Denver-based ap Inc. cleared a key regulatory hurdle Monday when the U.S. Department of Justice said it won’t block the company’s proposed purchase of newspapers from McClatchy Co.
MediaNews, which owns The Denver Post and dozens of other daily newspapers nationwide, plans to close its deal with McClatchy this week.
The company will acquire the San Jose Mercury News, the Contra Costa Times and a number of smaller papers in California.
The deal will place Media News among the nation’s four largest newspaper publishers by circulation, up from seventh.
“We are pleased and ready to move forward,” said Jody Lodovic, president of MediaNews. “It’s nice to get it out of the way.”
The company will begin operating the papers as early as Wednesday, Lodovic said.
Sacramento, Calif.-based McClatchy earlier this year bought publicly traded Knight Ridder for more than $4 billion. McClatchy has now sold 12 of the 32 papers it acquired in that deal.
In April, MediaNews agreed to buy from McClatchy the San Jose Mercury News, the Contra Costa Times and the smaller California papers for $736.8 million.
In addition, New York-based Hearst Corp. agreed to buy the St. Paul Pioneer Press and the Monterey County Herald from McClatchy for $263.2 million. Hearst will trade those two papers for a stake in MediaNews’ assets outside the San Francisco Bay Area market, where Hearst owns the San Francisco Chronicle.
The arrangement between MediaNews and Hearst will be reviewed separately by regulators, Lodovic said.
The Justice Department said it came to Monday’s decision after interviewing more than 80 industry members, including competing newspaper distributors, advertisers, subscribers, newspaper unions and industry experts.
In the end, the antitrust division “determined that the transaction is not likely to reduce competition substantially,” the division said in a statement.
“The Division concluded that, following the acquisition, Media News will continue to face competition for the sale of newspapers and newspaper advertising in the East Bay from the San Francisco Chronicle,” the statement said.
The Justice Department added that from the deal Media News would “achieve large cost savings by combining the production and delivery systems” of the Mercury News, the Contra Costa Times and the company’s current lineup of papers.
MediaNews already owns a number of newspapers in the San Francisco Bay market, which has caused some critics to contend the deal would limit competition for readers and advertisers.
Stephen Barnett, emeritus professor of law at the University of California, Berkeley, said federal regulators have typically signed off on consolidation of newspapers. As newspapers contend with competition from Internet news outlets and declining circulation, “the government and the courts don’t want to make it harder,” Barnett said.
Some regulatory hurdles remain.
A review of the deal by California Attorney General Bill Lock yer remains open, a spokesman said.
A challenge at the state level is less likely now that federal government has closed its review, Barnett said.
Also, San Francisco real-estate investor Clint Reilly plans to ask for a trial to review the deal, although a federal judge last week denied a request for a temporary restraining order to block the transaction.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
