Two Bay Area newspapers sold to MediaNews
By Julia Cheever, Bay City News Service
August 3, 2006
The sale of the San Jose Mercury News and Contra Costa Times
by the McClatchy Co. to MediaNews Group Inc. was completed yesterday,
The two newspapers will be added to eight other Bay area newspapers,
including the Oakland Tribune, owned by Denver-based MediaNews.
The sale is part of a $1 billion deal in which a partnership
controlled by MediaNews will acquire four newspapers from McClatchy.
The other two newspapers in the deal, the Monterey County Herald
and St. Paul Pioneer Press of Minnesota, were sold to the Hearst
Corp., which also owns the San Francisco Chronicle.
MediaNews will manage the Monterey and St. Paul papers and will
eventually buy them from Hearst under a not-yet-negotiated arrangement,
which could be a stake in MediaNews operations outside the Bay
The sale recently passed two legal hurdles. Last week, a federal
judge turned down a request by San Francisco businessman Clint
Reilly for a temporary restraining order blocking the sale.
Reilly claims in an antitrust lawsuit, which is still pending,
that the transfer will result in higher subscription and advertising
rates and lower quality because competition will be decreased.
The second hurdle was passed on Monday when the antitrust division
of U.S. Justice Department approved the sale, concluding that
"the transaction is not likely to reduce competition substantially."
The department found that there is relatively little overlap
among the Mercury, Contra Costa Times and other papers owned by
MediaNews and that the newspapers will continue to face competition
from the Chronicle.
A separate state antitrust investigation is still pending, according
to Tom Dresslar, a spokesman for California Attorney General Bill
But state approval, unlike federal approval, was not required
before the sale could go through.
Dresslar said the outcome of the state probe could be a decision
that competition would not be harmed or it could be a lawsuit
or a call for mediation of any concerns identified by the state.
McClatchy, headquartered in Sacramento, acquired the four newspapers
as part of its $4 billion purchase of San Jose-based Knight Ridder
Inc. earlier this year.
Including those four publications, McClatchy has now divested
itself of a total of 12 of the former Knight Ridder papers, the
company said in its announcement.
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