Hearst, MediaNews complete complex deal
EmptyNEW YORK -- MediaNews Group Inc. and Hearst Corp. completed a complex $317 million deal giving Hearst a 31% stake in MediaNews properties outside the San Francisco Bay area, and adding three daily newspapers to the roster of MediaNews.
MediaNews, the Denver-based publisher of The Denver Post, The Detroit News and 55 other daily newspapers, used $290.3 million of the Hearst investment to complete its takeover on Oct. 19 of the St. Paul Pioneer Press, The Monterey County Herald and the Torrance Daily Breeze newspapers from Hearst, a New York-based media company. It disclosed details of the deal in a Securities and Exchange Commission filing Monday.
MediaNews’ Dean Singleton enlisted Hearst to facilitate the acquisition of four former Knight Ridder newspapers that were put on the block by McClatchy Co. before it completed its $4.1 billion acquisition of the Knight Ridder newspaper company in 2006.
Hearst agreed to buy the St. Paul and Monterey papers for $263.2 million and then flip them to MediaNews as part of its investment in the Denver company. A partnership controlled by MediaNews separately purchased the San Jose Mercury News and Contra Costa Times from McClatchy for $736.8 million.
Hearst subsequently acquired for $25.9 million the Torrance newspaper and three weekly newspapers, which were earmarked for MediaNews.
The resulting deals made MediaNews, which already owned the Oakland Tribune, the largest publisher in the Bay Area.
Hearst owns the San Francisco Chronicle and 11 other daily newspapers; 19 U.S. magazines including Cosmopolitan, Esquire and O, The Oprah Magazine; 26 TV stations and stakes in several cable TV networks including ESPN.
Hearst and MediaNews initially were seeking to share their national advertising, Internet ad sales, distribution and production operations in the Bay Area. But a San Francisco businessman sued on antitrust grounds, and the publishers eventually settled the case in April by rescinding the cooperative agreement.
Regulators approved the deal despite some concerns of competitive constraints, under the assumption that Hearst would be a passive equity investor in MediaNews.
MediaNews is using $25 million of the almost $27 million cash it received from Hearst to pay what apparently is the first-ever cash dividend of $10.98 per share to owners of MediaNews Class A shares, the SEC filing also showed.
Most of that stock is owned by the families of Singleton, MediaNews vice chairman and chief executive, and his long-time business partner, Richard B. Scudder, according to the company’s most recent 10-K filing with the SEC, which said the company has never previously paid cash dividends because of restrictions tied to its long-term debt level.
Both publishers are privately held, but MediaNews said in its 10-K that it files financial disclosure documents with the SEC voluntarily.
Singleton is chairman of The Associated Press, a not-for-profit cooperative owned by its member news organizations.