(Update: Our Merc colleagues Pete Carey and Chris O’Brien are pursuing this story. They’ve found the McClatchy newspaper company is also considering a bid to buy Knight Ridder. Good news for those of you who care about high standards of journalism. McClatchy has a good reputation.)

knight ridder.jpg

Big changes could be looming here at Silicon Valley’s newspaper, the Mercury News.

Knight Ridder is the second largest newspaper company in the country, and it happens to be the 21st largest company in Silicon Valley. It is based in San Jose and also owns the San Jose Mercury News, which is our day-job employer.

Internet pressure (Yahoo, Craigslist, the giant Mountain View search company, etc., are eating into newspaper ad revenue) and declining readership have put pressure on Knight Ridder’s stock, and now word comes that Knight Ridder is apparently relenting to stockholder pressure, and is soliciting bids from buyers who come up with a plan to boost its stock price.

The Wall Street Journal reports (sorry, we don’t have a link; the WSJ apparently doesn’t provide them with its subscription any more, or at least we couldn’t track one down):

A trio of private-equity firms has formed an alliance to examine purchasing newspaper publisher Knight Ridder Inc., according to…



people familiar with the matter.

The alliance — consisting of the Blackstone Group, Providence Equity Partners Inc. and
Kohlberg Kravis Roberts & Co. — is in early stages of preparation, these people say. But the buyout firms remain wary that the $4 billion market capitalization is too high for the publisher, which owns the Miami Herald, the Philadelphia Inquirer and 30 other daily newspapers.

Nonetheless, the formation of the consortium represents a small but telling sign of interest for an auction that has been expected to be a difficult one for the San Jose, Calif., company. Concerns about the health of both display and classified advertising — increasingly encroached upon by Internet-driven media — have led many to believe the company will be hard-pressed to find a buyer.

Here’s the latest Mercury News story, which confirms that Knight Ridder is soliciting bids.