WASHINGTON - Antitrust regulators are reviewing the McClatchy Co.'s proposed $4.5 billion takeover of Knight Ridder, including its plan to sell 12 newspapers it is acquiring.
Although the decision to investigate the proposed deal's effect on competition and prices is fairly routine given its size, the government also apparently is interested in who might buy the Knight Ridder papers McClatchy plans to sell.
The Associated Press reported yesterday that a Justice Department lawyer was inquiring about the effect on advertisers if MediaNews Group Inc. were to buy the San Francisco Bay area's San Jose Mercury News and Contra Costa Times from McClatchy. MediaNews already owns several papers in the area, and is widely thought to be interested in those two.
Justice Department spokeswoman Gina Talamona confirmed that antitrust lawyers are examining the proposed McClatchy-Knight Ridder deal, but she would not comment on specifics about the inquiry.
Meanwhile, sources close to the sales process said MediaNews has submitted a bid for the two California newspapers, along with the Monterey (Calif.) Herald, the St. Paul Pioneer Press in Minnesota, and the two Philadelphia newspapers, the Inquirer and Daily News.
On Tuesday, Los Angeles investment firm Yucaipa Cos., in an alliance with The Newspaper Guild, made an offer for all 12 newspapers up for sale. And Philadelphia investors have made a bid for the Inquirer and Daily News.
A group of investors from the Minneapolis-St. Paul area is interested in the Pioneer Press, group spokesman John Wodele confirmed Wednesday.
"We've been able to attract a group of local investors who are very interested in keeping the Pioneer Press a viable entity in the St. Paul community," Wodele said. He said they want to remain anonymous for now.
Wodele, who runs a public and media relations firm in St. Paul, said the group has not yet submitted a bid.
The Contra Costa Times reported that developer Albert Seeno is interested in buying the newspaper. He could not be reached for comment.
After major shareholders pressured Knight Ridder to put itself up for sale, the company agreed March 13 to be purchased by McClatchy, which immediately announced it was selling 12 Knight Ridder newspapers. McClatchy is keeping the Lexington Herald-Leader and 19 other Knight Ridder daily papers.
Moody's Investors Service downgraded McClatchy's credit rating Wednesday from Baa1 to Baa3, one step above junk-bond status, and said the ratings "remain on review for possible downgrade."
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