on the site Wednesday. 

McManus wrote that he was contacted by a Justice Department paralegal who asked about the potential sale’s impact on advertisers, “rather that on consumer prices of news quality. But he was willing to listen to concerns about concentration of ownership on the news product.” 


Monterey bidder? 

While Toll Brothers is not interested in any of the Bay Area papers, another homebuilder is. 

Nader Agha is the leader of a consortium that wants to buy the Monterey County Herald, according to an article reported last Tuesday in that paper. Also involved is Charles Chrietzberg, president and CEO of Monterey County Bank, the paper reports. 

The Herald was scooped on the story by the Los Angeles Times, which broke the news two days earlier in a story that included a quote from Herald editor Carolina Garcia, who observed that Agha offers to do a lot of things, but not a lot comes to pass.” 

Lubman declined to comment when asked if Agha’s group had submitted a bid..