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Knight Ridder, the second-largest newspaper company in the U.S, and owner of the San Jose Mercury News, for which we work, has agreed to sell itself for about $4.5 billion to the McClatchy Company, according to the New York Times (registration required).

The deal, expected to be announced tomorrow, comes at a time when the newspaper industry is grappling with the migration of advertisers to online sources, and a proliferation of other online news sources that are stealing those ads.

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But we can confirm that many Knight Ridder employees are breathing a sigh of relief. McClatchy has an excellent reputation for quality journalism, and its headquarters in Sacramento and relative strength in central California means that KR’s Mercury News, Contra Costa Times and other papers in Contra Costa, Monterey and San Luis Obispo will help make the combined company a California powerhouse. Question is, will it have the heft to lure advertisers who want to advertise nationally? We’re still lacking in a lot of regional markets. We don’t have a NYT or a USA Today that has national reach.

But is that really important anymore, now that Web sites are becoming more important? That’s the $4.5 billion dollar question.

Update: The above was written before the announcement Monday morning that McClatchy wants to sell The Mercury News and some of the other papers as part of the deal, as Lynne rightfully points out below. Champagne cork back in bottle!