Toward a one-newspaper town: And then there were three

Way back last fall, when news first broke of a shareholder revolt at Knight Ridder, the Star Tribune rather forcefully poo-poohed the possibility that the Strib's parent company, McClatchy, might make a bid for the faltering newspaper chain. In the Twin Cities market, this was a matter of no trifling significance. Knight Ridder is the owner of the Strib's only daily print rival, the St. Paul Pioneer Press, so a purchase by McClatchy could have significant ramifications for advertisers and readers alike.

It didn't take the Strib long to put the smackdown on the one-newspaper town talk. A mid-November article, authored by Strib staff writers Terry Fiedler and Deborah Caulfield Rybak, dismissed such speculation by the second paragraph: "A scenario in which the McClatchy Co., owner of the Star Tribune, buys the Pioneer Press to eliminate a competitor is seen as particularly unlikely."

In the realm of the particularly unlikely, a few months, evidently, makes a big difference. This morning's Strib reports that McClatchy is now one of just three remaining bidders for Knight Ridder. Writes Chris Serres, the Strib's new man on the beat:

Though McClatchy might seem like a long shot -- last year, its revenue was a little more than one-third of Knight Ridder's -- analysts say the Sacramento, Calif.-based newspaper company has several factors working in its favor. The company has relatively little debt, a strong management team and a solid reputation of producing high-quality journalism.

As a result, Knight Ridder's board of directors and CEO Tony Ridder might perceive a bid from McClatchy as more attractive than one from MediaNews and Gannett, if the financial terms are competitive, analysts said.

While Serres acknowledges the possibility of a McClatchy takeover, he does hue to the company line in one critical regard:

But don't expect the Twin Cities to become a one-newspaper town if McClatchy is the successful bidder; the government most likely would force it to sell the Pioneer Press because of antitrust concerns, or to continue operating it, analysts said

As discussed in this space previously, that may be an overly sanguine view of federal regulators' commitment to anti-trust laws. Just two years ago, Justice Department officials sat on their hands when Knight Ridder, which also owns the Duluth News-Tribune, snapped up its rival in neighboring Superior, Wisconsin, The Daily Telegram.

UPDATE: A report released today by Merrill Lynch tabs McClatchy as the front-runner in the Knight Ridder sweepstakes.

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