McClatchy Co. said Tuesday it will sell the Star Tribune newspaper to the private equity firm Avista Capital Partners for $530 million, a sharp drop from the $1.2 billion it paid to acquire the flagship property just eight years ago.
Former Akron Beacon Jouranl publisher Chris Harte will be chairman of a board of directors who will oversee the newspaper for Avista.
The $530 million sale will place the future of Minnesota's dominant newspaper in the hands of Avista Capital Partners, a New York-based partnership of former investment bankers. It also continues a trend that accelerated this year in which large newspaper companies, such as McClatchy, Knight Ridder and Tribune, either winnowed their holdings or put themselves up for sale. Private owners have emerged to bid for many of the big-city papers that have come into play as a result.
McClatchy has played a major role in that change, agreeing to buy all of Knight Ridder Inc. last spring. Sacramento, Calif.-based McClatchy then sold a number of the Knight Ridder papers it considered to be less desirable, including the St. Paul Pioneer Press, which is now run by privately held MediaNews Group Inc. of Denver.
While the sale price is far less than McClatchy paid in 1998, the company will also realize $160 million in tax benefits as a result, making the total benefit to McClatchy closer to $700 million.
The sale, which is expected to close in the first quarter of 2007, will mark the entry of Avista into the newspaper business. The private equity firm, which has holdings in media, health care and energy businesses, was among the firms that had been interested in the Philadelphia Inquirer and the Philadelphia Daily News before McClatchy sold the former Knight Ridder papers to another group earlier this year.
The Avista partners did not disclose any specific plans for the Star Tribune, saying those discussions have not yet been held. Speaking to a handful of reporters after the announcement, Harte said the sale came about quickly.
We just saw an opportunity here to take a historically strong asset in an industry that's clearly out of favor right now," Harte said. "The long-term goal is to provide great content."
Some observers of the industry believe that newspaper readers will continue to migrate to the Internet, leaving fewer readers to support the printed product that remains the main source of revenue for publishers, although most are aggressively beefing up their Web content and advertising.
However, Harte indicated that his group believes the printed product will remain in demand and profitable for many years.
"We believe strongly that there will be a Star Tribune printed and delivered to hundreds of thousands of customers every morning for decades to come, probably for generations, maybe for centuries."
The Star Tribune has a paid circulation of 361,172 daily copies and 596,333 on Sunday.
While layoffs and other staff reductions have occurred among a number of the papers that have been bought by private groups this year, Avista officials said they are not eyeing major staff reductions or a quick sale.
Click on the headline to read coverage in the Star-Tribune which includes a number of related articles and history of the newspaper.
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