Gannett Sells the Idaho Statesman to Knight Ridder 

In a newspaper deal that reaches across the nation, Editor & Publisher magazine reported late Tuesday that the Idaho Statesman's parent company Gannett has sold Boise's only daily newspaper and two Washington state daily papers, The Olympian and The Bellingham Herald to rival media comapny Knight Ridder. In exchange, Gannett will receive the Tallahassee Democrat in Florida and an undisclosed amount of cash.

In a separate deal between the two companies, Knight Ridder sold the Detroit News, to Gannett, who then sold it to the Denver, Colorado-based MediaNews Group. The deal must pass regulatory review by the Justice Department, after which the transfer of ownership is expected to take place in early September.

Locally, The Idaho Statesman's publisher, Leslie Hurst, has been named the new publisher for Gannett's Lansing State Journal in Lansing, Michigan. The new publisher of the Statesman will be Michael R. Petrak, Knight Ridder's current vice president of Marketing. In an article in the Idaho Statesman on Thursday Petrak said he doesn't expect to make many changes.

"You're doing all the things we'd expect you to do," Petrak told Statesman employees at a meeting Wednesday afternoon. "All I see are things we really like. When something's working, you don't want to change it."

However, Knight Ridder is not without its critics, who accuse the company of putting profits over journalism. Jay Harris, former publisher of Knight Ridder's San Jose Mercury News, resigned from his position to take a stand against what he perceived as unethical actions by his corporate parent company. (See story here)

Daily newspapers in general have seen tough times in recent years. While overall advertising revenue has been up, decreased circulation and rising newsprint costs have made it difficult to maintain high profit margins.

As a result, both Gannett and Knight Ridder have struggled on Wall Street. Gannett showed an earnings decline in the second quarter this year, and Fitch Ratings revised their ratings earlier this week moving Knight Ridder from a "stable" ranking to "negative." However, stocks for both companies fared well on Wednesday in reaction to the sale, with Gannett stock rising 27 cents and Knight Ridder stock 19 cents, respectively.

In some cases, financial strife has caused the companies to rethink the daily newspaper subscription model. Knight Ridder has experimented with youth-oriented free daily newspapers in some markets, while Gannett has launched with the free weekly tabloids commonly known as "faux-alts." In Boise and Lansing, Gannett launched faux-alts nearly three years ago. Since then, they have launched many more in other markets—although the jury is still out on the profitablility of their photo-heavy, content-light format.

Earlier this year, Knight Ridder shut down its faux-alt in Miami, Florida, which competed against the local alternative paper the Miami New Times, (See story here). Soon after, Knight Ridder launched a free daily tabloid, the East Bay Daily News in Berkley, CA, which caused the daily newspaper in Oakland to cancel its own plans for a free daily tabloid called The Daily Flash. (See story here)

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