Brown McClatchy Maloney of Sequim tells this story to illustrate how far The McClatchy Co., his family's newspaper chain, has come in 40 years:
In the late 1960s, another newspaper family put its Olympia and Bellingham papers up for sale. One of Maloney's older cousins thought McClatchy, whose only daily papers at the time were in Sacramento, Fresno and Modesto, Calif., should at least look into buying them.
He ran the idea past his septuagenarian aunt, who had run the company for more than three decades. Her response?
"If it wasn't in the [Central] Valley, we weren't interested," Maloney says.
Today, McClatchy's horizons extend far beyond the Sierras. On July 1, if all goes as planned, the chain will swallow Knight Ridder and become the nation's second-largest newspaper company, with 32 dailies stretching from Miami to Anchorage.
Among the 20 newspapers it would acquire: The Olympian and The Bellingham Herald.
The mammoth takeover would reshape the newspaper landscape, nationally and locally. It was a hot topic, at the podium and in the hallways, as the country's top editors gathered Tuesday in Seattle for the annual convention of the American Society of Newspaper Editors.
The transaction would push the number of daily papers McClatchy owns in Washington from two to four, solidifying its position as the state's No. 2 newspaper publisher in daily circulation.
It also would give the Sacramento-based company a big stake in No. 1: McClatchy would inherit Knight Ridder's 49.5 percent share in The Seattle Times Co., which owns two Eastern Washington dailies in addition to its namesake.
Altogether, nearly 500,000 copies of newspapers in which McClatchy has an interest would fly off Washington presses each weekday. That's almost half the combined daily circulation of all the newspapers in the state.
McClatchy officials aren't offering many details about their plans while the Knight Ridder deal undergoes federal antitrust review. But, from what they have said, newspaper readers and advertisers probably won't notice much difference when the company's Northwest footprint expands.
No plans to consolidate
Robert Weil, the vice president who oversees McClatchy's Northwest operations, said last week there's no plan from Sacramento to consolidate any news, advertising or production operations at its Washington newspapers.
"The decisions are all going to be made locally," he said. "That's really a hallmark of McClatchy."
Weil also said McClatchy intends to be "a passive, minority investor" in The Times Co., leaving management decisions to the local Blethen family, owner of the remaining 50.5 percent.
Knight Ridder Chief Executive Tony Ridder chafed in that role, contending the Blethens ignored him, mismanaged the company and didn't make enough money. McClatchy and the Blethens, in contrast, are saying nice things about each other.
"We really admire the Blethens. Family ownership is something we value," said Maloney, a major shareholder and great-great-grandson of McClatchy's founder.
Company grew slowly
McClatchy was founded 149 years ago by a disciple of newspaper pioneer Horace Greeley who came west during the California Gold Rush. He and his descendants imbued their Central Valley newspapers with a passion for scrappy, enterprising journalism.
McClatchy still enjoys a reputation for quality. "I have not known of a paper they acquired that they did not improve," said Ben Bagdikian, retired dean of the Graduate School of Journalism at the University of California, Berkeley.
Maloney, 50, who owns the weekly Sequim Gazette and Forks Forum on the Olympic Peninsula and has lived there for 18 years, said the legacy persists in part because his family, unlike some newspaper dynasties, has remained small and close-knit. There are just seven cousins in his generation, the fifth. He's one of four who sit on the company board.
Until it announced the Knight Ridder takeover last month, McClatchy had a history of expanding incrementally.
It bought its first newspapers outside California – the Anchorage Daily News and Tri-City Herald in Kennewick – in 1979, followed by The News Tribune in Tacoma in 1986. Over the next dozen years, it added five dailies in the Carolinas and Minnesota.
McClatchy went public in 1988, following the lead of several other newspaper chains.
Media critics have derided such moves as pacts with the devil: As circulation slips and profits drop, many papers slash news spending to mollify Wall Street.
Knight Ridder, which put itself up for sale last fall at the insistence of unhappy institutional investors, is Exhibit A.
But McClatchy has avoided that fate, in part because it's structured differently than Knight Ridder. "It's the difference between heaven and hell," Bagdikian said.
The company created two tiers of stock: publicly traded Class A shares, and Class B shares restricted almost exclusively to the family. Each Class B share has one vote, each Class A share just one-tenth. Class B shareholders elect three-quarters of the board.
Even after McClatchy issues 34 million new Class A shares to help finance the $6 billion Knight Ridder purchase, the family still will effectively control 80 percent of the company.
"If you keep control, you can be as idiosyncratic as you want to be," said Stephen Lacy, a Michigan State University professor who studies media economics.
Unlike many other newspaper chains, McClatchy hasn't laid off or bought out newsroom workers to cut costs in recent years. Still, it has managed to outperform most of its competitors financially, in part because of its strategy of investing in fast-growing markets.
Sometimes McClatchy has made news in Washington state as well as reporting it. When it bought the News Tribune from Tacoma's Baker family, McClatchy purchased only the assets, negating union contracts and telling workers to reapply for their jobs. Forty of 700 weren't rehired.
After five years of fruitless contract talks, workers at the paper voted narrowly in 1991 to decertify their union, The Newspaper Guild. Some accused McClatchy of union-busting.
Guild President Linda Foley said the union enjoys decent relations with McClatchy at the papers where it still has contracts. "Some of the players have changed," she said. "We haven't had another Tacoma with them."
Under McClatchy's stewardship, The News Tribune has been a finalist for Pulitzer Prizes twice, a first for the century-old newspaper.
Elizabeth Brenner, who left the publisher's job in 2004 for a similar post at the Milwaukee Journal Sentinel, said Sacramento never pushed her to cut journalistic corners to enhance the bottom line during her six years in Tacoma.
McClatchy allows each newspaper's management considerable autonomy, said Keith Love, a former McClatchy executive who now is a vice president of Chateau Ste. Michelle winery in Woodinville. "They really mean it when they say to their editors and publishers, 'Run it like it's your own newspaper,' " he said.
But Tom Osborne, a former senior News Tribune editor who left in 1998, said journalists shouldn't put the company on a pedestal.
"McClatchy is a good company, and they produce good newspapers," he said, "but to think that they consider shareholder returns and profits secondary to journalism ... is just misleading yourself."
Managers in Tacoma routinely kept up to a dozen of 120 newsroom positions vacant for extended periods, he said, because there wasn't money budgeted to fill them.
More accepting
Observers say McClatchy's family tradition and relative insulation from Wall Street pressures may help explain why it's apparently more willing than Knight Ridder to live with the Blethens' management of The Seattle Times.
Times Publisher Frank Blethen's oft-stated insistence that quality journalism is a higher priority than profit "is the McClatchy management model, up to a point," Love said.
Gregory Favre, who retired as McClatchy's vice president for news in 2001, said he was surprised to learn McClatchy plans to keep its minority interest in The Times. "In 150 years, I've never known the McClatchy family to be a minority investor in any venture," he said. "Maybe there are conversations going on that you and I don't know about."
Some speculate the Blethens might try to buy McClatchy's share of The Times Co. Times spokeswoman Jill Mackie said the Blethens "would love to get the shares back, but at the right price." She declined to comment when asked whether they have approached McClatchy, or plan to do so.
Mackie also said Frank Blethen and Times leadership "all have respected how McClatchy has run McClatchy newspapers."
Good investment
A minority stake in The Times might appeal to McClatchy as a good long-term investment, said Lacy, of Michigan State University. The Times and The Hearst Corp., owner of the smaller Seattle Post-Intelligencer, have been fighting in court for three years over the future of their joint-operating agreement. Ultimately, Lacy said, Seattle will have only one paper, and it's almost certain to be The Times.
"It's a good franchise," he said. "I think McClatchy understands that."
McClatchy Chief Executive Gary Pruitt, in Seattle on Tuesday to speak at the editors' conference, said the company hasn't focused yet on its long-term relationship with The Times, a small part of a very big purchase. For now, McClatchy executives are pre-occupied with selling 12 of Knight Ridder's 32 papers that don't fit their growth strategy.
Wall Street hasn't reacted positively to the Knight Ridder takeover. Broad skepticism about the future of newspapers in the Internet age and a disappointing first-quarter earnings report have combined to push McClatchy's stock price down nearly 16 percent since the deal was announced.
Maloney says he expected a temporary dip: "In the long run, I'm confident we're going to be one of the strongest newspaper companies."
Eric Pryne: 206-464-2231 or epryne@seattletimes.com
