Under pressure, Knight Ridder explores sale

NEW YORK -- Newspaper publisher Knight Ridder Inc., under pressure from its largest shareholders, said Monday it would consider selling the company and other steps to boost shareholder value.\nThe San Jose, Calif.-based publisher of The Miami Herald, The San Jose Mercury News and 30 other newspapers said it would work with longtime financial adviser Goldman Sachs and Co. to explore a possible sale and other options.\nKnight Ridder also said it had changed its bylaws to allow shareholders to submit proposals at its annual meeting, currently scheduled for next April, and also to nominate directors.\nIn a prepared statement, Knight Ridder said there was no assurance there would be a transaction. The company also said it didn't intend to provide any updates on the process "unless and until" its board has approved a specific transaction. A company spokeswoman declined to comment beyond the written statement.\nLast week, Knight Ridder's largest shareholder, Private Capital Management LP of Naples, Fla., threatened to nominate its own slate of directors at the newspaper publisher's next annual meeting after receiving only a "limited response" to the "serious concerns" it and other shareholders had raised about the company.\nPrivate Capital Management owns 19 percent of Knight Ridder and has significant stakes in other publicly held newspaper publishers. PCM first agitated for a sale of Knight Ridder in early November, and its call was soon seconded by Knight Ridder's No. 3 shareholder Harris Associates LP, a Chicago-based money manager. Harris has an 8.2 percent stake in Knight Ridder.\nA third shareholder, Southeastern Asset Management Inc., which holds 8.9 percent of Knight Ridder, has also said it would take a more active role in considering future options for the company.\nNewspaper stocks have fallen out of favor with investors because of concerns about waning advertising and circulation as more people go online for news. Rising costs for newsprint and the consolidation of big newspaper advertisers like department stores have also affected the newspaper business. However, they remain generally profitable.\nGiven the dismal view that many investors have of the newspaper business, it is unclear how many bidders will emerge for Knight Ridder.\nKnight Ridder's shares had been down 20 percent this year before PCM's initial broadside against the company in early November, in line with several other major newspaper publishers. \nTony Ridder, Knight Ridder's CEO, sent a memo to the company's staff Monday with questions and answers about the announcement, including assurances that employees would not lose their vested pension benefits if there is a change in control.\n"During this period of exploring strategic alternatives, we will continue business as usual," Ridder said. "But we also will continue to be mindful of expenses in what continues to be a difficult revenue environment."\nKnight Ridder is the second-largest newspaper publisher in the country, after Gannett Co.