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Communities Fear Effect of a Knight Ridder Sale

Times Staff Writer

As newspaper giant Knight Ridder Inc. began mulling over buyout bids after a 5 p.m. deadline Thursday, investors and employees weren’t the only ones worrying about the future.

Readers and community leaders around the country also are concerned that new owners of the nation’s No. 2 newspaper chain will scale back coverage, install unfamiliar leaders or cut charity and other civic efforts.

“No change would be good,” said Mike Levsen, mayor of Aberdeen, S.D., home of Knight Ridder’s American News -- one of the company’s 32 dailies. “Right now they contribute hugely to the community.”

One all-cash bid came Thursday from a group of five private investment firms including Bain Capital, Hellman & Friedman, Thomas H. Lee Partners and Texas Pacific Group, said one party involved in the auction.

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But the leading bid may be from McClatchy Co., publisher of the Sacramento Bee, the Minneapolis Star Tribune and 10 other daily papers. The Wall Street Journal, citing unnamed sources, reported on its website late Thursday that McClatchy had bid more than $65 a share in cash and stock. Shares of Knight Ridder had risen 20 cents to close at $62.66.

It was unclear whether another expected bidder, an alliance of MediaNews Group Inc. and Gannett Co., had made an offer Thursday.

Neither the suitors nor Knight Ridder -- whose directors could make a choice as soon as Sunday -- would comment. But whatever the outcome, cost cutting is likely. Even McClatchy, which is seen as journalistically strong, would have to make cuts or sell papers to pay off acquisition costs, analysts said.

Cutbacks may be especially likely in areas where the two overlap -- such as Minneapolis-St. Paul, where Knight Ridder owns the St. Paul Pioneer Press.

Sooner or later, those cuts would translate into reduced coverage and a diminished civic dialogue, said John McManus, director of a journalism watchdog project at San Jose State University, near Knight Ridder’s corporate headquarters and flagship newspaper, the San Jose Mercury News.

“If newsrooms lose 25% of the people and are paid less, which I think will happen, then the quality of news will damage the civic vitality of these communities,” McManus said. Even people who don’t read a paper will suffer, he said, because “a lot of what local TV, local radio and bloggers do is based on what they learn from the newspaper.”

He said the changes might be more profound in places like Aberdeen, population 25,000. “People in smaller and medium markets are more dependent on the monopoly papers than in larger markets,” he said.

The American News, with a circulation of 16,000, not only reaches more than 70% of the households in its readership area but also champions the local women’s shelter and sponsors numerous events, including panel discussions about regional population shifts and an annual celebrity pheasant hunt, which sends money to a camp for children with diabetes.

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Residents of Aberdeen say the paper is especially important because many readers are older and don’t use the Internet.

“Some of these people are 75-plus, and they’re still farming because they have to. The paper is their only way of finding things out about funerals and social gatherings,” said Bill Sutton, who manages the Millstone, a popular Aberdeen restaurant.

For readers of the Sun Herald in Biloxi, Miss., concern over the fate of their local paper is more acute in the wake of Hurricane Katrina. In addition to providing donations, the paper continued to publish, flying in editions that told evacuees where to get help.

“They were very clear about giving guidance when people didn’t know what to do or who to turn to,” said Chevis Swetman, chief executive of Biloxi’s Peoples Bank. “What an acquirer is going to do, I don’t know.”

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Although Knight Ridder is the second newspaper chain to own the Sun Herald since its hometown owners sold out in 1968, “you always have the fear of the unknown” with another sale, said Vincent Creel, the city’s public affairs director. The Sun Herald has just proved itself, he said. “A good newspaper is the conscience of a community, and to try to do that on a cookie-cutter template, that’s hard.”

Even in the biggest cities served by Knight Ridder -- including San Jose and Philadelphia -- longtime readers worry.

“We want to make sure someone doesn’t just buy it for a business venture,” said Philadelphia City Councilman Frank Rizzo Jr., son of a former mayor and an avid reader of both the broadsheet Inquirer and the tabloid Daily News, which also is owned by Knight Ridder.

Rizzo agreed with analysts who expect the Daily News, the smaller of the two, to vanish.

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“I think we’ll be down to one newspaper,” he said.


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