Opponents of The McClatchy Co.'s sale of a group of Northern California newspapers asked a federal judge Monday for a temporary restraining order to block the deal.
Sacramento-based McClatchy (NYSE: MNI) planned to sell the newspapers as part of its divestiture of assets from the acquisition of Knight Ridder Inc. Four newspapers -- three of them in the Bay area -- would have wound up in the hands of MediaNews Group Inc., which already has significant holdings in the region.
Clint Reilly sued July 14 to block the deal on antitrust grounds; on Monday, he requested a temporary restraining order to block the deal, saying it would give Denver-based MediaNews excessive market power. MediaNews owns 22 papers in the Bay Area. A hearing on the motion was scheduled for Thursday in a U.S. District Court in San Francisco.
The lawsuit could slow or alter the deal, which is expected to bring $1 billion in all to McClatchy. Reilly also filed suit in 2000 to challenge Hearst Corp.'s purchase of the San Francisco Chronicle. The sale was allowed, but not until after a long and expensive court proceeding in which a judge awarded Reilly reimbursement of his legal costs.
The July 14 lawsuit, filed in federal court in San Francisco, did not name McClatchy as a defendant, according to published reports. It was filed against MediaNews Group Inc. of Denver, Hearst, Gannett Co. Inc. (NYSE: GCI) and Stephens Media Group.
McClatchy agreed in April to sell the San Jose Mercury News, Contra Costa Times, Monterey Herald and St. Paul (Minn.) Pioneer Press for a total of $1 billion. The four were among 12 newspapers that McClatchy acquired from Knight Ridder Inc. but decided to sell as quickly as possible. Twenty other Knight Ridder newspapers acquired in the deal that closed last month will remain in the McClatchy fold.
MediaNews Group, which already owns other regional papers including the Oakland Tribune, agreed to pay $737 million for the San Jose and Contra Costa properties and fold them into the California Newspapers Partnership, in which it is the majority partner.
Hearst would pay $263 million for the Monterey and St. Paul assets, then swap them to MediaNews for a stake in that company's other holdings outside the Bay area.
Gannett and Stephens, which hold minority stakes in California Newspaper Partnership, also would pay into the deal.
Reilly, a political consultant and real estate investor, previously ran for San Francisco mayor.
