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Newspaper buyouts may stall

Published April 4, 2007


NEW YORK - In just over a year, unhappy shareholders have pressured two of the nation's largest newspaper companies into selling themselves. Who might be next?

The short answer may be: not anyone - yet.

With Tribune Co. going private under a deal announced Monday and Knight Ridder Inc. being sold to McClatchy Co. last year, most other newspaper companies are controlled by families or foundations, allowing them to resist pressure from shareholders.

Sam Zell, the billionaire real estate developer who is helping take Tribune private, saw opportunity where others saw trouble. But as the drawn-out sale process made clear, many investors remain worried about how newspapers are losing readers and advertisers to the Internet.

Those woes, however, are being felt differently throughout the newspaper business. Knight Ridder had a significant amount of exposure to mid-sized cities, where newspapers have tended to suffer the most. Tribune has papers in Chicago, New York and Los Angeles but also several in mid-sized cities such as Baltimore, along with Orlando and Fort Lauderdale.

Industry leader Gannett Co., which owns USA Today, is now the only large, publicly traded and nonfamily-controlled newspaper publisher, but that company has long been well-regarded on Wall Street and doesn't have any single large shareholder who could shake things up, as was the case at both Tribune and Knight Ridder.

Many newspaper owners have two classes of stock, with one class being held by a family or a trust that has special voting rights, such as the ability to elect a majority of directors.

One is the New York Times Co., which has made headlines in recent months because of protests from a Morgan Stanley investment fund manager who wants the company to eliminate the two-class share structure that allows the Sulzberger family to maintain control. The company has kept the fund manager at bay.

Besides the Times, the Washington Post Co., Dow Jones & Co., which publishes the Wall Street Journal, and McClatchy Co. and others also have two classes of stock. Several other publishers are privately held, including MediaNews Group Inc., owner of the Denver Post; and Hearst Corp., publisher of the Houston Chronicle. The St. Petersburg Times, Florida's largest newspaper, is independently owned.

[Last modified April 4, 2007, 01:57:22]

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