MediaNews to Pay for Most of McClatchy Deal
William Dean Singleton’s MediaNews Group Inc. is putting up most of the $1 billion that it and Hearst Corp. are spending to buy four newspapers from McClatchy Co., regulatory filings showed Monday.
Denver-based MediaNews is paying $737 million to McClatchy for the San Jose Mercury News and the Contra Costa Times, according to a copy of last week’s agreement made public Monday.
Hearst will spend $263 million for the Monterey County Herald and the St. Paul Pioneer Press in Minnesota. All four papers are now owned by Knight Ridder Inc., and Sacramento-based McClatchy is selling those and other publications as it buys Knight Ridder.
As previously reported, Hearst plans to trade its two papers to MediaNews for 20% to 30% of MediaNews’ publications outside the Bay Area.
MediaNews will end up with 11 daily papers surrounding San Francisco and a financial alliance with Hearst, which owns Singleton’s largest remaining Bay Area competitor, the San Francisco Chronicle.
MediaNews, which will become the fourth-largest U.S. chain by circulation after the deal is completed, is privately held, mostly by the families of Singleton -- the chef executive -- and the company’s chairman, Richard Scudder.
Monday’s filing with the Securities and Exchange Commission indicates that MediaNews’ holdings outside the Bay Area are worth more than $1 billion. The Bay Area papers would push the company’s value to about $2 billion, based on the purchase price for the Mercury News and Contra Costa Times.
McClatchy’s shares have stumbled since it agreed to purchase Knight Ridder, giving the company a market value of $2.1 billion at Monday’s closing price of $45.36. However, when the shares the company intends to issue as part of the $4-billion-plus purchase are included, its value would be about $3.7 billion.
The SEC filing also said that MediaNews and Hearst would keep the nonunion employees at the four papers, paying them what similar workers in the area earn. A renowned cost cutter, Singleton has said he intends to keep the management teams intact and generally leave salaries and benefits as they are, at least in the near term.
MediaNews and Hearst will also inherit the papers’ union contracts. San Jose’s expires just before the deal’s expected closing in July. But Luther Jackson, an official with the San Jose Newspaper Guild, said an “evergreen clause” would automatically extend the terms of that contract as long as the union and the company were negotiating.
