Federal regulators cleared the way Monday for McClatchy Co. to sell four newspapers in a $1-billion deal that would establish MediaNews Group Inc. as the San Francisco Bay Area's largest newspaper publisher.
The Justice Department removed a potential stumbling block by closing its antitrust investigation into the 3-month-old deal involving the San Jose Mercury News, Contra Costa Times and Monterey Herald in Northern California and the St. Paul Pioneer Press in Minnesota.
"After a careful investigation ... the antitrust division determined that the transaction is not likely to reduce competition substantially," the Justice Department said in a statement.
Regulators interviewed more than 80 people, including newspaper advertisers, subscribers, labor leaders and industry experts, during the review.
The Justice Department's decision will enable the sale to be completed later this week, MediaNews Chief Executive W. Dean Singleton said Monday.
A separate inquiry into the deal by California Atty. Gen. Bill Lockyer remains open, spokesman Tom Dresslar said.
San Francisco businessman Clinton Reilly also has sued to block the sale, but a federal judge last week refused to issue a temporary restraining order to prevent McClatchy from turning over the papers to MediaNews.
Privately owned MediaNews already owns the Oakland Tribune and a cluster of suburban papers in the Bay Area. Adding the San Jose Mercury News and Contra Costa Times will give Denver-based MediaNews more than 700,000 subscribers in the region, dwarfing the Hearst-owned San Francisco Chronicle, which listed just under 400,000 paid readers as of March 31.
McClatchy took control of the newspapers a month ago when the Sacramento-based company bought Knight Ridder Inc. for $4 billion.
Before that acquisition closed, McClatchy agreed to sell the papers to MediaNews in a complex deal that also involved Hearst Corp.
But the handoff couldn't be completed until the Justice Department was satisfied that the sale wouldn't harm Bay Area readers and advertisers.
As the review dragged on, McClatchy was left owning four papers that it didn't want. That situation threatened to become particularly thorny at the San Jose Mercury News, where labor contracts with about 600 workers expired June 30.
The Justice Department's blessing came on the same day that MediaNews' financing for the deal was set to expire.