Gary Pruitt, CEO of McClatchy Co. — and journalism’s golden boy of the moment — moved quickly to speak to two of his publics in the hours after the 6 a.m. announcement of the $6.5 billion sale of Knight Ridder to McClatchy.
First, Pruitt conducted a conference call with key Wall Street analysts — one of his publics — followed with a conference Q&A with media reporters from far and wide — his other public.
Pruitt was quick to affirm that the company is shopping 12 of the 32 Knight Ridder papers immediately to prospective buyers — disheartening news to editors and reporters in newsrooms in Philadelphia, St. Paul, Akron, San Jose and a host of smaller papers, who had hoped they might end up in McClatchy’s embrace. But he also reassured employees of the 20 papers that McClatchy wants to keep that he doesn’t see any layoffs in the merged company’s future, (although the expanded company will share some content among its papers) and that the Washington bureaus of both chains will merge into one unit, with no layoffs planned.
Pruitt hopes to sell “at least some of [the 12 newspapers on the block] on the same day we acquire Knight Ridder,” and he expects the deal to be finalized some time this summer. “In effect, [we hope that] McClatchy would not operate those papers for even one day,” he asserted. The proceeds from the sale of the 12 papers to one or multiple buyers will go to pay down some of the debt McClatchy has assumed to buy KR.
Pruitt was careful to point out that the company currently has “no deals in place,” to sell the Knight Ridder papers that he wants to unload, “but we are going to try and move quickly.” There have been inquiries about the papers already, he said. And because Knight Ridder has been “on the block” for some time, prospective purchasers have had the advantage of kicking the tires for weeks. Pruitt also said that while McClatchy still doesn’t know “the exact structure of what a sale will look like…we want to look toward buyers who will treat employees well, but we haven’t talked to anybody or have any deals structured as of yet.”
On the other side of the coin are the 20 Knight Ridder papers the company is holding on to, including ones in Miami, Charlotte, NC, Kansas City and Fort Worth. “The markets we’re retaining have a leg up…in that they’re growing at a quicker rate, and with that comes more readers, more classifieds,” and more advertising, Pruitt said. “They’re some of the best performing Knight Ridder markets.”
Pruitt said the 20 Knight Ridder dailies that he is keeping are the ones that look “most like our existing papers,” and are “chiefly centered on growth markets.” By way of explanation, he said that over the next five years, the household growth rate in the markets where the company operates is 11.4 percent, which is “more than 50 percent faster than the national average,” of 7.5 percent. In contrast, the combined growth rate in the markets where McClatchy is dumping its newly-acquired KR assets is less than 5 percent.
The sale will make the combined company the No. 2 U.S. newspaper chain, reaching a daily circulation of about 3.2 million people.