Newspaper publisher The McClatchy Co. said on Tuesday that it will sell its flagship Star Tribune to a private equity firm for $530 million, a sharp drop from the $1.2 billion it paid to acquire the newspaper just eight years ago.
McClatchy said it decided to sell the newspaper to Avista Capital Partners through a private bidding process "after a strategic reevaluation of its portfolio of holdings" following McClatchy's purchase of Knight Ridder for $4.5 billion earlier this year.
McClatchy chairman and CEO Gary Pruitt said in a written statement that the Star Tribune "is a profitable business that has generated significant returns for the company over the years. However, as we continue to analyze our business following the Knight Ridder acquisition, it became clear that selling the Star Tribune strengthens McClatchy's competitive position."
"This deal came about because of very specific conditions involving the Star Tribune and today's changing media landscape. We have no plans to sell any other newspapers," Pruitt said in an e-mail to McClatchy employees.
Avista does not own any other daily newspapers. It was founded in 2005 by seven former partners and nine former professionals from DLJ Merchant Banking Partners, the private equity affiliate of Credit Suisse Group, according to the statement announcing the sale.
"Avista is a company that believes in the future of newspapers and is strongly committed to the success of the Star Tribune," Publisher and President Keith Moyer told Star Tribune employees in an e-mail.
"I have had the opportunity to get to know Avista leadership quite well recently, and I can say this without hesitation: They are progressive, very smart, good-hearted people who believe that no other media platform can reach a local audience as effectively as newspapers and their product extensions,'' Moyer wrote.
Newspaper industry analyst John Morton found the sale "inexplicable and disappointing."
"The Minneapolis Star Tribune has a good reputation, has always had a good reputation. It is the kind of newspaper that you would have hoped a company like McClatchy would continue to own," he said.
"Clearly what is happening to McClatchy is that they are much more concerned about their overall financial performance than they are about publishing newspapers, the way I read it,'' Morton said.