Investor turns up heat on Knight Ridder

The largest shareholder in Knight Ridder Inc. is turning up the pressure on the newspaper publisher, saying in a regulatory filing Thursday [Nov 10, 2005] that it may nominate a slate of directors at the company's annual meeting next year.

Private Capital Management LP, an investment firm based in Naples, Fla., said it was considering that and other moves to boost the value of its 19 percent stake in Knight Ridder after seeing only a "limited response" to the "serious concerns" about the company raised by PCM and other shareholders.

Knight Ridder is the second-largest publisher of newspapers in the United States, behind Gannett Co., with 32 papers including The Miami Herald, the San Jose Mercury News and The Philadelphia Inquirer.

The company is facing a growing shareholder revolt after failing through a number of steps to lift its long-sagging share price, including a stock buyback, raising its dividend, making several newspaper transactions and cutting jobs.

The shares of most major newspaper companies are down sharply this year on investor concerns about their future prospects for growth, the ongoing migration of advertiser dollars and news consumers online, higher newsprint prices and a continuing slump in newspaper circulation. Despite those concerns, however, newspapers remain generally profitable businesses.

Knight Ridder's shares didn't immediately react to PCM's latest salvo against the company, edging down 4 cents to $61.99 on the New York Stock Exchange Thursday morning. The shares had slumped 20 percent this year prior to PCM's initial threat to the company last week, but have rallied since then from a low of $53.38 the day before PCM fired its first shot.

Last week PCM urged Knight Ridder to "aggressively" pursue a sale of the company or face dire consequences including a possible shake-up of the company's management and board of directors.

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