Raleigh News & Observer McClatchy sale story leaves out key data

The Mar. 29 Raleigh News & Observer reports only part of an Associated Press story concerning its parent McClatchy Company’s plan to sell 12 newspapers McClatchy will acquire as part of its acquisition of the Knight Ridder news organization. (McClatchy receives bids for 12 papers – p. 2D)

Here’s some of the the AP report which N&O editors decided not to pass on to readers:

Industry analysts have estimated the papers being sold will fetch somewhere between $1.4 billion and $2 billion, helping McClatchy reduce the debt that it's absorbing in the Knight Ridder acquisition. The company is inheriting $2 billion of Knight Ridder's debt and borrowing $3.75 billion to finance the acquisition.

McClatchy's shares fell $1.29 Tuesday to close at $47.96 on the New York Stock Exchange. The company's market value has dropped by 10 percent since the Knight Ridder deal was announced.

Knight Ridder, the nation's second largest newspaper publisher, put itself up for sale late last year under pressure from three major shareholders unhappy with the company's sagging stock price -- a slump that reflected investors' souring sentiments about traditional media as the Internet siphons away advertising revenue.

Why would The N&O not share those three paragraphs with its readers?

One reason may be that McClatchy and The N&O have presented the Knight Ridder purchase in very upbeat terms.

For instance, following the acquisition announcement, McClatchy CEO Gary Pruitt wrote an N&O op-ed in which he enthused:

But in each of the communities where we compete, almost every newspaper has the largest news staff, largest sales force, biggest audience and greatest share of advertising in its market.

In a similar vein, N&O executive editor for news Melanie Sill told readers

The N&O now is the third-largest paper in a group of 12 dailies and 17 community papers. We will become the seventh-largest in a group of 32 dailies and about 50 community publications, plus a much larger Washington bureau, new Internet assets and more. …

I'm glad McClatchy is buying Knight Ridder, because our company believes in quality journalism and good newspapers.

Today, Mar. 29, Yahoo Finance reported that McClatchy had ended the day trading at 49.32, down more than 33% from its 52-week high of 75.85. During the same 52-week period, almost all market indexes have risen.

I hope things go well for McClatchy and The N&O. I think there's a greater chance of that happening if the company and paper are more candid with investors and readers who are, for the most part, intelligent adults.

Readers Note: I'm sending links to this post to Pruitt and Sill. I'll invite them to respond and offer to post here what they say.