CORRECTION

An article on the front page Monday about the sale of Knight Ridder Inc. gave incorrect information about the Philadelphia Daily News. The Daily News is published in the mornings.

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The McClatchy Co. will buy Knight Ridder Inc., the nation's second-largest newspaper publisher, in a $4.5 billion deal with far-reaching implications for the print industry, The New York Times reported late Sunday, citing unnamed people involved in the negotiations.

Howard Weaver, vice president of news for McClatchy, declined to comment. Officials with Knight Ridder could not be reached to confirm the sale, but if the deal is made, it would give McClatchy control of North Carolina's two largest and most influential newspapers.

McClatchy, the Sacramento, Calif., parent of The News & Observer, won an auction for Knight Ridder, owner of The Charlotte Observer and 31 other daily newspapers, after agreeing to pay about $67 per share in cash and stock, The Times reported. The agreement, expected to be announced today, will vault McClatchy into the upper ranks of the newspaper industry, giving the company daily access to 4.8 million subscribers from Florida to Alaska.

Some media analysts have suggested that McClatchy might be taking on too much. But if the company can regain readers and improve the quality of some of Knight Ridder's troubled papers, it could calm fears that the industry is dying.

Managing the expansion will test the leadership of Chief Executive Gary Pruitt, whose biggest deal so far was the $1.4 billion purchase of the Star Tribune in Minneapolis nine years ago. The company bought The News & Observer in 1995 for $373 million. To help pay for the new purchase, analysts say Pruitt will have to trim costs by cutting jobs, selling off some papers or both.

"Each paper is going to have to stand on its own," Larry Grimes, president of W.B. Grimes, a media investment bank in Maryland, said before the sale was reported. "They're going to take a good look at the markets they're in."

At the N.C. papers

Financial analysts and journalism professors interviewed before the sale was reported Sunday night said that in North Carolina the larger McClatchy could:

* Consolidate government and political coverage. McClatchy could choose to have one team of reporters filing legislative and other stories of statewide interest to both The N&O and The Charlotte Observer. It could do the same in Washington.

* Consolidate sports coverage. McClatchy could choose to streamline sports reporting, with reporters filing stories about college and professional sports to both newspapers.

* Change business relationships. Analysts said much of the change in North Carolina likely will come in non-newsroom positions. McClatchy, for instance, could have one advertising representative handle accounts at both newspapers.

The opportunities for efficiencies could be even greater in South Carolina, where McClatchy owns several newspapers including The Herald in Rock Hill, just across the state border from Charlotte.

In other markets, changes could be more dramatic. In Philadelphia, where Knight Ridder operates both The Philadelphia Inquirer and Philadelphia Daily News, McClatchy is likely to close the Daily News, analysts said. It is an afternoon tabloid that some in the business say no longer has relevance.

Industry challenges

Whatever the fallout, the sale of Knight Ridder is among the biggest developments in an industry that has been roiled by the growth of the Internet and changes in consumer habits.

Fewer people turn to the printed page for information than a decade ago. Circulation of the nation's Sunday newspapers, considered the most important of the week, dipped to 57.8 million in 2004 from a high of 62.6 million in 1990, according to data from the Newspaper Association of America.

Advertisers have followed readers to other information sources, causing difficulties for the nation's newspapers. Publishers, with some of the healthiest profit margins of any industry, have had to cut costs to keep Wall Street happy. The New York Times, L.A. Times, St. Louis Post-Dispatch and other large and small newspapers eliminated an estimated 2,100 jobs last year through layoffs, buyouts and attrition.

Knight Ridder's trouble

The struggles have been most pronounced at Knight Ridder, which lacks a key feature to subdue investor pressure. Other newspaper chains such as The New York Times and McClatchy have two classes of stock -- one for regular investors and a second for founding families who have the most voting power. They control the direction of the company, no matter the whims of Wall Street.

Because it lacks such a special class of stock, Knight Ridder has had to deal with investor demands head on.

The company put itself up for sale in November after large investors, led by Private Capital Management of Naples, Fla., demanded a better financial return. The auction, and the bids it drew, was seen by some as a statement on the future of the newspaper industry.

The combination will be good for Knight Ridder "because it will pull the company behind the firewall that protects McClatchy from its investors," Philip Meyer, a professor of journalism at UNC- Chapel Hill, said before the reported sale. "Newspapers, in order to survive, are going to have to figure out how to merge print and online offerings, and that requires investment. But Wall Street won't let them invest because they're too concerned about short-term profitability."

Benefits and pitfalls

By virtue of its new size, McClatchy immediately will get some help in boosting profit. It will be able to negotiate better deals with newsprint and other suppliers, analysts said. Shutting down Knight Ridder's headquarters would save $50 million, and the company is believed to have a plan for reducing as much as $150 million in costs, said Edward Atorino, managing director of Benchmark Co. in New York.

But cost-cutting needs limits, say those who advocate for strong journalism in North Carolina.

The state has a long history of aggressive rivalry for stories of statewide interest -- especially between The N&O and Charlotte Observer. Gene Roberts, who covered state government for The N&O from 1959 to 1963, said it was "the most competitive job" he ever had. He went on to lead The Philadelphia Inquirer as executive editor for 18 years and later served as managing editor at The New York Times.

"One of the most horrifying sequence of events would be if an owner thought it could get economies by having the same bureau cover the state capital for both Charlotte and Raleigh," Roberts said.

Or if McClatchy's decisions led to fewer eyes watching over sports, business or other enterprises in the state, added Ferrel Guillory, director of UNC-CH's Program on Southern Politics, Media and Public Life. He worked as an N&O reporter and editor for 20 years.

"My belief is that McClatchy management is enlightened enough to stay out of the obvious traps," Roberts said.