McClatchy: We’re No. 3
Important Details: After McClatchy’s purchase of Knight Ridder earlier this year, circulation stats told us that McClatchy was becoming the second-largest newspaper company in the country. Events this week tell us it’s claiming spot No. 3, following both Gannett and Tribune.
On Tuesday, the three companies announced the expected: McClatchy would stay on as an equity partner in CareerBuilder, but with a share reduced from what Knight Ridder had held. The former Three Amigos, or TKG – Tribune, Gannett, and Knight Ridder – had evenly divided up most of the Web investments they made in common. And their pact had allowed surviving owners a right of buyback should any of the three partners be sold. Tribune made no secret of its desire to increase its CareerBuilder stake, one of its highest-revenue growth businesses as online recruitment proves to be a Web winner.
The announcement this week wrapped up not just the CareerBuilder ownership, but two others:
- McClatchy retains 15 percent (and one of six board seats) of CareerBuilder, with Gannett and Tribune each now holding 42.5 percent.
- McClatchy retains 15 percent of ShopLocal.com, a struggling local shopping comparison site, with its two partners each taking 42.5 percent.
- McClatchy keeps 11.25 percent of Topix, the underutilized geo/vertical search engine, which TKG had bought a majority of in early 2005. Gannett and Tribune get 31.9 percent each.
- McClatchy gets a check for $310 million for giving up its equal one-third position in those companies.
All in all, it was a week where McClatchy CEO Gary Pruitt delivered on his promises. In addition to the TKG rightsizing, with federal approval granted, he closed on his deal to sell the San Jose Mercury News and three other papers to MediaNews for $1 billion. Though lowering his stake in the joint enterprises, he nabbed $1.3 billion in total to pay down the KR purchase. He had told skeptical shareholders he’d be able to defray the purchase price quickly, and he has.
In Outsell’s Opinion: Now Pruitt’s real work is beginning – the operational end of running a more major newspaper company as the Internet explodes traditional business models. After all, he has his hands more than full just trying to transition Knight Ridder Digital into McClatchy Interactive, manage the new McClatchy Tribune News Service, and digest the new combined Washington, D.C. national/global news bureau. Early reports point to a number of struggles as the formerly small newspaper comes to grips with its new assets.
Pruitt’s step back to a No. 3 position may work out. McClatchy keeps a good equity stake in online recruitment and can be at the table (if at the end) as the news companies figure out how to make Topix and ShopLocal have a real, positive impact on their core businesses – an issue that has so far eluded them. The news industry is looking for new leadership, and McClatchy’s initial purchase of Knight Ridder had buoyed hopes that he might step in to help provide it. With the work of divestment and rightsizing done, the industry will now be looking to see if McClatchy settles back into a No. 3 watcher or moves out of the pack to distinguish itself and provide new models.