Justice Department approves sale of San Jose Mercury news and
Contra Costa Times newspapers
By Julia Cheever, Bay City News Service
July 31, 2006
The U.S. Justice Department today approved the McClatchy Co.'s
planned sale of the San Jose Mercury News and Contra Costa Times
to Denver-based MediaNews Group Inc.
The department announced it has closed an antitrust investigation
after determining that "the transaction is not likely to
reduce competition substantially."
The sale is part of a complex $1 billion deal in which Sacramento-based
McClatchy would transfer a total of four newspapers to MediaNews.
The newspapers are the Mercury News, Contra Costa Times, Monterey
County Herald and St. Paul Pioneer Press of Minnesota. McClatchy
acquired the papers as part of its $4 billion purchase of San
Jose-based Knight Ridder Inc. earlier this year.
The Justice Department is the second legal hurdle that the transaction
On Friday evening, a federal judge in San Francisco refused to
issue a temporary restraining order that would have blocked the
sale for 10 days. The order was requested in an antitrust lawsuit
filed by San Francisco businessman Clint Reilly.
A separate antitrust investigation by California Attorney General
Bill Lockyer remains open, according to Lockyer spokesman Tom
Dresslar. MediaNews owns eight other newspapers in the East Bay,
South Bay and North Bay.
The Justice Department reported its antitrust investigation focused
on the transaction's effects on competition in the East Bay, where
MediaNews's Alameda News Group includes the Oakland Tribune, Tri-Valley
Herald, Daily Review and Fremont Argus. The group also encompasses
the San Mateo County Times.
The department stated it found that "only a relatively small
number of readers and advertisers view MediaNews' papers, on the
one hand, and the Contra Costa Times and Mercury News, on the
other hand, as substitutes."
It also said the MediaNews papers will continue to face competition
from the San Francisco Chronicle, which is owned by Hearst Corp.
In a second possible transaction that has not yet been negotiated,
Hearst might acquire an investment in MediaNews operations outside
of California. The stake would be in exchange for Hearst's aid
to MediaNews in financing the purchase of the Monterey and St.
The Justice Department reported its antitrust division did not
address that possible transaction, but stated, "If and when
any such arrangement is proposed, the division will investigate
whether it would adversely affect competition."
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