- The Washington Times - Tuesday, May 23, 2006

PHILADELPHIA (AP) — McClatchy Co. is selling the Philadelphia Inquirer and the Philadelphia Daily News for $562 million to a group of local investors that hopes to reverse circulation declines by emphasizing local news and doing more with the Internet.

The two papers are being bought by a group led by advertising executive Brian Tierney and Bruce Toll, co-founder of luxury home builder Toll Brothers. The papers are among 12 currently owned by Knight Ridder that McClatchy plans to sell.

McClatchy and the investor group said that they intend to complete the deal around the same time that McClatchy closes its deal for Knight Ridder, which is expected this summer. McClatchy will receive $515 million in cash, and the investment group, Philadelphia Media Holdings, will assume $47 million in pension liabilities.

When McClatchy closes its purchase of Knight Ridder’s remaining 20 papers, it will become the second-largest newspaper company in the country, just behind Gannett Co.

The deal returns the Philadelphia papers to private ownership for the first time since 1969, when Walter H. Annenberg sold the papers to Knight Newspapers Inc. after being named U.S. ambassador to Britain.

“The next great era of Philadelphia journalism begins today with this announcement,” Mr. Tierney said.

“We intend to be long-term owners committed to serving this region with the vigorous, high-quality journalism we all expect of the Philadelphia Inquirer, Daily News and philly.com, and we intend to preserve both papers and their unique and valuable contributions.”

Mr. Tierney said the “plan is to invest in and grow both papers, not allow them to erode.”

The sale of the two papers is part of McClatchy’s plan to divest 12 of 32 newspapers it is buying from Knight Ridder for $4.5 billion plus the assumption of $2 billion of debt. Most of the publications being sold were targeted because they don’t fit McClatchy’s long-standing criteria of buying newspapers in rapidly growing markets.

In the six-month period ending in March, the Inquirer’s weekday circulation was nearly 350,500, according to the Audit Bureau of Circulations, down 5.1 percent from the same period a year ago.

The Inquirer, the nation’s 17th-largest daily newspaper and Pennsylvania’s largest, has won 17 Pulitzer Prizes, while the Daily News has won two.

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