Monday, May 1, 2006

By Chris O'Brien
San Jose Mercury News
Published: 4/27/06

Excerpt:

The announcement this week that MediaNews would acquire the Mercury News and three newspapers from McClatchy was among the industry's worst kept secrets. But word that Hearst, which owns the rival San Francisco Chronicle, would be involved in the deal caught most observers off guard and raised more than a few eyebrows.

Rather than the exception, however, such deals have become the standard way of doing business in a newspaper industry that seems to be fighting to keep its head above water. Newspapers face circulation declines and advertising growth has become more difficult in the Internet era. Wall Street, meanwhile, has been pummelling newspaper companies -- Knight Ridder was forced to sell at the behest of dissident shareholders.

In the clubby world of media companies, the companies that publish newspapers have entered into a dizzying array of joint ventures and partnerships that allow them to invest in each other and share resources such as printing presses, advertising staffs and human resources functions. ...

"As I go to investor meetings, they're always greeting each other warmly,'' said Rick Edmonds, a research fellow at the Poynter Institute for Media Studies. "It's not like Coke and Pepsi where they're all locked in fierce battle with each other. They're really by and large operating in their own territories. And there's a comfort level having people who know the business running the business. There's rarely an unfriendly takeover in the business."
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