Knight-Ridder Puts Star-News, Indiana Paper on the Block : Media Giant Said to Want Cash for Purchases or Debt Payment

In an unusual move for a major communications company, Knight-Ridder Inc. said Thursday that it wants to sell two of its newspapers, including the 102-year-old Pasadena Star-News.

The move is considered rare because Knight-Ridder wants to sell the papers to concentrate on more profitable business areas such as electronic publishing. When newspapers sell these days, it is usually because of legal restrictions on owning television and newspaper properties in the same city or due to the disputes between heirs of privately owned papers. The great majority of newspapers are exceptionally profitable.

But analysts said Miami-based Knight-Ridder wants to sell the two papers so it can concentrate on such businesses as its electronic database service, Dialog Information Services, which it bought from Lockheed Corp. last August for $353 million.

In choosing to sell the Pasadena paper and the Gary (Ind.) Post-Tribune, Knight-Ridder apparently found the two papers with “the least promising growth prospects” of any in its chain of 30 dailies, according to John Morton, a newspaper specialist with the brokerage firm Lynch, Jones & Ryan.

“Both papers lie in major markets with a very dominant paper in the central city, The Times in the case of Pasadena and the Chicago Tribune in the case of Gary,” Morton said. And “one of the things that has happened in retailing is, locally owned stores that papers like Pasadena relied on have been swallowed up by chain retailers, which look for bigger papers to advertise in.”

For suburban papers to thrive, they often become more regionally oriented in news coverage and circulation, Morton said.

Both the Pasadena and Gary papers, while believed to be profitable, have been losing circulation, although Gary has regained some ground in the past 2 1/2 years. Knight-Ridder does not release financial data on the papers separately.

Knight-Ridder said it plans to use proceeds from the sale for acquisitions, to repurchase stock or to reduce its debt, which grew to $929 million after the Dialog purchase. The company announced last October that it intends to sell its eight television stations.

For the Star-News, analysts estimated that the company might receive from $45 million to $60 million, while the Indiana paper would sell for $75 million to $100 million.

But no word of any likely buyers had trickled to Wall Street yet.

Morton said two newspaper owners who had shown interest in smaller suburban papers in competitive markets were Ingersoll Publications of New Jersey and Virginia investor Jack Kent Cooke, who owns the Daily News in the San Fernando Valley, among other properties.

“We will be most inclined to consider offers from American publishers who recognize the full value of these newspapers and whose track records suggest that they would take seriously the newspapers’ responsibility to readers, advertisers and the communities to be served,” Knight-Ridder President James K. Batten said in a prepared statement.

Executive Editor Patty Burnett said the Star-News covers the 15 cities in the West San Gabriel Valley.

The paper, which employs 211, also owns four twice-weekly papers: the Monrovia News-Post, the Arcadia Tribune, the Duartean and the Temple City Times.

In 1982, the Star-News gained attention when it tried to to produce a daily sports paper called All Sports, but the venture died less than a year later. That same year, the Star-News ceased publishing its afternoon edition.

The Star-News was bought in 1956 by the Ridder newspaper chain, a predecessor of Knight-Ridder.