Defining a bigger McClatchy

N&O owner to acquire Knight Ridder today

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CORRECTION

A story Tuesday in the Business section incorrectly described the role of Orage Quarles III, publisher of The News & Observer. As publisher, Quarles oversees all of the operations of The News and Observer Publishing Co.

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The McClatchy Co.'s $6.5 billion purchase of the Knight Ridder newspaper chain will usher in a new era of journalism in North Carolina, putting the state's two largest papers under a single owner.

McClatchy, the Sacramento, Calif.-based owner of The News & Observer, is expected today to complete the acquisition of San Jose, Calif.-based Knight Ridder, which owns The Charlotte Observer. Knight Ridder shareholders approved the deal Monday.

Executives from the two papers -- plus The State in Columbia, S.C., and four other South Carolina dailies -- are set to meet beginning July 19 to get to know each other and start exploring how the papers can work together. No immediate decisions are expected to emerge from the discussions.

But executives say some possible topics will include:

* Selling regional ads for multiple publications and online editions, rather than market by market. "I think the sales pitch would be: 'If you are interested in the Carolinas, we have some one-stop shopping," said Ann Caulkins, Charlotte's publisher. "And by the way, you can probably get a price break."

* Sharing news coverage, especially on high schools, professional sports and entertainment.

* Producing specialty publications with regional appeal. The Charlotte Observer publishes numerous free publications, including a bridal magazine, that could be broadened to attract readers and advertisers across the region.

* Sharing newspaper carriers in areas where circulation overlaps. "One of the areas that is certainly on the top of my list is how we can be more efficient serving the beach," said Orage Quarles III, publisher of The N&O. "We are [distributed] at the beach. Charlotte is at the beach. [The Sun News in] Myrtle Beach obviously is at the beach."

* Consolidating back-office functions such as billing for circulation and advertising.

Purchasing Knight Ridder will give McClatchy 32 daily papers with a circulation of 3.2 million nationally. To reduce debt resulting from the deal, McClatchy has agreed to sell an additional 12 Knight Ridder papers for about $2.1 billion to eight buyers. The final sale, involving the Times Leader in Wilkes-Barre, Pa., was announced Monday.

The $6.5 billion price being paid by McClatchy includes $4.5 billion in cash and stock, plus the assumption of $2 billion in debt owed by Knight Ridder.

Media analyst Edward Atorino of Benchmark said he doesn't expect earth-shaking changes at The N&O or The Charlotte Observer, the state's No. 1 paper based on circulation.

"I don't think [McClatchy CEO Gary] Pruitt is going to do anything drastic with these papers," he said. "I don't think he is going to fix what isn't broken."

McClatchy's structure calls for decisions about cooperation among papers to be made at the local level, said Lynn Dickerson, who will become vice president of operations when the Knight Ridder deal is completed.

As publisher of The N&O, Quarles heads the paper's business operations; Melanie Sill, the executive editor, is in charge of news.

"Orage and Melanie will make those decisions in Raleigh," said Dickerson, who will oversee McClatchy papers in the South.

Unlike the buyers in many acquisitions, McClatchy isn't planning layoffs.

"We have said publicly, and we still stand by this, that we have no intention of decreasing staff," Dickerson said. But McClatchy expects to generate annual savings of more than $60 million by improving efficiency and eliminating redundancies.