McClatchy sells last Knight Ridder paper

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ALLENTOWN, Pa. (AFX) - The smallest city in United States with two independent, paid daily newspapers will stay that way, at least for now.

McClatchy Co. said Monday it has found a buyer for the last of the Knight Ridder Inc. papers it planned to divest, agreeing to sell the Times Leader of Wilkes-Barre, Pa. to a consortium of private investors.

Richard L. Connor, who was editor and publisher of the Times Leader during a crippling newspaper strike almost three decades ago, plans to purchase the newspaper in conjunction with a group of local investors and HM Capital Partners LLC, a Dallas investment fund.

Terms were not disclosed at the request of the buyers, McClatchy said.

The deal will keep Wilkes-Barre, a northeastern Pennsylvania city of about 40,000, as a two-newspaper town. Times Leader employees had worried that the newspaper would be sold to the parent company of The Citizens' Voice, a rival daily.

"This sale represents a win for all the stakeholders: readers, advertisers, employees and the community of Wilkes-Barre," Gary Pruitt, McClatchy's chief executive officer, said in a statement. "We were particularly pleased to find buyers with community roots and direct experience with the Times Leader."

McClatchy said it had sold the 12 papers for a total of about $2.1 billion, which the company will use to pay down debt from the Knight Ridder acquisition.

Knight Ridder Inc. shareholders approved the company's sale to McClatchy on Monday.

Sacramento, Calif.-based McClatchy announced in March that it planned to buy San Jose, Calif.-based Knight Ridder for $4.5 billion in cash and stock, plus $2 billion in assumed debt, but that it would keep only 20 of the 32 Knight Ridder papers because most of the others didn't meet McClatchy's criteria of being located in rapidly growing markets.

McClatchy had found buyers for 11 of the papers by early June, making the Times Leader the only one left on the auction block.

Analysts had said the paper was the least attractive among the 12 papers being sold because it had head-to-head competition from The Citizens' Voice, a daily tabloid founded in 1978 by striking Times Leader workers.

"We went through some extraordinary times," said Connor, 59, who was sent to Wilkes-Barre by then-owner Capital Cities Communications to run the Times Leader two days after the strike began.

"This is a very, very, very tiny piece of the whole deal," Connor told The Associated Press on Monday. "The part I do think is so interesting is the guy that ran it for a big company has been given a chance to buy it with some local people."

According to the Audit Bureau of Circulations, the Times Leader had 40,457 in average Monday-Friday circulation for the six-month period ending in March; The Citizens' Voice had 32,890.

Having worried for weeks that Times-Shamrock Communications, the owner of the Voice, would buy the Times Leader and shut it down, newsroom staffers were "ebullient" Monday that Connor had won the bidding, Times Leader Editor Matt Golas said.

"I'm just delighted," he said. "I just think it's way better for everybody that we're going to have two newspapers here and people are going to have a choice."

News of the sale brought a characteristically arch response from the Times Leader's competition.

"We welcome Mr. Connor, his Texas backers and his anonymous local investors to the Wilkes-Barre market," said Citizens' Voice Publisher Scott Lynett. "We look forward to competing with him for many years to come."

Lynett confirmed for the first time Monday that Times-Shamrock had bid on the Times Leader.

The sale of the Times Leader to private investors is the latest example of what has become something of a trend in the newspaper industry. As measured by circulation, about 2.5 percent of the industry has reverted to private ownership in just the past six months, according to Rick Edmonds, a newspaper industry analyst at the Poynter Institute.

The most visible example is McClatchy's sale of the two Knight Ridder papers in Philadelphia -- the Inquirer and Daily News -- to a local investor group led by an advertising executive and a home builder.

"Part of what is driving this is public investors don't think much of the newspaper business right now," said Edmonds.

He said it remains to be seen whether local owners will use their papers to advance their pet causes. "That goes on some within the universe of locally owned, family papers now," he said.

Connor currently is editor and publisher of The Fort Worth Business Press, a business weekly in Texas. He was publisher of The Fort Worth Star-Telegram for more than a decade, leaving in 1997 to start a publishing company, Lionheart Newspapers LLC, that ultimately owned 70 newspapers in four states.