Magazine article Editor & Publisher

McClatchy Lands Big One; California Chain Buys Closely Held Raleigh, N.C., Daily in a $373-Million Deal That Surprised the Industry

Magazine article Editor & Publisher

McClatchy Lands Big One; California Chain Buys Closely Held Raleigh, N.C., Daily in a $373-Million Deal That Surprised the Industry

Article excerpt

IT WAS THE changing newspaper industry and not family pressure, the Daniels family says, that convinced it to sell the News & Observer of Raleigh, N.C., 101 years after Josephus Daniels bought the bankrupt paper at a county auction for $10,000.

McClatchy Newspapers Inc. is paying $373 million - $250 in cash, plus the assumption of $123 million in debt - for the 151,840-circulation News & Observer, six weeklies, the pioneering NandO Net online service, the slick Business North Carolina magazine and Benson Newspaper Printing, a commercial printer.

Over 101 years - and especially in the past few years - the Daniels family invested heavily in keeping the News & Observer abreast with the growth of its Research Triangle circulation area and with changes in the newspaper industry.

The paper moved into electronic publishing; it expanded and remodeled its offices and production plant, and is replacing its letterpress presses with two nine-unit-color flexographic presses.

Even so, the future was demanding more - more, management became convinced, than the family operation could afford.

"The Triangle is poised for more tremendous growth, and the News & Observer needs to be in the forefront of that opportunity," president and publisher Frank Daniels Jr. wrote in a letter to employees. "To keep up with a growing community requires capital, but our access to capital is limited."

For a newspaper company as small as News & Observer Publishing Co., going public was not much of an option, Daniels noted, saying a public offering would make it "the smallest media company in the public market and would take a tremendous discount from our private market value."

Bringing in minor investors would "merely postpone the time of selling," Daniels said.

"Looking 10 or 12 years down the road, we do not see any scenario that keeps the News & Observer in the Daniels family," he said

"Unlike many family businesses, we are of one accord with no one pushing us to sell," he said. "The primary stockholders are all in their 60s and would not benefit from waiting 10 years. The bulk of the company's management is in their 30s and 40s - young enough to continue to grow with an acquiring firm.

"In other words, there is no pressure to sell . . . . It would be fun and exciting for the N&O to remain in the family, but good business dictates that it's time to have new ownership, and the McClatchy family ownership is a good place for us to be," Daniels said.

McClatchy and the Daniels family are not strangers to each other. …

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