McClatchy Sells Philadelphia Newspapers
Posted on May 24, 2006
The AP reports that McClatchy Co. is selling its two Philadelphia newspapers, The Philadelphia Inquirer and the Philadelphia Daily News, to local investors for $562 million.
The two Philadelphia papers are being bought by a group led by advertising executive Brian Tierney and Bruce Toll, co-founder of luxury home builder Toll Brothers Inc. The papers are among 12 currently owned by Knight Ridder that McClatchy plans to sell.The newspapers were originally owned by Knight Ridder before McClatchy acquired them. The AP article has a couple interesting comments from newspaper analyst John Morton of Morton Research Inc. Morton said the investors should expect higher printing costs for the papers now that they are no longer part of a news publishing giant. However, Morton also thought that no longer being part of Wall Street could benefit the newspapers. "This is probably one of the positive things about it," Morton told the AP. "They won't have Wall Street on their backs all the time."McClatchy and the investor group said in a statement that they intend to complete the deal around the same time that McClatchy closes its deal for Knight Ridder, which is expected this summer. McClatchy will receive $515 million in cash, and the investment group, Philadelphia Media Holdings, will assume $47 million in pension liabilities.
Once McClatchy closes its purchase of Knight Ridder's remaining 20 papers, it will become the second-largest newspaper company in the country following Gannett Co.
The deal returns the Philadelphia papers to private ownership for the first time since 1969, when Walter H. Annenberg sold the papers to Knight Newspapers Inc. after being named U.S. ambassador to Britain.