Should McClatchy Be Looking Over Its Shoulders at PCM?
Pete Carey and Chris O'Brien at the San Jose Mercury News reported March 14, 2006, that McClatchy's purchase of Knight Ridder for $4.5 billion makes it the nation's second-largest newspaper company, even though it plans to sell off 12 of the San Jose newspaper company's 32 papers, including the Mercury News." They also wrote:
McClatchy Chief Executive Gary Pruitt, who has overseen the company's rise from a regional to a national media company, called the deal ``a vote of confidence in the newspaper industry.''
The deal was valued at $67.25 a share -- $40 of that in cash and the rest in McClatchy shares.
The news of the deal sent McClatchy's stock down $1.51 Monday [March 13, 2006] to $51.55. Private Capital Management, the [Naples, Florida-based] investment firm that pushed Knight Ridder to put itself up for sale last November, is also the largest shareholder in McClatchy, with 35.6 percent of the shares. Since the beginning of the year, McClatchy's stock is down 12.7 percent, shaving about $54.8 million off the value of PCM's investment. Question: Should McClatchy executives be worried that Bruce Sherman, PCM's chief executive, will try to force the sale of their company? After all, the stock is down and PCM is about profits.
For more, please see "`A vote of confidence in the newspaper industry.'"