MCCLATCHY NEWSPAPERS INC, S-3/A, 1994-03-22

MCCLATCHY NEWSPAPERS INC
S-3/A, 1994-03-22
NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1994

REGISTRATION NO. 33-52475

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

MCCLATCHY NEWSPAPERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 94-0666175
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>

2100 "Q" STREET, SACRAMENTO, CA 95816
(916) 321-1846
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

JAMES P. SMITH
VICE PRESIDENT, FINANCE AND TREASURER
MCCLATCHY NEWSPAPERS, INC.
2100 "Q" STREET
SACRAMENTO, CA 95816
(916) 321-1834
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
------------------------

COPIES TO:

<TABLE>
<S> <C>
TERRY MICHAEL KEE, ESQ. ROBERT T. CLARKSON, ESQ.
KATHARINE A. MARTIN, ESQ. DAVID J. SEGRE, ESQ.
ERIN G. AUSTIN, ESQ. ADELE FREEDMAN, ESQ.
PILLSBURY MADISON & SUTRO JAMES E. WILLIAMS, ESQ.
235 MONTGOMERY STREET WILSON, SONSINI, GOODRICH & ROSATI
SAN FRANCISCO, CA 94104 PROFESSIONAL CORPORATION
TWO PALO ALTO SQUARE
PALO ALTO, CA 94306
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
------------------------

If the only securities registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, check the following box: / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /

CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(3)
- -----------------------------------------------------------------------------------------------------------
Class A Common Stock, $0.01 par
value............................... 1,558,250 Shares $23.75 $37,008,438 $12,762
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 203,250 shares that the Underwriters have the option to purchase
from the Company to cover over-allotments, if any.

(2) Estimated as of March 18, 1994, pursuant to Rule 457, solely for the
purposes of computing the amount of the registration fee.

(3) Includes $12,682.00 previously paid based on a proposed maximum offering
price of $23.69 per share and 1,552,500 shares registered.

------------------------

THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MARCH 22, 1994

1,355,000 SHARES

MCCLATCHY NEWSPAPERS, INC.

CLASS A COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
---------------------

Of the 1,355,000 shares of Class A Common Stock offered hereby, 750,000
shares are being sold by the Company and 605,000 shares are being sold by the
Selling Stockholders. See "Selling Stockholders." The Company will not receive
any of the proceeds from the sale of shares by the Selling Stockholders.

The last reported sale price of the Class A Common Stock on the New York
Stock Exchange on March 18, 1994 was $24.00 per share. See "Class A Common Stock
Price Range, Volume and Dividends."

After giving effect to the offering (assuming the Underwriters'
over-allotment option is not exercised), the Company will have outstanding
6,173,706 shares of Class A Common Stock with one-tenth of a vote per share and
the right to elect 25% of the Company's Directors and 23,426,789 shares of Class
B Common Stock with one vote per share and the right to elect 75% of the
Company's Directors. As a result, the holders of Class B Common Stock will have
the exclusive right to vote shares constituting approximately 97% of the
combined voting power of the Class A and Class B Common Stock. See "Description
of Capital Stock."

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------

<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) STOCKHOLDERS
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
Per Share............ $ $ $ $
Total(3)............. $ $ $ $
</TABLE>

- ---------------

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

(2) Before deducting estimated expenses of $210,000 payable by the Company.

(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 203,250 shares at the initial public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such option is exercised in full, the total initial public offering price,
underwriting discount and proceeds to the Company will be $ ,
$ and $ , respectively. See "Underwriting."

---------------------

These shares are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that the certificates for
the shares will be ready for delivery at the offices of Goldman, Sachs & Co.,
New York, New York, on or about , 1994.
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
---------------------

The date of this Prospectus is , 1994.
<PAGE> 3

AVAILABLE INFORMATION

McClatchy Newspapers, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices located at Seven World Trade Center, 13th
Floor, New York, New York, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois. Copies of such materials can be obtained
by mail from the Public Reference Branch of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, such material
may also be inspected and copied at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.

------------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission (File No. 1-9824)
pursuant to the Exchange Act are incorporated herein by reference:

(1) Registration Statement on Form 8-A dated November 28, 1988, as
amended December 9, 1988;

(2) Annual Report on Form 10-K for the year ended December 31, 1993;
and

(3) All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of
Class A Common Stock.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such information (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be delivered to Elaine
Lintecum, Investor Relations Manager, McClatchy Newspapers, Inc., 2100 "Q"
Street, Sacramento, California 95816 (telephone: (916) 321-1846).

Unless the context requires otherwise, the "Company" refers to McClatchy
Newspapers, Inc., a Delaware corporation, its predecessors and its consolidated
subsidiaries. The address of the Company's principal executive offices is 2100
"Q" Street, Sacramento, California 95816, and its telephone number is (916)
321-1846.

------------------------

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements appearing elsewhere in this
Prospectus.

THE COMPANY

McClatchy Newspapers, Inc. (the "Company") owns and publishes 20 newspapers
in California, Washington, Alaska and South Carolina. The Sacramento Bee, the
Company's flagship newspaper established in 1857 with James McClatchy as its
founding editor, together with The Fresno Bee and The Modesto Bee, formed the
core of the Company's operations for many years and continue to have a
significant influence on the civic, political, economic and cultural life of
California's Central Valley. Since 1979, the Company has acquired four
additional metropolitan daily newspapers, The (Tacoma) News Tribune, the
Anchorage Daily News, the Tri-City Herald and The (Rock Hill) Herald, and has
five smaller dailies and eight nondaily newspapers serving smaller communities
in California, Washington and South Carolina. For the year ended December 31,
1993, the Company's combined average paid circulation totaled 815,000 daily,
962,100 Sunday and 31,700 nondaily circulation.

Each of the Company's seven major daily newspapers has the largest
circulation of any newspaper serving its particular metropolitan area. The
Company believes that this circulation advantage is of primary importance in
attracting advertising, the principal source of revenues for the Company. Until
recently, two of the Company's major markets were shared with other local daily
newspapers. However, in June 1992, the competing local daily newspaper in
Anchorage ceased operations, permitting the Company's Anchorage Daily News to
show a profit for the first time under Company ownership in 1993. In early 1994,
the competitor to The Sacramento Bee published its last edition, leaving The Bee
as the sole major local daily newspaper in the California State capital.

The Company believes that it has grown and prospered by publishing
newspapers that exhibit a high degree of concern for journalistic quality,
public service and editorial integrity, and that its attention to certain basic
strategies will continue to keep it financially strong and successful. Keeping
and building the existing subscriber base is a fundamental goal of all of the
Company's newspapers. In addition, the Company may add to its newspaper
operations by purchasing newspapers in markets with strong growth potential. New
products and services are developed to help the Company protect its existing
franchises and enable it to deliver information through emerging technologies,
including facsimile, audiotex, on-line and CD-ROM. The Company believes that the
local newspaper is the principal packager and distributor of information to the
community. Management believes that, as information becomes more widely
available over electronic transmission networks, its newspaper databanks will
enable the Company to become a primary supplier of general and customized
information content on such networks.

Substantially all of the Company's business operations relate to newspaper
publishing. Advertising revenues approximated 78% of consolidated revenues in
both 1993 and 1992. Circulation revenues approximated 19% of consolidated
revenues in 1993 and 18% in 1992. The Company also owns other businesses that
complement its publishing operations, strengthen its newspapers, and provide
alternative methods of delivering news and information. Other businesses owned
by the Company include Legi-Tech, an on-line computer service which provides
information to clients on legislative activity in the California and New York
state legislatures and in the United States Congress, and McClatchy Printing
Company, a commercial printing operation, located in Clovis, California. The
Company is currently expanding its West Coast based distributor of preprinted
advertising inserts to a national operation under a newly formed subsidiary, The
Newspaper Network, Inc. In addition, the Company is a partner (13.5% interest)
in Ponderay Newsprint Company, a general partnership that constructed and now
operates a newsprint mill in Washington State.

3
<PAGE> 5

THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock offered:
By the Company.............................................. 750,000 shares(1)
By the Selling Stockholders................................. 605,000 shares
Common Stock to be outstanding after the offering:
Class A Common Stock........................................ 6,173,706 shares(1)
Class B Common Stock........................................ 23,426,789 shares(2)
Use of Proceeds............................................... For general corporate purposes,
principally working capital.
NYSE symbol for Class A Common Stock.......................... MNI
</TABLE>

- ---------------

(1) Assumes the Underwriters' over-allotment option is not exercised. See
"Underwriting."

(2) The Company's Common Stock is divided into two classes with identical rights
with respect to cash dividends and in any dissolution, but different voting
rights. The Class A Common Stock, shares of which are offered hereby, is
generally entitled to one-tenth of a vote per share. The Class B Common
Stock, which is convertible at the option of the holder into Class A Common
Stock, is entitled to one vote per share. See "Description of Capital
Stock."

SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues -- net:
Advertising........................... $303,003 $335,663 $337,372 $345,574 $350,046
Circulation........................... 63,126 70,266 74,770 80,318 83,729
Other................................. 14,634 15,482 14,686 14,355 15,340
-------- -------- -------- -------- --------
Total................................. 380,763 421,411 426,828 440,247 449,115
-------- -------- -------- -------- --------
Operating income........................ 55,523 55,402 49,207 61,923 65,104
Income before cumulative effects of
accounting changes.................... 33,890 26,445 23,729 30,171 31,798
Cumulative effects of accounting
changes............................... -- -- -- (341) --
Net income.............................. $ 33,890 $ 26,445 $ 23,729 $ 29,830 $ 31,798
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings per common share:
Income before cumulative effects of
accounting changes................. $ 1.19 $ 0.93 $ 0.83 $ 1.05 $ 1.10
Cumulative effects of accounting
changes............................ -- -- -- (0.01) --
-------- -------- -------- -------- --------
Net income............................ $ 1.19 $ 0.93 $ 0.83 $ 1.04 $ 1.10
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends per common share.............. $ 0.11 $ 0.16 $ 0.20 $ 0.215 $ 0.27
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
ACTUAL AS ADJUSTED(1)(2)
-------- -----------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.................................................. $ 49,809 $ 66,699
Total assets..................................................... 525,163 542,053
Long-term obligations............................................ 14,213 14,213
Stockholders' equity............................................. 383,523 400,413
</TABLE>

- ---------------

(1) Assumes that the Underwriters' over-allotment option is not exercised. See
"Underwriting."

(2) Gives effect to the sale of shares offered by the Company hereby. The
estimated net proceeds to the Company have been added to working capital
pending their use. See "Use of Proceeds."

4
<PAGE> 6

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Class A
Common Stock offered hereby are estimated to be $16,890,000 ($21,524,000 if the
Underwriters' over-allotment option is exercised in full). The net proceeds will
be used for general corporate purposes, which may include working capital
requirements, capital expenditures, investments in the Company's newspaper
subsidiaries or other related businesses, or investments in or the acquisition
of other newspapers or complementary businesses. The Company will not receive
any proceeds from the sale of the shares being sold by the Selling Stockholders.

The sale of the Class A Common Stock offered hereby will effect a
distribution of shares equal to approximately 27% of the 5.1 million shares of
the outstanding Class A Common Stock as of December 31, 1993.

CLASS A COMMON STOCK
PRICE RANGE, VOLUME AND DIVIDENDS

The Company's Class A Common Stock is listed on the New York Stock Exchange
under the symbol "MNI." The Class A Common Stock is also traded on the Midwest
Stock Exchange and the Pacific Stock Exchange. The Class B Common Stock is not
publicly traded. The following table sets forth, for the periods indicated, high
and low sale prices for the Company's Class A Common Stock and the aggregate
quarterly trading volume, as reported by these exchanges, and the cash dividends
declared per common share.

<TABLE>
<CAPTION>
CLASS A
COMMON STOCK AGGREGATE
PRICE QUARTERLY CASH DIVIDENDS
-------------- TRADING DECLARED
HIGH LOW VOLUME PER SHARE
---- --- ---------- --------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1992:
First quarter.................................. $22 3/8 $17 539,300 $ 0.0500
Second quarter................................. 22 3/4 19 1/4 226,700 0.0500
Third quarter.................................. 22 3/8 19 1/4 172,300 0.0575
Fourth quarter................................. 21 18 356,300 0.0575
YEAR ENDED DECEMBER 31, 1993:
First quarter.................................. 23 18 1/2 498,200 0.0625
Second quarter................................. 23 20 3/8 479,700 0.0625
Third quarter.................................. 20 7/8 18 1/8 464,500 0.0725
Fourth quarter................................. 25 5/8 20 1/8 385,900 0.0725
YEAR ENDED DECEMBER 31, 1994:
First quarter (through March 18, 1994)......... 24 1/4 22 1/8 504,900 0.0800
</TABLE>

On March 18, 1994, the reported last sale price of the Company's Class A
Common Stock on the New York Stock Exchange was $24.00 per share.

The Company's Common Stock is divided into two classes, with identical
rights with respect to cash dividends and in any dissolution, but different
voting rights. The Class A Common Stock, shares of which are offered hereby, is
generally entitled to one-tenth of a vote per share and has the right to vote as
a class to elect 25% of the Company's Directors (rounded up to the nearest whole
number) but no vote with respect to election of the other Directors. The Class B
Common Stock, which is convertible at the option of the holder into Class A
Common Stock, is entitled to one vote per share and has the right to vote as a
class to elect 75% of the Company's Directors (rounded down to the nearest whole
number), but no vote with respect to election of the other Directors.

The Class B Common Stock is closely held and subject to an agreement among
stockholders designed to keep such stock in the hands of members of the
McClatchy family and thus to prevent such stock from being held by the public
generally. After giving effect to the offering of Class A Common Stock made
hereby and assuming the Underwriters' over-allotment option is not exercised,
the holders of Class B Common Stock will have the exclusive right to vote shares
constituting approximately 97% of the combined voting power of the Class A and
Class B Common Stock. See "Description of Capital Stock."

5
<PAGE> 7

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1993 and as adjusted to reflect the sale by the Company of 750,000
shares of Class A Common Stock and the receipt of the estimated net proceeds
therefrom (assuming the Underwriters' over-allotment option is not exercised).
The Company will not receive any proceeds from the sales of the shares by
Selling Stockholders.

The capitalization table should be read in conjunction with the
Consolidated Financial Statements and notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1993
--------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current maturities........................... $ -- $ --
-------- -----------
Stockholders' equity:
Common Stock(1):
Class A, $0.01 par value, 50,000,000 shares authorized,
5,100,450 shares issued actual and 6,155,450 shares issued
as adjusted(2).............................................. 51 62
Class B, $0.01 par value, 30,000,000 shares authorized,
24,503,789 shares issued actual and 23,448,789 shares issued
as adjusted................................................. 238 234
Additional paid-in capital...................................... 39,472 56,355
Retained earnings............................................... 344,133 344,133
Treasury stock, 20,000 Class A shares actual and as adjusted, at
cost, and 750,000 Class B shares actual, at no cost(3), and
no shares as adjusted........................................ (371) (371)
-------- -----------
Total stockholders' equity................................. 383,523 400,413
-------- -----------
Total capitalization.................................... $383,523 $ 400,413
-------- -----------
-------- -----------
</TABLE>

- ---------------

(1) Issued shares includes treasury shares. As adjusted share amounts reflect
the conversion of 1,355,000 shares of Class B Common Stock into 1,355,000
shares of Class A Common Stock offered for sale hereby, of which 300,000
shares were so converted prior to December 31, 1993 and are reflected in
actual Class A and Class B shares issued.

(2) Shares of Class A Common Stock issued exclude 503,300 shares issuable upon
exercise of options outstanding under the Company's stock option plans as of
December 31, 1993.

(3) See note 1 to Consolidated Financial Statements.

6
<PAGE> 8

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for each of the
five years ended December 31, 1993 have been derived from the Consolidated
Financial Statements of the Company. This data should be read in conjunction
with the Consolidated Financial Statements and notes thereto included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues -- net:
Advertising........................... $303,003 $335,663 $337,372 $345,574 $350,046
Circulation........................... 63,126 70,266 74,770 80,318 83,729
Other................................. 14,634 15,482 14,686 14,355 15,340
-------- -------- -------- -------- --------
Total......................... 380,763 421,411 426,828 440,247 449,115
-------- -------- -------- -------- --------
Operating expenses:
Compensation.......................... 156,863 175,668 188,791 199,295 199,743
Newsprint and supplements............. 72,452 77,956 74,562 59,501 60,639
Depreciation and amortization......... 25,583 30,316 29,929 33,560 35,583
Other operating expenses.............. 70,342 82,069 84,339 85,968 88,046
-------- -------- -------- -------- --------
Total......................... 325,240 366,009 377,621 378,324 384,011
-------- -------- -------- -------- --------
Operating income........................ 55,523 55,402 49,207 61,923 65,104
-------- -------- -------- -------- --------
Nonoperating expenses (income):
Interest expenses..................... 311 2,776 1,157 920 118
Interest income....................... (987) (13) (7) (35) (461)
Partnership losses.................... 935 6,366 4,193 6,674 6,171
Other -- net.......................... (139) 97 1,697 106 360
-------- -------- -------- -------- --------
Total......................... 120 9,226 7,040 7,665 6,188
-------- -------- -------- -------- --------
Income before income tax provision and
cumulative effects of accounting
changes............................... 55,403 46,176 42,167 54,258 58,916
Income tax provision.................... 21,513 19,731 18,438 24,087 27,118
-------- -------- -------- -------- --------
Income before cumulative effects of
accounting changes.................... 33,890 26,445 23,729 30,171 31,798
Cumulative effects of accounting
changes............................... -- -- -- (341) --
-------- -------- -------- -------- --------
Net income.............................. $ 33,890 $ 26,445 $ 23,729 $ 29,830 $ 31,798
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings per common share:
Income before cumulative effects of
accounting changes................. $ 1.19 $ 0.93 $ 0.83 $ 1.05 $ 1.10
Cumulative effects of accounting
changes............................ -- -- -- (0.01) --
-------- -------- -------- -------- --------
Net income............................ $ 1.19 $ 0.93 $ 0.83 $ 1.04 $ 1.10
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends per common share.............. $ 0.11 $ 0.16 $ 0.20 $ 0.215 $ 0.27
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital....................... $ 21,899 $ 23,460 $ 22,208 $ 23,816 $ 49,809
Total assets.......................... 440,326 467,950 477,076 491,151 525,163
Long-term obligations................. 63,316 55,196 38,618 23,901 14,213
Stockholders' equity.................. $291,517 $314,186 $333,372 $358,299 $383,523
SHARES OF COMMON STOCK OUTSTANDING (AT
YEAR END):(1)
Class A, $0.01 par value.............. 4,287 4,358 4,461 4,565 5,080
Class B, $0.01 par value.............. 24,259 24,245 24,223 24,197 23,754
-------- -------- -------- -------- --------
Total......................... 28,546 28,603 28,684 28,762 28,834
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

- ---------------

(1) Excludes treasury shares.

7
<PAGE> 9

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RECENT EVENTS

The recessionary economy of Northern California continued in 1993,
resulting in a slowdown in advertising revenues at The Sacramento Bee and The
Modesto Bee. Stronger revenue performances at The Fresno Bee, the Anchorage
Daily News and newspapers in Washington State and South Carolina offset the
lower revenues in Sacramento and Modesto. Net income also benefitted from
continued low newsprint prices and cost controls.

In June 1992 the Anchorage Daily News became the sole metropolitan daily
newspaper in Anchorage when the competing newspaper, the Anchorage Times,
closed. As a result, revenues increased from $31.1 million in 1991 to $36.6
million in 1992 and $41.9 million in 1993, allowing the Daily News to become
profitable for the first time under Company ownership in 1993.

On August 2, 1993 new federal tax laws raised the corporate income tax rate
from 34% to 35% retroactive to January 1, 1993, and made other changes to the
deductibility of certain expenses. The liability method of income tax accounting
required that the Company revalue accumulated deferred taxes, and taxes on
earnings through the first half of 1993 to reflect the higher rate. Accordingly,
the Company increased its tax provision by $1,088,000 or four cents per share in
the third quarter of 1993 for these retroactive adjustments. See note 5 to the
Consolidated Financial Statements.

RESULTS OF OPERATIONS

1993 COMPARED TO 1992

Net income increased 6.6% to $31.8 million as strong performances at The
Fresno Bee and newspapers in Washington State and South Carolina offset weaker
results at the Sacramento and Modesto Bees. Income also benefitted from improved
operating results at the Anchorage Daily News since the closure of the Anchorage
Times, stringent cost controls at all of the Company's newspapers and a second
year of low newsprint prices.

Net revenues increased 2.0% to $449.1 million compared to $440.2 million in
1992. Advertising rate increases at most of the Company's newspapers offset the
impact of lower volumes resulting in a 1.3% increase in consolidated advertising
revenues. While overall advertising volumes were down, gains were reported at
The Fresno Bee, the Tri-City Herald and The (Rock Hill) Herald. In general,
higher retail advertising linage was offset by declines in national and
classified linage.

At the Company's seven largest daily newspapers, full run "run-of-press"
("ROP") linage, which is found in the body of the newspaper and accounts for the
majority of advertising revenues, declined 3.1%. Part run ROP linage, found in
zoned editions of the newspaper which are targeted to specific areas of a
community, declined 4.6%. These declines were partially offset by gains in
advertising in total market coverage ("TMC") products (delivered to
nonsubscribers of the newspapers) of 18.5% and a 5.9% increase in the number of
preprinted advertisements inserted into the daily newspapers. Advertising volume
in McClatchy's 13 other newspapers increased 3.3%.

Circulation revenue increased 4.2% as the combined number of daily and
Sunday subscribers increased 1.9% and 1.8%, respectively (average paid
circulation). With a slower economy impacting many of the Company's newspaper
readers, most of McClatchy's metropolitan newspapers opted to forego circulation
rate increases in 1993. The Anchorage Daily News and The (Rock Hill) Herald
increased home-delivery rates modestly in April and September, respectively.

Other revenues increased $985,000 or 6.9% due principally to an increase in
commercial printing at McClatchy Printing Company in Clovis, California.

Operating expenses were held to a 1.5% increase over 1992 and were up 2.2%
after excluding a $2.6 million charge in 1992 for an early retirement program at
the Sacramento and Modesto Bees. Excluding the early retirement charge,
compensation costs increased 1.5%, reflecting a 2.1% increase in salaries and a
nominal decline in the cost of employee benefits. The increase in salaries
generally reflect wage rate increases of 2% to 3% partially offset by lower
headcounts. Newsprint and supplements and other operating expenses increased
2.2% and reflect low newsprint prices, generally low inflation and the

8
<PAGE> 10

impact of cost control programs at all of the Company's newspapers. Depreciation
and amortization was up 6.0% due to the installation of new mailroom equipment
at The Sacramento Bee and presses at The (Tacoma) News Tribune.

Nonoperating expense declined $1.5 million primarily due to lower interest
expense as the Company repaid its bank debt, and higher investment income on
cash equivalents.

The Company's tax rate was 46.0% compared to 44.4% in 1992. The increase in
this rate primarily relates to new federal tax legislation which raised the
corporate tax rate from 34% to 35%, retroactive to January 1, 1993.

1992 COMPARED TO 1991

Improved operating results at the Anchorage Daily News and The News
Tribune, lower newsprint prices and company-wide cost controls were the major
contributors to a 25.7% increase in net income. The Daily News and The News
Tribune led the Company in both revenue and operating income growth.

Net revenues increased 3.1% to $440.2 million compared to $426.8 million in
1991. This growth reflects circulation and advertising rate increases, and, to a
lesser extent, a rebound in subscriber and advertising volumes in the second
half of 1992.

Advertising revenues were up 2.4% to $345.6 million. Advertising rates were
increased at a number of the larger metropolitan dailies in the first quarter of
1992. The Anchorage Daily News implemented an additional advertising rate
increase in August 1992 because of its significant growth in circulation after
the Anchorage Times' closure.

Advertising volumes were generally flat for the year. Lower advertising
linage in the California markets was offset by gains made at other newspapers.
At the Company's seven largest newspapers, full run ROP linage was even with
1991 levels. Gains in retail linage were offset by losses in classified and
national advertising. Part run ROP linage grew 0.2% while linage in TMC products
declined 11.1% at these newspapers. The number of preprinted inserts delivered
in the seven largest newspapers grew 3.8%. Linage at McClatchy's 13 other
newspapers declined 0.7%.

The Anchorage Daily News also led the Company in subscriber and circulation
revenue growth. The Daily News' average daily paid circulation for the year
ended December 31, 1992 grew to approximately 72,000 from 60,800 in 1991 and
Sunday was 94,900 versus 81,600.

Company-wide, the number of subscribers grew 2.1% for average daily paid
circulation (1.4% excluding the Ellensburg Daily Record purchased in 1992) and
1.8% on Sunday. Nondaily subscribers increased 3.1%. This growth in subscribers
coupled with selective home delivery and single-copy rate increases resulted in
a 7.4% gain in circulation revenues to $80.3 million.

Operating expenses were held to a 0.2% increase over 1991 despite the
recognition of a $2.6 million charge for an early retirement program. Excluding
the early retirement charge, compensation costs were up 4.2%, reflecting a 3.6%
increase in salaries and a 6.6% increase in fringe benefits. These increases
reflect wage increases of 2% to 4% and higher retirement and other fringe
benefits. Newsprint and supplements costs declined $15.1 million or 20.2% due
mostly to lower newsprint prices precipitated by a lack of advertising demand.
Depreciation and amortization was up 12.1% reflecting primarily a full year of
depreciation on The Fresno Bee's expanded plant and new presses and amortization
of intangibles purchased during the year. Other operating expenses were held to
a 1.9% increase through Company-wide cost control programs.

While the Ponderay Newsprint Company continues to be one of the more
efficient and low cost producers of newsprint, the Company's share of losses
from this joint venture increased due to lower newsprint prices. Other
nonoperating expenses declined because 1991 included an adjustment related to
the destruction of a rental property.

The effective tax rate increased to 44.4% from 43.7% in 1991. A
reconciliation of the effective tax rates is included in note 5 to the
Consolidated Financial Statements.

9
<PAGE> 11

QUARTERLY RESULTS OF OPERATIONS

The Company's business is somewhat seasonal, with peak revenues and profits
generally occurring in the second and fourth quarters of each year as a result
of increased advertising activity during the spring holiday and Christmas
periods. The first quarter is historically the weakest quarter for revenues and
profits. The Company's 1992 and 1993 unaudited quarterly results are summarized
as follows (in thousands, except share amounts):

<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1992:
Revenues -- net............................. $101,292 $111,169 $110,503 $117,283
Operating income............................ 9,881 16,246 16,856 18,940
Income before cumulative effects of
accounting changes........................ 4,488 7,831 8,699 9,153
Net income.................................. 4,147 7,831 8,699 9,153
Income per common share before cumulative
effects of accounting changes............. .15 .27 .30 .32
Net income per common share................. .14 .27 .30 .32
1993:
Revenues--net............................... $105,282 $113,458 $111,282 $119,093
Operating income............................ 10,546 16,962 16,396 21,200
Net income.................................. 4,768 8,514 7,341 11,175
Net income per common share................. .17 .30 .25 .39
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company generated $90.7 million of cash from operations in 1993 and has
generated $228.5 million over the last three years. The principal uses of cash
have been to repay bank debt incurred to purchase its South Carolina-based
newspapers and to invest in capital expenditures. Cash has also been used to
fund its Ponderay newsprint mill investment and to pay dividends. With all of
its bank debt now repaid, the Company has invested its cash in high quality
commercial paper and government securities. At year end, cash and cash
equivalents totaled $42.3 million.

With the ongoing recession in Northern California, the Company deferred
some of its planned capital expenditures in 1992 and 1993. Nonetheless, a total
of $35.9 million was expended in 1993 for projects and equipment to improve
productivity and keep pace with circulation growth. Capital expenditures over
the last three years have totaled $106.9 million and planned expenditures in
1994 are estimated to be $38.3 million.

The Company has a 13.5% interest in the Ponderay Newsprint Company, a
general partnership formed to construct and operate a newsprint mill near
Spokane, Washington. The mill began operating in December 1989. The Company's
share of the mill's operating losses over the last three years equaled $17.0
million. The Company has contributed $12.4 million to fund the mill's cash needs
over this period. Ponderay is expected to incur losses over the next several
years assuming newsprint prices remain depressed and the Company presently
intends, when necessary, to contribute funds to help finance its share of these
losses. See note 3 to the Consolidated Financial Statements.

During 1993 the Company terminated its bank line of credit and now has only
an outstanding letter of credit for $5.9 million. See note 4 to Consolidated
Financial Statements. Management is of the opinion that operating cash flow is
adequate to meet the liquidity needs of the Company, including currently planned
capital expenditures and other investments.

10
<PAGE> 12

BUSINESS

Each of the Company's seven major daily newspapers has the largest
circulation of any newspaper serving its particular metropolitan area. The
Company believes that this circulation advantage is of primary importance in
attracting advertising, the principal source of revenues for the Company. Until
recently, two of the Company's major markets were shared with other daily
newspapers. However, in June 1992, the competing daily newspaper in Anchorage
ceased operations, permitting the Company's Anchorage Daily News to show a
profit for the first time under Company ownership in 1993. In early 1994, the
competitor to The Sacramento Bee published its last edition, leaving The Bee as
the sole major daily newspaper in the California State capital.

Substantially all of the Company's business operations relate to newspaper
publishing. Advertising revenues approximated 78% of consolidated revenues in
both 1993 and 1992. Circulation revenues approximated 19% of consolidated
revenues in 1993 and 18% in 1992. The Company also owns other businesses that
complement its publishing operations, strengthen its newspapers, and provide
alternative methods of delivering news and information. Other businesses owned
by the Company include Legi-Tech, an on-line computer service which provides
information to clients on legislative activity in the California and New York
state legislatures and in the United States Congress and McClatchy Printing
Company, a commercial printing operation, located in Clovis, California. The
Company is currently expanding its West Coast based distributor of preprinted
advertising inserts to a national operation under a newly formed subsidiary, The
Newspaper Network, Inc. In addition, the Company is a partner (13.5% interest)
in Ponderay Newsprint Company, a general partnership that constructed and now
operates a newsprint mill in Washington State.

STRATEGIES

Maintaining and expanding the Company's existing newspapers'
subscriber base. Keeping and building the existing subscriber base is a
fundamental goal of all of the Company's newspapers. Larger numbers of
subscribers translate into higher circulation revenue and, more
importantly, higher advertising revenue. To accomplish this goal, the
Company is committed to making the necessary investment to achieve superior
customer service and the highest degree of journalistic quality. Over the
years this quality has been demonstrated by the many industry awards its
newspapers have won, including two Pulitzer awards by The Sacramento Bee in
1992 and one by the Anchorage Daily News in 1989.

Continuing to look for opportunities to acquire newspapers in new
markets. The Company may add to its newspaper operations by purchasing
newspapers in markets with strong growth potential which are or can become
the primary print advertising and news sources for their areas. Over the
last 15 years, this strategy has resulted in the purchase of 17 newspapers
of varying sizes, each of which is the primary local news source in its
market. Most of these newspapers are outside of Northern California and
have helped reduce the effects on the Company's operations of the recent
economic downturn in this region.

Developing new products and services to protect its existing
franchises. To combat competitive pressures, the Company develops new
products and services to protect its existing franchises.

11
<PAGE> 13

To answer the challenge of advertisers seeking to target more defined areas
of distribution by direct mail, the Company is currently expanding its West
Coast based distributor of preprinted advertising inserts to a national
operation under a newly formed subsidiary, The Newspaper Network, Inc. The
Newspaper Network offers advertisers the convenience of a one-order,
one-bill sales of advertising preprints. The Company believes that this
initiative will be important for both McClatchy and the newspaper industry
in competing with direct mail on a national basis. Additionally, local
management has developed alternative delivery systems, including electronic
communications such as facsimile machines, to handle additional or expanded
news stories and is using established carrier routes to distribute items
other than newspapers such as magazines and product samples.

Understanding and implementing new technologies which can enhance the
value of the information content of the newspapers' databanks. In order to
prepare for the future, the Company continues to research and monitor
developing technologies relating to the "Information Superhighway." The
Company believes the local newspaper in a given community is the principal
packager and distributor of information and many of the new technologies
being developed will make use of this information. Management believes that
companies of its size may not own the transmission devices, but they can
and will become primary suppliers of general and customized information
content. The Company is making sure its newspapers have the expertise to
assemble and package the information content to be transmitted along these
highways of the future. A special task force known as the "Information
Center" made up of employees from throughout the Company has been
established to research and discuss how to distribute information through
electronic outlets. In addition, the Company is working with five other
newspaper companies to explore how each might benefit from information and
technology changes.

NEWSPAPER OPERATIONS

Each of the Company's newspapers is semiautonomous in its business and
editorial operations so as to meet most effectively the needs of the communities
it serves. Publishers, editors and general managers of the newspapers make the
day-to-day decisions and within limits are responsible for their own budgeting
and planning. Policies on such matters as determining the amount and type of
capital expenditures, key personnel changes, and strategic planning and
operating budgets including wage and pricing matters are approved or established
by the Company's senior management or Board of Directors.

The volume of advertising is significantly affected by the local economies
in each newspaper's market. The Northern California economy, home to three of
the Company's larger newspapers, slowed in 1991 and continues to be affected by
an economic downturn, albeit not as severe as the downturn in the southern half
of the state. As a result, advertising linage (i.e., number of lines of type in
six column inches) declined in 1993 at The Sacramento and Modesto Bees, but was
partially offset by increases in advertising rates.

Total advertising linage is comprised of a number of different components,
the most important of which is "run of press" ("ROP") linage. Full run ROP
linage is advertising in the body of a newspaper distributed throughout a
community while part run ROP is found in zoned editions of the newspaper
targeted to specific areas of the community. ROP linage generates in excess of
80% of advertising revenues. Total-market-coverage ("TMC") advertising linage is
found in products distributed to nonsubscribers of the newspapers. Preprinted
inserts are advertisements inserted into the newspapers and are generally
measured by units rather than lines of type.

At the Company's seven largest daily newspapers, full run ROP linage was
8.9 million six column inches, down 3.1% from 1992. Part run ROP linage was
614,000, down 4.6%, TMC linage was 1.0 million, up 18.5% and the newspapers
distributed 1,401 million advertising preprints, up 5.9% from 1992.

The Company continued to show growth in average paid circulation in 1993.
For the year ended December 31, 1993, the Company's combined average paid daily
circulation increased 1.9% to 815,000 and Sunday was up 1.8% to 962,100. In
1992, the State of California enacted a sales tax on daily newspapers which
caused a circulation decrease at The Sacramento, Modesto and Fresno Bees for the
year.

12
<PAGE> 14

All of the Company's daily newspapers are morning distribution, except for
the Ellensburg Daily Record. Certain information regarding newspaper operations
is summarized below:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CIRCULATION(1)
DAYS -------------------
NEWSPAPER LOCATION PUBLISHED DAILY SUNDAY
------------------------ --------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
The Sacramento Bee Sacramento, CA Mon.-Sun. 271,700 341,000
The Fresno Bee Fresno, CA Mon.-Sun. 149,900 186,800
The News Tribune Tacoma, WA Mon.-Sun. 128,600 147,800
The Modesto Bee Modesto, CA Mon.-Sun. 83,000 91,900
Anchorage Daily News Anchorage, AK Mon.-Sun. 73,400 97,100
Tri-City Herald Pasco, WA Mon.-Sun. 38,600 41,900
The Herald Rock Hill, SC Mon.-Sun. 31,000 30,700
The Island Packet Hilton Head, SC Mon.-Fri., Sun. 12,700 15,600
Beaufort Gazette Beaufort, SC Mon.-Fri., Sun. 10,000 9,300
The Dispatch Gilroy, CA Mon.-Fri. 6,300
Daily Record Ellensburg, WA Mon.-Sat. 5,500
Free Lance Hollister, CA Mon.-Fri. 4,300
Amador Ledger Dispatch Jackson, CA Mon., Wed., Fri. (2)
Pierce County Herald Puyallup, WA Tues., Sat. (2)
Morgan Hill Times Morgan Hill, CA Tues., Fri. (2)
Clovis Independent Clovis, CA Wed. (2)
Lincoln News Messenger Lincoln, CA Thurs. (2)
Clover Herald Clover, SC Wed. (2)
Yorkville Enquirer Yorkville, SC Thurs. (2)
Lake Wylie Magazine Lake Wylie, SC Twice-Monthly (2)
</TABLE>

------------------

(1) Average paid circulation for the year ended December 31, 1993
according to Company records.

(2) Combined total nondaily circulation for these local newspapers for
the year ended December 31, 1993 was 31,700.
- --------------------------------------------------------------------------------

THE SACRAMENTO BEE

Founded in 1857, The Sacramento Bee, the Company's flagship newspaper,
serves the California State capital and its metropolitan area. According to
estimates contained in the 1993 Survey of Buying Power published by Sales and
Marketing Management ("SMMS") and which is based upon the most recent census
taken by the United States Bureau of Census, the Sacramento Metropolitan
Statistical Area ("MSA") had a population of approximately 1,461,400 as of
December 31, 1992, making it the 33rd largest MSA in the United States. SMMS
figures indicate that the population of the Sacramento MSA increased 2.8% in
1992.

Prior to the recession, which began in 1991, the Sacramento area
experienced strong population growth as individuals and businesses were drawn to
the more affordable Central Valley of California. This influx has slowed because
of the recent economic recession, causing the newspaper's advertising volumes to
decrease and 1993 advertising revenues to decline 2.4% from the prior year.
Nonetheless, cost control programs at The Sacramento Bee helped to partially
offset the impact of lower revenues.

For many years The Sacramento Bee's principal competitor was the Sacramento
Union, a morning daily and Sunday newspaper. In October 1993 the Union reduced
its publication to three times a week and in January 1994 the Union ceased
publication. Over the last several years the Union had lost advertising and
circulation to the extent that its closure is not expected to have a significant
near-term impact on The Sacramento Bee.

Frank Whittaker, age 44, has been president of The Sacramento Bee since
1990 and general manager since 1985. He was previously the director of
circulation and manager of newspaper planning for The Toronto Star. Gregory
Favre, age 58, has been the executive editor of the newspaper since 1984. He was
previously the managing editor of the Chicago Sun Times and of the Chicago Daily
News.

13
<PAGE> 15

The following table summarizes The Sacramento Bee's net revenues,
circulation and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
THE SACRAMENTO BEE
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)................. $155,557 $167,053 $168,428 $168,486 $165,322
Circulation:
Daily..................................... 260,900 266,100 270,000 266,900 271,700
Sunday.................................... 314,400 328,300 338,100 337,900 341,000
Advertising Linage (in thousands of six
column inches):
Full Run ROP.............................. 2,968 2,884 2,597 2,530 2,408
Part Run ROP.............................. 198 312 361 345 328
TMC....................................... 221 237 159 159 158
Preprinted Inserts
(millions distributed).................... 449 473 539 532 564
</TABLE>

---------------------

(1) According to Company records.
- --------------------------------------------------------------------------------

Based upon the December 31, 1992 (latest available) Audit Bureau of
Circulation ("ABC") audit report and ABC's estimate of households in The
Sacramento Bee's Newspaper Designated Market ("NDM"), an area agreed upon by ABC
and a newspaper to be the newspaper's primary circulation area, the newspaper
was reaching daily 42% and Sunday 51% of such households.

THE FRESNO BEE

The Fresno Bee, founded in 1922, serves the number one agricultural
producing county in the United States. Fresno County's economy benefited in 1993
through relief from a six-year drought and growth in residential construction.
SMMS estimates that the Fresno MSA had a population of approximately 832,500 as
of December 31, 1992 making it the 68th largest MSA in the nation. SMMS figures
indicate that the population of the Fresno MSA increased 3.2% in 1992.

The 1992 completion of a $60 million plant expansion and addition of 18
units of new press has allowed the paper to respond to increasing demand for
color advertising and circulation growth. The paper capitalized on its
relatively strong economy and new equipment, posting a 3.2% increase in
advertising revenue in 1993.

Gary Pruitt, age 36, has been the publisher of The Fresno Bee since October
1991. He was previously assistant to the vice president of operations for the
Company and from 1984 to 1991 he was the Company's general counsel, and was
corporate secretary from 1987 to 1991.

14
<PAGE> 16

The following table summarizes The Fresno Bee's net revenues, circulation
and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
THE FRESNO BEE
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)................. $ 73,066 $ 73,646 $ 74,778 $ 77,153 $ 79,072
Circulation:
Daily..................................... 146,000 147,000 150,100 146,800 149,900
Sunday.................................... 176,000 181,500 184,900 183,100 186,800
Advertising Linage (in thousands of six
column inches):
Full Run ROP.............................. 1,516 1,410 1,448 1,418 1,483
Part Run ROP.............................. 115 131 159 184 159
TMC....................................... 171 133 234 167 170
Preprinted Inserts (millions distributed)... 219 235 246 284 291
</TABLE>

------------------

(1) According to Company records.
- --------------------------------------------------------------------------------

Based on the December 31, 1992 (latest available) ABC audit report and
ABC's estimate of households in The Fresno Bee's NDM, the newspaper was reaching
daily 48% and Sunday 58% of such households.

THE NEWS TRIBUNE

The News Tribune serves the Tacoma, Washington metropolitan area, including
Federal Way, a newly incorporated city just north of Tacoma. SMMS estimates that
the Tacoma Primary MSA had a population of approximately 625,000 as of December
31, 1992 making it the 81st largest MSA in the nation. SMMS figures indicate
that the population of the Tacoma Primary MSA increased 3.3% in 1992.

Since purchasing The News Tribune in 1986, the Company has improved the
editorial product to expand circulation in the Puget Sound region and has
improved the operating margins by nearly 200%. In addition, the Company
converted The News Tribune from evening to morning distribution in 1987 and
circulation has grown from daily 109,300 and Sunday 121,600 in 1986 to daily
128,600 and Sunday 147,800 in 1993. The newspaper now competes in the
northernmost fringes of its market with the major Seattle daily newspapers
located just 30 miles north of Tacoma.

The Tacoma area is affected by the downsizing of The Boeing Company, a
major employer in the Puget Sound region, and has experienced a recent slowdown
in business activity. However, planned staffing increases at military bases in
the Tacoma area may help to offset the impact of the aircraft maker's layoffs.

Kelso Gillenwater, age 47, became publisher of The News Tribune in October
1991. He was publisher of the Company's Tri-City Herald from 1981 to 1991 and
was previously president and general manager of Landmark Dailies, Inc.

15
<PAGE> 17

The following table summarizes The News Tribune's net revenues, circulation
and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
THE NEWS TRIBUNE
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)................. $ 52,495 $ 55,818 $ 58,099 $ 61,647 $ 64,324
Circulation:
Daily..................................... 119,200 118,800 122,600 126,900 128,600
Sunday.................................... 130,800 135,900 140,100 144,500 147,800
Advertising Linage (in thousands of six
column inches):
Full Run ROP.............................. 1,300 1,296 1,233 1,292 1,291
Part Run ROP.............................. 45 33 28 20 28
TMC....................................... 23 28 26 22 31
Preprinted Inserts (millions distributed)... 170 179 185 194 214
</TABLE>

------------------

(1) According to Company records.
- --------------------------------------------------------------------------------

Based on the December 31, 1992 (latest available) ABC audit report and
ABC's estimate of households in The News Tribune's NDM, the newspaper was
reaching daily 51% and Sunday 57% of such households.

THE MODESTO BEE

The Modesto Bee, Company-owned since 1927, serves the city of Modesto,
located in San Joaquin County in the Central Valley of California. SMMS
estimates that the Modesto MSA had a population of approximately 406,200 as of
December 31, 1992 making it the 120th largest MSA in the nation. SMMS figures
indicate that Modesto's population increased 2.9% in 1992.

The Modesto Bee's revenue and operating income peaked in 1990 when the
Modesto area enjoyed a strong influx of newcomers into its region from the San
Francisco Bay Area as many people and businesses were attracted to the more
affordable Central Valley. This migration slowed as the California recession
began in 1991. As a result, the newspaper has relied on cost controls to offset
slower business activity and lower revenues.

John Ward, age 47, has been the general manager of The Modesto Bee since
1985. He was previously the vice president of administration of the
Knight-Ridder Fort Wayne, Indiana newspapers. Sanders H. LaMont, age 53, has
been the executive editor of The Modesto Bee since 1980. He was previously the
executive editor of The Marietta (Ohio) Times and before that the managing
editor of The Fort Meyers News-Press.

The following table summarizes The Modesto Bee's net revenues, circulation
and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
THE MODESTO BEE
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)....................... $39,263 $44,566 $43,574 $43,662 $42,925
Circulation:
Daily........................................... 79,300 82,600 83,300 82,500 83,000
Sunday.......................................... 87,800 92,300 92,800 91,700 91,900
Advertising Linage (in thousands of
six column inches):
Full Run ROP.................................... 1,269 1,361 1,238 1,269 1,237
Part Run ROP.................................... 72 105 108 108 99
TMC............................................. 654 460 428 402 567
Preprinted Inserts (millions distributed)......... 138 154 154 147 143
</TABLE>

------------------

(1) According to Company Records.
- --------------------------------------------------------------------------------

16
<PAGE> 18

Based on the December 31, 1992 (latest available) ABC audit report and
ABC's estimate of households in The Modesto Bee's NDM, the newspaper was
reaching daily 63% and Sunday 68% of such households.

ANCHORAGE DAILY NEWS

Purchased by the Company in 1979, the Anchorage Daily News has since grown
to become Alaska's largest newspaper. The Daily News' primary circulation is
concentrated in the south central region of the state -- comprised of
metropolitan Anchorage, the Kenai Peninsula and the Matanuska-Susitna Valley.
SMMS estimates that the Anchorage MSA had an approximate population of 244,400
as of December 31, 1992, making it the 174th largest MSA in the United States.
SMMS figures indicate that the population of the Anchorage MSA increased 5.2% in
1992.

The Company considers the progress of the Anchorage Daily News since its
purchase in 1979 to be one of its greatest successes. When acquired, the Daily
News had an average paid circulation of about 12,000 and was not published on
Sundays. Its competitor, the Anchorage Times, had an average paid circulation of
about 45,500 daily and 51,900 Sunday. By 1983, the Daily News had surpassed the
Anchorage Times in both daily and Sunday circulation and advertising share of
field.

In June 1992 the Anchorage Times ceased publication and sold certain of its
operating assets to the Company. Now the sole daily in Anchorage, the Daily News
had an average paid circulation of 73,400 daily and 97,100 Sunday in 1993 and
revenues of $41.9 million, up from $36.6 million in 1992 and $31.1 million in
1991. In 1993, the Daily News had its first profitable year under Company
ownership.

In July 1993, Fuller Cowell, age 41, became publisher of the Daily News. He
was operations coordinator for the Company from 1991 to 1993 and was previously
vice president and general manager of the Company's Gavilan Newspapers
subsidiary (The Dispatch, Free Lance and Morgan Hill Times) from 1987 to 1991.
Howard Weaver, age 43, who won a Pulitzer Prize for the Daily News as a reporter
in 1975, has been the managing editor of the newspaper since 1980.

The following table summarizes the Anchorage Daily News' net revenues,
circulation and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ANCHORAGE DAILY NEWS
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)....................... $28,875 $30,550 $31,101 $36,648 $41,923
Circulation:
Daily........................................... 57,000 59,600 60,800 72,000 73,400
Sunday.......................................... 73,000 77,900 81,600 94,900 97,100
Advertising Linage (in thousands of
six column inches):
Full Run ROP.................................... 1,482 1,479 1,370 1,390 1,053
TMC............................................. 40 49 45 43 30
Preprinted Inserts (millions distributed)......... 59 79 77 87 99
</TABLE>

------------------

(1) According to Company records.
- --------------------------------------------------------------------------------

Based on the June 30, 1993 (latest available) ABC audit report and ABC's
estimate of households in the Anchorage Daily News' NDM, the newspaper was
reaching daily 58% and Sunday 74% of such households.

TRI-CITY HERALD

Purchased by the Company in 1979, the Tri-City Herald serves the
Tri-Cities, which include the cities of Richland, Kennewick and Pasco in
southeastern Washington. SMMS estimated that the Tri-City MSA had a population
of approximately 158,000 as of December 31, 1992 making it the 219th largest MSA
in the country. SMMS figures indicate that the population of the Tri-City MSA
increased 3.8% in 1992.

17
<PAGE> 19

During the last two decades, the Tri-Cities economy has been affected
greatly by the construction of nuclear energy plants and storage of nuclear
waste. During the 1980s, the federal government curtailed a major portion of
such activity, resulting in a regional economic recession. Over the past several
years, the United States Department of Energy has begun clean-up of the nuclear
waste, which has enhanced the region's economy.

Jack Briggs, age 61, became publisher in October 1991. He was the Tri-City
Herald's managing editor from 1985 to 1991 and has held various editorial
positions at the paper since 1960.

The following table summarizes the Tri-City Herald's net revenues,
circulation and advertising activity over the last five years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TRI-CITY HERALD
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1989 1990 1991 1992 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Revenues (in thousands)....................... $11,930 $12,429 $13,217 $14,089 $15,626
Circulation:
Daily........................................... 33,000 35,000 36,100 37,300 38,600
Sunday.......................................... 36,300 38,200 39,200 40,400 41,900
Advertising Linage (in thousands of
six column inches):
Full Run ROP.................................... 707 673 652 656 721
TMC............................................. 25 21 25 25 20
Preprinted Inserts (millions distributed)......... 46 53 54 58 64
</TABLE>

------------------

(1) According to Company records.
- --------------------------------------------------------------------------------

Based on the December 31, 1992 (latest available) ABC audit report and
ABC's estimate of households in the Tri-City Herald's NDM, the newspaper was
reaching daily 73% and Sunday 79% of such households.

THE HERALD

Purchased in 1990, The Herald serves Rock Hill and surrounding communities
in York County, South Carolina. Rock Hill is a community approximately 25 miles
southwest of Charlotte, North Carolina, just across the state border. SMMS
estimates that York County had an approximate population of 138,600 as of
December 31, 1992.

The Herald's main competitor is a zoned edition of the Charlotte Observer,
whose circulation in The Herald's primary circulation area as reported by ABC
was 10,752 daily and 13,894 Sunday as of March 31, 1993 compared to 11,049 daily
and 13,955 Sunday as of March 31, 1992.

After purchasing The Herald in 1990, the Company invested in new editorial
production computers, added a third section to the newspaper and expanded sports
coverage and newswire services. The Company also extended training of sales
representatives in advertising and circulation and introduced advertising volume
contracts and other new advertising programs. The result of these initiatives
has been growth in revenues, operating results and circulation.

Orage Quarles, III, age 43, was hired in 1993 as publisher of The Herald
and director of the Company's South Carolina operations, which includes The
Herald and sister daily newspapers in Hilton Head and Beaufort. He was
previously president and publisher of The Stockton (California) Record and began
his newspaper career in 1969 with the Gannett Co., Inc., where he held various
management positions from 1979 through 1993.

18
<PAGE> 20

The following table summarizes The Herald's net revenues, circulation and
advertising activity over the last four years:
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
THE (ROCK HILL) HERALD
OPERATIONAL SUMMARY(1)
YEAR ENDED DECEMBER 31,
-------------------------------------
1990 1991 1992 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Revenues (in thousands)................................ $ 7,991 $ 8,415 $ 8,723 $ 9,514
Circulation:
Daily.................................................... 29,600 30,100 30,400 31,000
Sunday................................................... 29,200 29,400 29,800 30,700
Advertising Linage (in thousands of
six column inches):
Full Run ROP............................................. 648 660 642 725
TMC...................................................... 69 66 56 60
Preprinted Inserts (millions distributed).................. 19 20 21 26
</TABLE>

------------------

(1) According to Company records. The Herald was purchased by the Company
on January 1, 1990.
- --------------------------------------------------------------------------------

Based on the March 31, 1993 (latest available) ABC audit report and ABC's
estimate of households in The Herald's NDM, the newspaper was reaching daily 60%
and Sunday 59% of such households.

OTHER NEWSPAPERS

The Company also publishes five small daily and eight nondaily community
newspapers. The Ellensburg Daily Record in Central Washington was purchased in
September 1992. The Daily Record is an evening newspaper, published Monday
through Saturday, with about 5,500 paid circulation. The other four daily
newspapers include two in South Carolina -- The Island Packet on Hilton Head
Island and the Beaufort Gazette in Beaufort; and two in California -- The
Dispatch in Gilroy and the Free Lance in Hollister. Combined average daily
circulation for these four newspapers according to Company records was 33,200 in
1993 compared to 32,300 in 1992. Average Sunday circulation at the two South
Carolina newspapers was 24,900 in 1993 compared to 23,600 in 1992.

The eight nondaily newspapers are generally published weekly or
twice-weekly. Four of the newspapers are located in California, three in South
Carolina and one in Washington State. Combined average circulation for this
group according to Company records was 31,700 at December 31, 1993.

OTHER OPERATIONS AND INVESTMENTS

Substantially all of the Company's business operations relate to newspaper
publishing. However, the Company also owns other businesses that complement its
publishing operations, serve to strengthen its newspapers, and allow for
alternative methods of delivering news and information.

The Company is currently expanding its West Coast based distributor of
preprinted advertising inserts to a national operation under a newly formed
subsidiary, The Newspaper Network, Inc. The Newspaper Network has launched an
aggressive program to build a national business by offering advertisers
one-order, one-bill sales of advertising preprints in newspapers throughout the
country. The Company believes that this initiative will be important for both
McClatchy and the newspaper industry in competing with direct mail on a national
basis.

Legi-Tech is an on-line computer service which provides information to
clients on legislative activity in the California and New York state
legislatures and in the United States Congress. Legi-Tech also provides The
Sacramento Bee on-line to its customers and sells historical legislative
information, as well as The Sacramento and Fresno Bees on CD-ROM. In late 1993,
Legi-Tech expanded distribution of its on-line information to Internet, and in
1994 plans to introduce the use of photography and graphics in its CD-ROM
products.

As a result of the Company's continued research and development of new
technologies for its news and data, most of its larger papers are providing
subscriber and advertiser services through various forms of electronic
distribution. Several of the Company's largest newspapers are available on-line
through various third-party services. For a fee, customers can request a "fax on
demand" of a current or historical

19
<PAGE> 21

news story or additional details not originally published, but stored in a
newspaper's database. Through automated voice technology, individuals can obtain
information on a variety of topics, including weather, sports scores and stock
quotes.

McClatchy Printing Company is a commercial printer located in Clovis,
California. In addition to printing television guides for the Company's Bee
newspapers, it prints various commercial products and preprinted advertisements
for third party customers. In 1993 approximately 40% of McClatchy Printing
revenues were derived from outside customers. The addition of a new press in
1993 will enable McClatchy Printing to continue to expand its operations.

The Company has also invested with four other publishers and a Canadian
newsprint manufacturer in Ponderay Newsprint Company, a general partnership
formed to construct and operate a newsprint mill in the State of Washington. The
mill became operational in late 1989 and is one of the more efficient and
low-cost producers of newsprint in North America. Ponderay has a production
capacity in excess of 200,000 metric tons annually. The publisher partners are
committed to take an aggregate 126,000 metric tons of this production with the
balance sold on the open market. The Company's annual commitment is 28,400
metric tons. See note 3 to the Consolidated Financial Statements.

20
<PAGE> 22

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Directors and executive officers of the Company and their ages are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ---------------------------- --- --------------------------------------
<S> <C> <C>
William K. Coblentz 71 Director
Booth Gardner 57 Director
William L. Honeysett 56 Executive Vice President, Director
Joan F. Lane 65 Director
Betty Lou Maloney(1) 73 Director, Assistant Secretary
James B. McClatchy(1) 73 Chairman of the Board of Directors and
Publisher
William Ellery McClatchy(1) 69 Director, Assistant Secretary
Erwin Potts 61 President and Chief Executive Officer,
Director
S. Donley Ritchey 60 Director
William M. Roth 77 Director
Frederick R. Ruiz 50 Director
James P. Smith 56 Vice President, Finance, Treasurer,
Director
H. Roger Tatarian 77 Director
Peter M. CaJacob 50 Vice President, Human Resources
Gregory E. Favre 58 Vice President, News
</TABLE>

- ---------------

(1) James B. McClatchy and William Ellery McClatchy are brothers. Betty Lou
Maloney is their cousin by marriage.

William K. Coblentz, a Director of the Company since March 1979, is a
senior partner in the San Francisco law firm of Coblentz, Cahen, McCabe &
Breyer. He was a member of the board of directors of Pacific Telesis Group from
1976 to 1992 and is a member of the board of directors of the Koret Foundation.
From 1964 through 1980 Mr. Coblentz was a member of the University of California
Board of Regents and was its chairman for two years.

Booth Gardner has been a Director of the Company since July 1993. In 1993
he was nominated to serve as the U.S. Ambassador to the General Agreement on
Tariffs and Trade in Geneva, Switzerland. He was elected Governor of the State
of Washington in 1984 and held that office from 1985 to 1993. While Governor, he
served as Chairman of the Western Governors' Association and chaired the
National Governors' Association's Committee on International Trade. Prior to his
tenure as Governor of Washington, he was County Executive of Pierce County,
Washington from 1980 to 1984. Mr. Gardner is a member of the board of trustees
of the Menninger Foundation and the board of advisors of the PEW Charitable
Trusts.

William L. Honeysett was named Executive Vice President on February 18,
1994, has been a Director of the Company since July 1993 and its Vice President,
Operations from October 1991 to February 1994. Until October 1991, he was
publisher of The News Tribune in Tacoma, Washington. Mr. Honeysett was a
regional president for Gannett Co., Inc. before becoming publisher in Tacoma. He
is a former director of the Pacific Northwest Newspaper Association.

Joan F. Lane has been a Director of the Company since March 22, 1989. From
1982 to 1992, Mrs. Lane served as Special Assistant to the Dean of the School of
Humanities and Sciences of Stanford University. She is currently a Special
Assistant to the Board of Trustees of Stanford University. She has served on the
board of directors of The Brown Group, Inc. from 1985 to the present, as a
director of the James Irvine Foundation from 1990 to the present, and as a
trustee of the San Francisco Foundation from 1984 to November 1991. She was a
member of the board of trustees of Smith College from 1978 to 1985, and chairman
of that board from 1982 to 1985.

Betty Lou Maloney has been a Director of the Company since July 1975 and
Assistant Secretary of the Company since August 1980.

21
<PAGE> 23

James B. McClatchy is Chairman of the Company's Board of Directors, having
been elected to that position in April 1989; he also held that position from
August 1980 through July 1987. He has served as the Company's Publisher from
July 1987 to the present. Mr. McClatchy was a Director of the Company from 1943
through 1965, was again elected a Director in March 1976 and has served in that
capacity since that time. He is a former owner and publisher of several weekly
newspapers in California and Nevada. He is a board member and past president of
the Inter-American Press Association and board chairman and director of the
French American International School.

William Ellery McClatchy has been a Director of the Company since March
1976 and Assistant Secretary since August 1980.

Erwin Potts has been the President of the Company since July 1987, its
chief executive officer since April 1989 and its chief operating officer since
1985. He was the Company's Executive Vice President from March 1985 through July
1987, and a Vice President from March 1979 through March 1985. In addition, Mr.
Potts has served as a Director of the Company since March 1976. He is a member
of the advisory board of the John S. Knight Fellowship at Stanford University,
and was a member of the advisory board of University of North Carolina School of
Journalism from 1989 to 1992. He is a director of the Newspaper Association of
America and a director of the Sacramento Regional Foundation.

S. Donley Ritchey has been a Director of the Company since July 1985. He
retired from Lucky Stores, Inc. in 1986, where he was chief executive officer
and chairman of its board of directors. Mr. Ritchey is a director of Pacific
Telesis Group, The Brown Group, Inc., Spreckels Industries, Inc., Hughes
Markets, Inc., De La Salle Institute and the Rosenberg and East Bay Community
Foundations. He was elected to the city council of the town of Danville,
California in November 1987 and is currently Mayor of Danville.

William M. Roth has been a Director of the Company since September 1980. He
was chief financial officer for Matson Navigation Company from 1952 to 1961,
chairman of the board of Pacific Life Assurance Company from 1960 to 1963, and
U.S. Ambassador and Special Trade Representative from 1963 to 1969. He was a
member of the University of California Board of Regents for 16 years. Mr. Roth
is president of Roth Properties, a family controlled investment management
company.

Frederick R. Ruiz has been a Director of the Company since July 1993. He is
chairman and chief executive officer of Ruiz Foods, Inc., a family-owned frozen
food manufacturer, having been a co-founder with his father of that business in
1964. He has served on the board of directors of Gottschalks, Inc. since 1992.
In 1992, Mr. Ruiz' company received the U.S. Small Business Association's
National Entrepreneurial Success Award and was inducted into the SBA Hall of
Fame in Washington, D.C. Mr. Ruiz is a member of the board of the College of the
Sequoias Foundation; a member of the President's Advisory Board, Business
Advisory Council of the School of Business, and Board of Governor's Foundation,
and past chairman of the Valley Business Center, School of Business, all at
California State University, Fresno. He is a member of the board of trustees of
Valley Children's Hospital, Fresno, and serves on the boards of the American
Frozen Food Institute, California Hispanic Business College Fund, and is a
review board member for the U.S. Military Academy, as well as a member of the
steering committee of the Valley Business Conference.

James P. Smith is Vice President, Finance and Treasurer of the Company. He
has been a Director of the Company since March 1982. He was named Vice
President, Finance in December 1985 and Treasurer in July 1980. Prior to that
time he had served as Assistant Treasurer. Mr. Smith served as Secretary from
July 1980 through January 1987. Mr. Smith has been the Company's chief financial
officer since 1980.

H. Roger Tatarian has been a Director of the Company since March 1982. He
was employed by United Press International from 1938 through 1972, and was its
vice president and editor-in-chief from 1963 through 1972. From 1972 until 1987
he was a professor of journalism and since 1987 he has been professor emeritus
of journalism at California State University, Fresno. He was a trustee, New York
Correspondents Fund, 1969 through 1972; Board of Governors, Overseas Press Club,
1968 through 1969; member, Western Region Advisory Board, American Press
Institute, 1981 through 1984; and Consultant to the U.S. National Commission for
UNESCO, 1978 through 1982.

Peter M. CaJacob has been Vice President, Human Resources since December
1993. He joined the Company as Director of Human Resources in February of 1990.
Prior to that he held a variety of positions

22
<PAGE> 24

in personnel, labor relations and employee relations for Whirlpool Corporation,
Aerojet-General Corporation and GenCorp Automotive during the past 25 years.

Gregory E. Favre has been Vice President, News of the Company since January
1990 and Executive Editor of The Sacramento Bee since 1984. Prior to that he was
managing editor of the Chicago Sun Times and managing editor of the Chicago
Daily News. He was named California's Newspaper Executive of the Year by the
California Newspaper Publishers Association in 1993. Mr. Favre is incoming
president (April 1, 1994) of the American Society of Newspaper Editors. He
served as president of the California Society of Newspaper Editors during the
1988-1989 term.

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the Selling
Stockholders' actual or deemed beneficial ownership of the Company's Class A
Common Stock as of March 17, 1994:

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PRIOR
TO OFFERING(2)
---------------------------- BENEFICIAL OWNERSHIP AFTER
PERCENT OF OFFERING(3)
CLASS A ----------------------------
NUMBER OF COMMON CLASS A SHARES NUMBER OF
SELLING STOCKHOLDERS(1) SHARES STOCK TO BE SOLD SHARES
- ------------------------------ ------------ ------------ -------------- ------------
PERCENT OF
CLASS A
COMMON
STOCK
------------
<S> <C> <C> <C> <C> <C>
The Central Valley
Foundation.................. 500,000 9.3% 500,000 -- --
James B. McClatchy(4)......... 13,172,198 71.3% 50,000 13,122,198 68.1%
William Briggs McClatchy...... 290,000 5.1% 10,000 280,000 5.0%
Betty Lou Maloney(5).......... 1,503,750 21.9% 20,000 1,483,750 21.6%
Charles Kennan McClatchy
1993 Trust(6)............... 249,600 4.4% 25,000 224,600 4.0%
</TABLE>

- ---------------

(1) All addresses: c/o McClatchy Newspapers, Inc., P.O. Box 15779, Sacramento,
CA 95852-0779 except the address of The Central Valley Foundation which is
235 Montgomery St., 11th Floor, San Francisco, CA 94104.

(2) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Class B Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.

(3) Assumes the Underwriters' over-allotment option is not exercised.

(4) Includes: (i) 10,000,000 shares held under five separate trusts each with
2,000,000 shares and different income beneficiaries. James B. McClatchy,
William Ellery McClatchy, William K. Coblentz, William M. Roth and Erwin
Potts share joint voting and investment control with respect to these
trusts. James B. McClatchy disclaims beneficial ownership of all but the
2,000,000 shares in one such trust as to which he has a present income
interest; and (ii) 1,078,865 shares over which James B. McClatchy, William
Ellery McClatchy and William K. Coblentz share joint voting and investment
control as Co-Executors under the will of Charles K. McClatchy, deceased.
James B. McClatchy disclaims beneficial ownership of these shares.

(5) Includes 3,750 shares subject to stock options which are currently
exercisable.

(6) Of the 249,000 shares held by the trust, 49,600 shares are held by a
revocable trust pursuant to which Charles Kennan McClatchy and D.B. Craig,
Jr., as trustee, share voting and dispositive power, and 200,000 shares are
held by a stock trust pursuant to which D.B. Craig, Jr., as trustee, has
sole voting and dispositive power.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares
of Class A Common Stock, $0.01 par value, and 30,000,000 shares of Class B
Common Stock, $0.01 par value. As of March 17, 1994, there were 5,368,706 shares
of Class A Common Stock outstanding held by 1,267 stockholders and 23,481,789
shares of Class B Common Stock outstanding held by 24 stockholders. Effective on
the date of this Prospectus, the holders of 55,000 shares of Class B Common
Stock will convert such shares into Class A Common Stock for sale to the
Underwriters.

23
<PAGE> 25

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

The Transfer Agent and Registrar for the Class A and Class B Common Stock
is the Chemical Trust Company of California.

Each share of Class B Common Stock is convertible at any time at the option
of the holder into Class A Common Stock on a share-for-share basis.

Voting Rights

Holders of Class A Common Stock are entitled to one-tenth of a vote per
share and to elect as a class 25% of the Board of Directors (rounded up to the
nearest whole number). Holders of Class B Common Stock are entitled to one vote
per share and to elect as a class 75% of the Board of Directors (rounded down to
the nearest whole number). Holders of Class A Common Stock and Class B Common
Stock are not entitled to vote cumulatively for the election of Directors.
Immediately following this offering, the holders of Class B Common Stock will
retain effective control of the Company through holding approximately 97% of the
combined voting power of the outstanding Common Stock and the ability to elect
nine of the thirteen members of the Board.

Directors may be removed with or without cause by holders of the class of
stock that elected them or with cause by the Board of Directors. A vacancy on
the Board created by the removal or resignation of a Director or by the
expansion of the authorized number of Directors may be filled by the remaining
Directors then in office.

The holders of Class A Common Stock and Class B Common Stock are entitled
to vote as separate classes on any modifications to the rights of either class
of stock and as otherwise required by law.

Dividends

Shares of Class A and Class B Common Stock are entitled to receive
dividends if, as and when declared by the Board of Directors of the Company.
Dividends must be paid on both the Class A Common Stock and the Class B Common
Stock at any time that dividends are paid on either. Any dividend so declared
and payable in cash, capital stock of the Company (other than Class A Common
Stock or Class B Common Stock) or other property will be paid equally, share for
share, on the Class B Common Stock and Class A Common Stock. Dividends and
distributions payable in shares of Class B Common Stock may be paid only on
shares of Class B Common Stock, and dividends and distributions payable in
shares of Class A Common Stock may be paid only on shares of Class A Common
Stock. Pursuant to any such dividend or distribution, each share of Class B
Common Stock will receive a number of shares of Class B Common Stock equal to
the number of shares of Class A Common Stock payable on each share of Class A
Common Stock.

In the event of the liquidation, dissolution or winding up of the Company,
holders of the shares of Class A Common Stock and Class B Common Stock are
entitled to share equally, share for share, in the assets available for
distribution.

AGREEMENT AMONG CLASS B STOCKHOLDERS

The owners of all outstanding shares of Class B Common Stock of the Company
have entered into an agreement to continue until the year 2047, in which they
have agreed, for themselves, their successors and assigns that, subject to
certain exceptions, no one of them may make any transfer of any shares of Class
B Common Stock (unless such shares are, as generally permitted by the agreement,
first converted into Class A Common Stock) except to one or more "Permitted
Transferees." For purposes of the agreement, a Permitted Transferee is any
current holder of Class B Common Stock of the Company; any lineal descendant of
Charles Kenny McClatchy (1858-1936), founder of the predecessor of the Company;
or a trust for the exclusive benefit of, or in which all of the remainder
beneficial interests are owned by, one or more of such lineal descendants.

In the event that a party to the agreement attempts to transfer any shares
of Class B Common Stock or any interest therein in violation of the agreement,
or upon the happening of certain other events enumerated in the agreement as
"Option Events," the remaining parties will acquire options to purchase the
Class B Common Stock of the party attempting to transfer the same or otherwise
affected by the

24
<PAGE> 26

particular Option Event. Such options to purchase will entitle each remaining
party to purchase that number of shares of Class B Common Stock which is
proportionate to that party's respective holdings of Class B Common Stock prior
to such purchase. If all such shares are not purchased proportionately, those
holders who do exercise options will have an opportunity to purchase the
remainder, again in a proportional manner. If less than all shares are
purchased, the Company will have the option to purchase the remaining shares. In
general, any shares not so purchased pursuant to this procedure may thereafter
be converted into shares of Class A Common Stock and then transferred freely
(unless following such conversion the outstanding shares of Class B Common Stock
would constitute less than 25% of the total number of all outstanding shares of
Common Stock of the Company).

The intent of the foregoing agreement is to preserve family control of the
Company. Such agreement may be terminated by the vote of the holders of 80% of
the outstanding shares of Class B Common Stock who are subject to such
agreement.

25
<PAGE> 27

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as
representatives, has severally agreed to purchase from the Company and the
Selling Stockholders, the respective number of shares of Class A Common Stock
set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CLASS A
UNDERWRITER COMMON STOCK
------------------------------------------------------------ ----------------
<S> <C>
Goldman, Sachs & Co.........................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................
----------------
Total............................................. 1,355,000
----------------
----------------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the shares offered hereby, if
any are taken.

The Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $ per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to certain
brokers and dealers. After the shares of Class A Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30
calendar days after the date of this Prospectus to purchase up to an aggregate
of 203,250 additional shares of Class A Common Stock to cover over-allotments,
if any. If the Underwriters exercise their over-allotment option, the
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
1,355,000 shares of Class A Common Stock offered hereby. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of the 1,355,000 shares of Class A Common Stock offered hereby.

The Company, the Selling Stockholders and officers and directors of the
Company who, after the offering, will hold in the aggregate approximately
4,548,782 shares of Class A and Class B Common Stock (including 191,100 shares
subject to currently exercisable stock options), have agreed not to offer, sell
or otherwise dispose of any shares of capital stock of the Company for a period
of 120 days after the date of this Prospectus without the prior written consent
of the representatives of the Underwriters, except that the Company may, without
such consent, grant options or issue shares of Class A Common Stock under its
stock option plans and employee stock purchase plan. Certain other holders of
18,284,990 shares of Class B Common Stock have agreed not to offer, sell or
otherwise dispose of any shares of capital stock of the Company for a period of
90 days after the date of this Prospectus without the prior written consent of
the representatives of the Underwriters.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

LEGAL MATTERS

The legality of the issuance of the shares of Class A Common Stock offered
hereby is being passed upon for the Company and the Selling Stockholders by
Pillsbury Madison & Sutro, San Francisco and Menlo Park, California. Certain
legal matters in connection with the Class A Common Stock offered hereby are
being passed upon for the Underwriters by Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation, Palo Alto, California.

26
<PAGE> 28

EXPERTS

The Consolidated Financial Statements of the Company as of December 31,
1993 and 1992 and for each of the three years in the period ended December 31,
1993 included and incorporated by reference in this Prospectus and the related
financial statement schedules incorporated by reference in this Prospectus have
been audited by Deloitte & Touche, independent auditors, as stated in their
reports appearing and incorporated by reference herein and have been so included
and incorporated by reference in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.

27
<PAGE> 29

MCCLATCHY NEWSPAPERS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Deloitte & Touche, Independent Auditors.................................... F-2
Consolidated Balance Sheet........................................................... F-3
Consolidated Statement of Income..................................................... F-5
Consolidated Statements of Cash Flows................................................ F-6
Consolidated Statements of Stockholders' Equity...................................... F-7
Notes to Consolidated Financial Statements........................................... F-8
</TABLE>

F-1
<PAGE> 30

INDEPENDENT AUDITOR'S REPORT

McClatchy Newspapers, Inc.:

We have audited the accompanying consolidated balance sheets of McClatchy
Newspapers, Inc. and its subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of income, cash flows and stockholders' equity
for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of McClatchy Newspapers, Inc. and
its subsidiaries at December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.

As discussed in note 2 to the consolidated financial statements, in 1992
the Company changed its method of accounting for income taxes to conform to
Statement of Financial Accounting Standards (SFAS) No. 109 and changed its
method of accounting for postretirement health care and life insurance benefits
to conform to SFAS No. 106.

DELOITTE & TOUCHE
Sacramento, California
February 1, 1994

F-2
<PAGE> 31

MCCLATCHY NEWSPAPERS, INC.

CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 42,326 $ 8,658
Trade receivables (less allowances of $1,757 in 1993 and
$2,100 in 1992).............................................. 47,859 46,862
Other receivables............................................. 1,456 1,108
Newsprint, ink and other inventories.......................... 10,033 10,130
Deferred income taxes......................................... 9,672 8,143
Other current assets.......................................... 1,843 2,512
--------- ---------
TOTAL CURRENT ASSETS..................................... 113,189 77,413
PROPERTY, PLANT AND EQUIPMENT:
Land.......................................................... 18,057 17,670
Buildings and improvements.................................... 120,753 119,111
Equipment..................................................... 282,082 265,662
Construction in progress...................................... 15,893 7,977
--------- ---------
Total.................................................... 436,785 410,420
Accumulated depreciation........................................... (166,460) (149,272)
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT.................................. 270,325 261,148
INTANGIBLES -- NET................................................. 124,662 133,977
INVESTMENT IN NEWSPRINT MILL PARTNERSHIP........................... 3,977 5,437
OTHER ASSETS....................................................... 13,010 13,176
--------- ---------
TOTAL ASSETS............................................. $ 525,163 $ 491,151
--------- ---------
--------- ---------
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 32

MCCLATCHY NEWSPAPERS, INC.

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable................................................ $ 14,043 $ 10,474
Accrued compensation............................................ 26,324 22,902
Income taxes.................................................... 1,117 30
Unearned revenue................................................ 10,560 9,833
Carrier deposits................................................ 3,055 3,006
Other accrued liabilities....................................... 8,281 7,352
-------- --------
TOTAL CURRENT LIABILITIES.................................. 63,380 53,597
LONG-TERM OBLIGATIONS................................................ 14,213 23,901
DEFERRED INCOME TAXES................................................ 64,047 55,354
COMMITMENTS AND CONTINGENCIES (NOTE 9)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value:
Class A -- authorized 50,000,000 shares, issued 5,100,450 in
1993 and 4,585,370 in 1992................................... 51 46
Class B -- authorized 30,000,000 shares, issued 24,503,789 in
1993 and 24,946,789 in 1992.................................. 238 242
Additional paid-in capital...................................... 39,472 38,272
Retained earnings............................................... 344,133 320,110
Treasury stock, 20,000 Class A shares, and 750,000 Class B...... (371) (371)
-------- --------
TOTAL STOCKHOLDERS' EQUITY................................. 383,523 358,299
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $525,163 $491,151
-------- --------
-------- --------
</TABLE>

F-4
<PAGE> 33

MCCLATCHY NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
REVENUES -- NET:
Advertising........................................ $350,046 $345,574 $337,372
Circulation........................................ 83,729 80,318 74,770
Other.............................................. 15,340 14,355 14,686
-------- -------- --------
TOTAL......................................... 449,115 440,247 426,828
-------- -------- --------
OPERATING EXPENSES:
Compensation....................................... 199,743 199,295 188,791
Newsprint and supplements.......................... 60,639 59,501 74,562
Depreciation and amortization...................... 35,583 33,560 29,929
Other operating expenses........................... 88,046 85,968 84,339
-------- -------- --------
TOTAL......................................... 384,011 378,324 377,621
-------- -------- --------
OPERATING INCOME........................................ 65,104 61,923 49,207
NONOPERATING EXPENSES (INCOME):
Interest expense................................... 118 920 1,157
Partnership losses................................. 6,171 6,674 4,193
Other -- net....................................... (101) 71 1,690
-------- -------- --------
TOTAL......................................... 6,188 7,665 7,040
-------- -------- --------
INCOME BEFORE INCOME TAX PROVISION AND CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES......................... 58,916 54,258 42,167
Income tax provision.................................... 27,118 24,087 18,438
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES.. 31,798 30,171 23,729
Cumulative effects of accounting changes................ -- (341) --
-------- -------- --------
NET INCOME.............................................. $ 31,798 $ 29,830 $ 23,729
-------- -------- --------
-------- -------- --------
EARNINGS PER COMMON SHARE:
Income before cumulative effects of accounting
changes.......................................... $ 1.10 $ 1.05 $ .83
Cumulative effects of accounting changes........... -- (.01) --
-------- -------- --------
NET INCOME PER COMMON SHARE........................ $ 1.10 $ 1.04 $ .83
-------- -------- --------
-------- -------- --------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES................ 28,879 28,754 28,664
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 34

MCCLATCHY NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income............................................ $ 31,798 $ 29,830 $ 23,729
Reconciliation to net cash provided:
Depreciation and amortization...................... 35,778 33,751 30,180
Deferred income taxes.............................. 7,164 5,940 5,819
Partnership losses................................. 6,171 6,674 4,193
Cumulative effect of changes in accounting:
Postretirement benefit........................ -- 4,627 --
Income taxes.................................. -- (4,286) --
Changes in certain current assets and
liabilities -- net............................... 9,204 4,365 (1,938)
Other.............................................. 599 (4,923) (208)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES............... 90,714 75,978 61,775
CASH PROVIDED (USED) BY INVESTING ACTIVITIES:
Purchase of property, plant and equipment............. (35,851) (29,476) (41,574)
Investment in newsprint mill partnership.............. (4,711) (3,780) (3,882)
Acquisition of newspaper operations................... -- (3,755) (47)
Other -- net.......................................... 188 (4,486) 617
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES................... (40,374) (41,497) (44,886)
CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
Repayment of long-term debt........................... (10,072) (25,092) (15,792)
Payment of cash dividends............................. (7,775) (6,182) (5,736)
Other................................................. 1,175 1,249 1,193
-------- -------- --------
NET CASH USED BY FINANCING ACTIVITIES................... (16,672) (30,025) (20,335)
-------- -------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS................. 33,668 4,456 (3,446)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............ 8,658 4,202 7,648
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR.................. $ 42,326 $ 8,658 $ 4,202
-------- -------- --------
-------- -------- --------
OTHER CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized).................. $ 118 $ 1,086 $ 1,225
Income taxes (net of refunds)......................... 18,448 20,625 13,587
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 35

MCCLATCHY NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PAR VALUE ADDITIONAL TREASURY
----------------- PAID-IN RETAINED STOCK
CLASS A CLASS B CAPITAL EARNINGS AT COST TOTAL
------- ------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1990.............. $44 $ 243 $ 35,801 $ 278,469 $(371) $314,186
Net income............................... 23,729 23,729
Dividends paid ($.20 per share).......... (5,736) (5,736)
Conversion of 22,000 Class B shares to
Class A................................ -- --
Issuance of 80,408 Class A shares under
employee stock plans................... 1 1,192 1,193
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1991.............. 45 243 36,993 296,462 (371) 333,372
Net income............................... 29,830 29,830
Dividends paid ($.215 per share)......... (6,182) (6,182)
Conversion of 26,000 Class B shares to
Class A................................ 1 (1)
Issuance of 78,391 Class A shares under
employee stock plans................... 1,279 1,279
Receipt of 750,000 Class B treasury
shares from trust...................... -- --
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1992.............. 46 242 38,272 320,110 (371) 358,299
Net income............................... 31,798 31,798
Dividends paid ($.27 per share).......... (7,775) (7,775)
Conversion of 443,000 Class B shares to
Class A................................ 4 (4)
Issuance of 72,080 Class A shares under
employee stock plans................... 1 1,200 1,201
------- ------- ---------- --------- --------- --------
BALANCES, DECEMBER 31, 1993.............. $51 $ 238 $ 39,472 $ 344,133 $(371) $383,523
------- ------- ---------- --------- --------- --------
------- ------- ---------- --------- --------- --------
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 36

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

McClatchy Newspapers, Inc. and its subsidiaries (the "Company") are engaged
primarily in the publication of newspapers.

The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany items and transactions have been
eliminated.

Revenue recognition -- Advertising revenues are recorded when the
advertisement is placed in the newspaper and circulation revenues are recorded
as newspapers are delivered over the subscription term. Unearned revenues
represent prepaid circulation subscriptions.

Cash equivalents are highly liquid investments with maturities of three
months or less when acquired.

Concentrations of credit risks -- Financial instruments which potentially
subject the Company to concentrations of credit risks are principally cash and
cash equivalents and trade accounts receivables. Cash and cash equivalents are
placed with various high-credit-quality institutions and are currently invested
in the highest rated commercial paper and government securities. Accounts
receivable are with customers located primarily in the immediate area of each
city of publication. The Company routinely assesses the financial strength of
significant customers and this assessment, combined with the large number and
geographic diversity of its customers, limits the Company's concentration of
risk with respect to trade accounts receivable.

Inventories are stated at the lower of cost (based principally on the
last-in, first-out method) or current market value. If the first-in, first-out
method of inventory accounting had been used, inventories would have increased
by $1,460,000 at December 31, 1993 and $1,124,000 at December 31, 1992.

Property, plant and equipment are stated at cost. Major renewals and
betterments, as well as interest incurred during construction, are capitalized.
Such interest aggregated $5,000 in 1993, $376,000 in 1992 and $2,715,000 in
1991.

Depreciation is computed generally on a straight-line basis over estimated
useful lives of:

- 10 to 60 years for buildings

- 9 to 20 years for presses

- 3 to 10 years for other equipment

Intangibles consist of the unamortized excess of the cost of acquiring
newspaper operations over the fair market values of the newspapers' tangible
assets at the date of purchase. Identifiable intangible assets, consisting
primarily of lists of advertisers and subscribers, covenants not to compete and
commercial printing contracts, are amortized over periods ranging from three to
twenty-five years. The excess of purchase prices over identifiable assets is
amortized over forty years. Management periodically evaluates the recoverability
of intangible assets by reviewing the current and projected profitability of its
newspaper operations.

Deferred income taxes result from temporary differences between amounts
reported for financial and income tax reporting purposes. See note 2.

Earnings per share are based upon the weighted average number of
outstanding shares of common stock and common stock equivalents (stock
options -- see note 10). Prior to 1992 shares issued excluded 750,000 Class B
shares which were held in a trust in which the Company had a vested income and
remainder interest. Upon the dissolution of the trust in 1992 the shares were
returned to the Company and included in treasury stock at no cost. These shares
have been excluded from weighted average shares outstanding for all periods.

F-8
<PAGE> 37

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. CUMULATIVE EFFECTS OF ACCOUNTING CHANGES

Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
Under SFAS 109, deferred income tax assets and liabilities reflect the future
tax consequences, based on enacted tax laws, of temporary differences between
financial and tax reporting existing at the balance sheet date. The actual
effects of tax law changes are recognized when enacted. Prior to SFAS 109,
deferred income taxes were determined using tax rates in effect when differences
relating to revenues and expenses arose between financial and tax reporting. The
cumulative effect of this change reduced deferred tax liabilities and increased
1992 net income by $4,286,000 or $.15 per share. This change had no significant
effect on the income tax provision for 1992, and when considered with the other
change described below, did not have a material impact on net earnings in 1992.

The Company also adopted the provisions of SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions" effective January 1,
1992. The Statement requires the accrual of postretirement health care and life
insurance benefits over employees' service periods rather than expensing these
costs on a pay-as-you-go basis. The cumulative effect of this change increased
long-term obligations by $7,592,000, decreased deferred income tax liabilities
by $2,965,000 and reduced 1992 net income by $4,627,000 or $.16 per share.

3. INVESTMENT IN NEWSPRINT MILL PARTNERSHIP

A wholly-owned subsidiary of the Company owns a 13.5% interest in Ponderay
Newsprint Company ("Ponderay"), a general partnership formed to construct and
operate a newsprint mill in the State of Washington. The Company guarantees
$16,875,000 of bank debt provided by a consortium of 11 foreign and domestic
banks to construct the mill.

At December 31, 1993, Ponderay borrowings bore interest at rates averaging
7.27%. The debt is due in quarterly installments through March 1, 2001 and is
collateralized by the assets of Ponderay. The debt is subject to certain
restrictive covenants regarding contractual obligations of Ponderay and its
partners. The Company has committed to take 28,400 metric tons of annual
production on a "take-if-tendered" basis until the debt is repaid. The Company
purchased $12,079,000, $12,700,000 and $16,526,000 of newsprint from Ponderay in
1993, 1992 and 1991, respectively.

Summarized financial data for the years ended December 31, 1993, 1992 and
1991 for Ponderay's operations are as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
FINANCIAL POSITION:
Current assets............................... $ 19,624 $ 18,361 $ 19,249
Property, plant and equipment................ 304,315 321,065 336,343
Other assets................................. 5,690 10,075 15,326
--------- --------- ---------
TOTAL ASSETS......................... $ 329,629 $ 349,501 $ 370,918
--------- --------- ---------
--------- --------- ---------
Current liabilities.......................... $ 33,761 $ 27,516 $ 17,416
Long-term liabilities........................ 267,331 282,636 292,717
Partners' capital............................ 28,537 39,349 60,785
--------- --------- ---------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL............................ $ 329,629 $ 349,501 $ 370,918
--------- --------- ---------
--------- --------- ---------
RESULTS OF OPERATIONS:
Revenues.................................. $ 94,375 $ 89,807 $ 112,295
Net loss.................................. 45,713 49,435 31,058
</TABLE>

F-9
<PAGE> 38

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM OBLIGATIONS

Long-term obligations consist of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
-------- --------
<S> <C> <C>
Long-term debt:
Bank credit agreement............................... $ 10,000
Other debt.......................................... $ 60 164
-------- --------
Total............................................... 60 10,164
Less current portion................................ 60 92
-------- --------
Total long-term debt................................ -- 10,072
Postretirement benefits obligation.................... 9,142 8,808
Other long-term obligations........................... 5,071 5,021
-------- --------
Total long-term obligations........................... $ 14,213 $ 23,901
-------- --------
-------- --------
</TABLE>

Long-term obligations mature as follows (in thousands):

<TABLE>
<S> <C>
1995.............................. $ 1,068
1996.............................. 1,004
1997.............................. 636
1998.............................. 406
Thereafter........................ 11,099
--------
Total............................. $ 14,213
--------
--------
</TABLE>

The Company's cash reserves and expected cash flows are sufficient for its
near term needs. Accordingly, the Company terminated its bank credit agreement
at the end of 1993. The Company has an outstanding letter of credit for
$5,860,000.

Other long-term obligations consist primarily of deferred compensation and
supplemental retirement benefits.

5. INCOME TAX PROVISIONS

On January 1, 1992 the Company adopted SFAS 109. The impact of this change
is discussed in note 2.

Income tax provisions consist of (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current:
Federal........................................... $16,212 $14,692 $11,168
State............................................. 3,742 3,455 1,451
Deferred:
Federal........................................... 6,663 5,963 5,552
State............................................. 501 (23) 267
------- ------- -------
Income tax provision................................ $27,118 $24,087 $18,438
------- ------- -------
------- ------- -------
</TABLE>

F-10
<PAGE> 39

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deferred income tax provisions result from (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
Depreciation and amortization........................ $ 5,441 $ 3,982 $2,613
Newsprint mill partnership........................... 2,445 2,191 2,183
Deductible deposits.................................. -- 2,205 --
State taxes.......................................... (10) (295) 696
Deferred compensation................................ (1,617) (1,979) (719)
Other................................................ 905 (164) 1,046
------- ------- ------
Total................................................ $ 7,164 $ 5,940 $5,819
------- ------- ------
------- ------- ------
</TABLE>

The effective tax rate and the statutory federal income tax rate are
reconciled as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory rate......................................... 35% 34% 34%
State taxes, net of federal benefit.................... 5 4 3
Amortization of intangibles............................ 4 4 5
Impact of retroactive tax rate adjustments............. 1 -- --
Other.................................................. 1 2 2
---- ---- ----
Effective rate......................................... 46% 44% 44%
---- ---- ----
---- ---- ----
</TABLE>

On August 2, 1993 new federal tax legislation was enacted which, among
other things, increased the federal corporate tax rate to 35% from 34%,
retroactive to January 1, 1993. The liability method of accounting for taxes
requires that the effect of this rate increase on current and cumulative
deferred taxes be reflected in the period in which the law was enacted.
Accordingly, the Company recorded an adjustment of $1,088,000 in the third
quarter. Of this amount, $239,000 related to higher taxes on earnings through
June 30, 1993 and $849,000 was required to revalue deferred taxes at January 1,
1993.

The components of deferred tax liabilities (benefits) recorded in the
Company's Consolidated Balance Sheet on December 31, 1993 and 1992 are (in
thousands):

<TABLE>
<CAPTION>
1993 1992
-------- -------
<S> <C> <C>
Depreciation and amortization......................... $ 45,517 $40,076
Partnership losses.................................... 10,971 8,526
Deductible deposits................................... 3,954 3,954
State taxes........................................... 1,689 1,699
Deferred compensation................................. (11,321) (9,704)
Other................................................. 3,565 2,660
-------- -------
Deferred tax liability (net of $9,672 in 1993 and
$8,143 in 1992 reported as current assets).......... $ 54,375 $47,211
-------- -------
-------- -------
</TABLE>

The tax asset above for deferred compensation includes $2,965,000 in 1992
which was allocated to the cumulative effect of adopting a change in the method
of accounting for postretirement benefits as discussed in note 2.

See note 9 for a discussion of tax assessments.

F-11
<PAGE> 40
MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INTANGIBLES

Intangibles consist of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
Identifiable intangible assets, primarily customer
lists.............................................. $132,881 $133,403
Excess purchase prices over identifiable assets...... 64,560 64,560
-------- --------
Total................................................ 197,441 197,963
Less accumulated amortization........................ 72,779 63,986
-------- --------
Intangibles -- net................................... $124,662 $133,977
-------- --------
-------- --------
</TABLE>

7. EMPLOYEE BENEFITS

Early retirement charge:

In September 1992, the Sacramento and Modesto Bees made available an early
retirement program to certain employees. The program ended in October 1992 with
66 employees accepting early retirement. Accordingly, the Company recorded a
pretax charge of $2,593,000 in the fourth quarter of 1992.

Retirement plans:

The Company has a defined benefit pension plan (the "retirement plan") for
a majority of its employees. Benefits are based on years of service and
compensation. Contributions to the plan are made by the Company in amounts
deemed necessary to provide benefits. Plan assets consist primarily of
investments in marketable securities including common stocks, bonds and U.S.
government obligations, and other interest bearing accounts.

The Company also has a supplemental retirement plan to provide key
employees with additional retirement benefits. The terms of the plan are
generally the same as those of the retirement plan, except that the supplemental
retirement plan is limited to key employees and benefits under it are reduced by
benefits received under the retirement plan. The accrued pension obligation for
the supplemental retirement plan is included in other long-term obligations.

The elements of pension costs are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Cost of benefits earned during the year............. $ 5,393 $ 5,282 $ 5,123
Interest on projected benefit obligation............ 6,447 5,922 6,788
Return on plan assets -- (gain)..................... (10,231) (7,253) (13,135)
Deferred gain -- return on plan assets greater than
assumed........................................... 3,787 1,098 5,637
Net amortization and other deferrals................ 2 (384) (521)
------- ------- -------
Net pension cost.................................... $ 5,398 $ 4,665 $ 3,892
------- ------- -------
------- ------- -------
</TABLE>

Assumptions used for accounting for defined benefit plans were:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Discount rate in determining benefit
obligation............................... 7.3% 8.5% 8.5%
Expected long-term rate of return on
assets................................... 8.5% 9.0% 9.0%
Rates of compensation increase............. 4.5%-5.5% 5.5%-6.0% 5.5%-6.0%
</TABLE>

F-12
<PAGE> 41

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The plans' funded status and amounts recognized in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992 are as follows (in
thousands):

<TABLE>
<CAPTION>
1993 1992
-------------------------- --------------------------
SUPPLEMENTAL SUPPLEMENTAL
RETIREMENT RETIREMENT RETIREMENT RETIREMENT
PLAN PLAN PLAN PLAN
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.................. $ 67,081 $ 2,834 $ 51,629 $ 2,688
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Accumulated benefit obligation............. $ 72,609 $ 2,834 $ 55,757 $ 2,688
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Plan assets at fair value.................... $ 89,219 $ 79,540
Projected benefit obligation................. (94,378) $ (3,780) (78,684) $ (3,461)
---------- ------------ ---------- ------------
Projected benefit (over) under plan assets... (5,159) (3,780) 856 (3,461)
Unrecognized net (gains) losses.............. 982 (427) (2,043) (576)
Unrecognized prior service cost.............. 3,274 1,628 3,667 1,790
Unrecognized net pension transition asset,
amortized over 15 years.................... (4,378) -- (4,925) --
Adjustment required to recognize minimum
liability.................................. -- (255) -- (441)
---------- ------------ ---------- ------------
Accrued pension obligation................... $ (5,281) $ (2,834) $ (2,445) $ (2,688)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>

In 1992, the Company settled pension obligations for future benefits due to
employees who retired prior to January 1, 1989 by converting pension assets
totalling approximately $22,300,000 to purchased annuities. The Company
recognized a pretax gain of $794,000 on the settlement of these obligations.

The Company has a Deferred Compensation and Investment Plan ("401(k) plan")
which enables qualified employees to voluntarily defer compensation. Company
contributions to the 401(k) plan were $3,751,000 in 1993, $3,455,000 in 1992 and
$2,987,000 in 1991.

POSTRETIREMENT BENEFITS:

The Company also provides or subsidizes certain retiree health care and
life insurance benefits. On January 1, 1992 the Company began accruing the cost
of these benefits over employee's service periods instead of recording them on a
pay-as-you-go basis. The impact of this change is discussed in note 2.

The elements of postretirement expenses are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1993 1992
----- -------
<S> <C> <C>
Service costs............................................. $ 230 $ 233
Interest costs............................................ 649 645
Transition obligation..................................... -- 7,592
----- -------
Total postretirement benefits costs....................... $ 879 $ 8,470
----- -------
----- -------
</TABLE>

F-13
<PAGE> 42

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Assumptions used for accounting for postretirement benefits were:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
----------- -----
<S> <C> <C>
Discount rate in determining benefit obligation.... 7.3% 8.5%
Medical care cost trend rate....................... 9.5%-13.25% 14.0%
</TABLE>

The plan's funded status and amounts recognized in the Company's
Consolidated Balance Sheet at December 31, 1993 and 1992 are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1992
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees................................................. $ 5,250 $ 5,525
Active eligible employees................................ 789 721
Active ineligible employees.............................. 3,343 2,721
------- -------
Total APBO............................................... 9,382 8,967
Unrecognized gain........................................ (80) --
------- -------
Net postretirement benefit liability..................... $ 9,302 $ 8,967
------- -------
------- -------
</TABLE>

The medical care cost trend rates are expected to decline to about 5.8% by
the year 2003. A 1.0% increase in the assumed health care cost trend rate would
have increased the APBO by 3.0%, the annual service cost by 13.0% and the annual
interest cost by 4.0%.

8. CASH FLOW INFORMATION

Cash provided or used by operations was affected by changes in certain
current assets and liabilities, net of the effects of acquired newspaper
operations, as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
Increase (decrease) in assets:
Receivables.................................... $ 1,345 $ (142) $ 290
Inventories.................................... (97) 1,221 (627)
Other current assets........................... (669) (1,795) 2,714
------- -------- --------
Total..................................... 579 (716) 2,377
Increase (decrease) in liabilities:
Accounts payable............................... 3,569 2,103 (4,844)
Accrued compensation........................... 3,422 1,109 594
Income taxes................................... 1,087 (2,112) 1,455
Other current liabilities...................... 1,705 2,549 3,234
------- -------- --------
Total..................................... 9,783 3,649 439
------- -------- --------
Net cash increase (decrease) from changes in
current assets and liabilities.................... $ 9,204 $ 4,365 $ (1,938)
------- -------- --------
------- -------- --------
</TABLE>

F-14
<PAGE> 43

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

See note 3 for a discussion of the Company's commitments to Ponderay
Newsprint Company.

The Company and its subsidiaries rent certain facilities and equipment
under operating leases expiring at various dates through December 31, 1999.
Total rental expense amounted to $1,618,000 in 1993, $1,596,000 in 1992 and
$1,649,000 in 1991. Minimum rental commitments under operating leases with
noncancelable terms in excess of one year are (in thousands):

<TABLE>
<S> <C>
1994............................... $ 1,869
1995............................... 1,460
1996............................... 1,128
1997............................... 865
1998............................... 617
Thereafter......................... 207
-------
Total.............................. $ 6,146
-------
-------
</TABLE>

State and federal taxing authorities have audited the Company's tax returns
for 1982-1987, and have made assessments or proposed adjustments primarily
related to the deduction of certain intangible assets and deductions related to
discontinued and other non-newspaper operations. The total amount of the
proposed adjustments, including interest thereon, is approximately $25,000,000
at December 31, 1993. The Company is protesting the adjustments through the
appropriate authorities. While this process is expected to extend over several
years and additional assessments for like issues are expected to be forthcoming,
the Company believes these adjustments will be reduced in the appeals processes.
Pending final resolution of these matters, the Company has deposited, with the
applicable tax authorities, a total of $12,592,000 to stop interest accrual on a
portion of the adjustments and included this amount in other assets at December
31, 1993. In the opinion of management, adequate provision has been made for any
taxes and interest resulting from these assessments and the ultimate outcome of
these matters will not have a material adverse effect on the Company's
consolidated results of operation or financial position.

There are libel and other legal actions that have arisen in the ordinary
course of business and are pending against the Company. Management believes,
after reviewing such actions with counsel, that the outcome of pending actions
will not have a material adverse effect on the Company's consolidated results of
operations or financial position.

10. COMMON STOCK AND STOCK PLANS

The Company's Class A and Class B common stock participate equally in
dividends. Holders of Class B common stock are entitled to one vote per share
and to elect as a class 75% of the Board of Directors, rounded down to the
nearest whole number. Holders of Class A common stock are entitled to one-tenth
of a vote per share and to elect as a class 25% of the Board of Directors,
rounded up to the nearest whole number. Class B common stock is convertible at
the option of the holder into Class A common stock on a share-for-share basis.

Prior to 1992, shares issued excluded 750,000 Class B shares which were
held in a trust in which the Company had a vested income and remainder interest.
Upon dissolution of the trust in 1992, the shares were returned to the Company
and included in treasury stock.

The Company's Amended Employee Stock Purchase Plan (the "Purchase Plan")
reserved 1,500,000 shares of Class A common stock for issuance to employees.
Eligible employees may purchase shares at 85% of "fair market value" (as
defined) through payroll deductions. The Purchase Plan can be

F-15
<PAGE> 44

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

automatically terminated by the Company at any time. As of December 31, 1993,
385,518 shares of Class A common stock have been issued under the Purchase Plan.

The Company's 1987 Stock Option Plan (the "Employee Plan"), as amended,
reserved 600,000 shares of Class A common stock for issuance to key employees.
Options are granted at the market price of the Class A common stock on the date
of the grant. The options vest in installments over four years, and once vested
are exercisable up to ten years from the date of award. Although the Plan
permits the Company, at its sole discretion, to settle unexercised options by
granting stock appreciation rights (SARS), the Company does not intend to avail
itself of this alternative except in limited circumstances.

In July 1990, the Company adopted a stock option plan for outside
(nonemployee) directors (the "Directors' Plan") providing for the issuance of up
to 150,000 shares of Class A Common Stock. Under the Directors' Plan each
outside director is granted an option at fair market value at the conclusion of
each regular annual meeting of stockholders for 1,500 shares. Terms of the
Directors' Plan are similar to the terms of the Employee Plan. Outstanding
options are summarized as follows:

<TABLE>
<CAPTION>
EMPLOYEE PLAN DIRECTORS' PLAN
-------------------- -------------------
AVERAGE AVERAGE
OPTIONS PRICE OPTIONS PRICE
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1990...................... 284,800 $17.43 10,500 $18.25
Granted............................................. 110,400 15.88 10,500 21.50
-------- -------
Outstanding, December 31, 1991...................... 395,200 16.99 21,000 19.88
Granted............................................. 108,600 19.50 10,500 20.75
Exercised........................................... (1,025) 16.00 -- --
Surrendered for SARS................................ (23,500) 15.66 -- --
Forfeited........................................... (9,975) 22.66 -- --
-------- -------
Outstanding, December 31, 1992...................... 469,300 17.52 31,500 20.17
Granted............................................. -- -- 10,500 22.38
Exercised........................................... (4,425) 15.26 -- --
Forfeited........................................... (3,575) 17.78 -- --
-------- -------
Outstanding, December 31, 1993...................... 461,300 17.54 42,000 20.72
-------- -------
-------- -------
</TABLE>

In the Employee Plan, there are 220,925 options exercisable as of December
31, 1993. In January 1994, the Company granted 104,500 options to employees
using substantially all shares reserved in the plan. In the Directors' Plan
15,750 shares were exercisable at December 31, 1993 and 108,000 available for
future awards.

On January 26, 1994 the Board of Directors adopted the 1994 Employee Stock
Option Plan, subject to stockholder approval, reserving 650,000 Class A shares
for issuance to key employees. The terms of this plan are substantially the same
as the terms of the Employee Plan and no shares have been granted under the new
plan.

F-16
<PAGE> 45

MCCLATCHY NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The Company's business is somewhat seasonal, with peak revenues and profits
generally occurring in the second and fourth quarters of each year as a result
of increased advertising activity during the spring holiday and Christmas
periods. The first quarter is historically the weakest quarter for revenues and
profits. The Company's quarterly results are summarized as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1993:
Revenues -- net............................. $ 105,282 $ 113,458 $ 111,282 $ 119,093
Operating income............................ 10,546 16,962 16,396 21,200
Net income.................................. 4,768 8,514 7,341 11,175
Net income per common share................. .17 .30 .25 .39
1992:
Revenues -- net............................. $ 101,292 $ 111,169 $ 110,503 $ 117,283
Operating income............................ 9,881 16,246 16,856 18,940
Income before cumulative effects of
accounting changes........................ 4,488 7,831 8,699 9,153
Net income.................................. 4,147 7,831 8,699 9,153
Income per common share before cumulative
effects of accounting changes............. .15 .27 .30 .32
Net income per common share................. .14 .27 .30 .32
1991:
Revenues -- net............................. $ 99,469 $ 109,399 $ 106,451 $ 111,507
Operating income............................ 6,525 13,999 12,904 15,779
Net income.................................. 2,974 6,263 6,563 7,929
Net income per common share................. .10 .22 .23 .28
</TABLE>

See notes 5 and 7 for discussions of charges recorded in the third quarter
of 1993 and fourth quarter of 1992 for tax and early retirement expenses,
respectively.

F-17
<PAGE> 46

- ------------------------------------------------------
- ------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Prospectus Summary................... 3
Use of Proceeds...................... 5
Class A Common Stock Price Range,
Volume and Dividends............... 5
Capitalization....................... 6
Selected Consolidated Financial
Data............................... 7
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 8
Business............................. 11
Management........................... 21
Selling Stockholders................. 23
Description of Capital Stock......... 23
Underwriting......................... 26
Legal Matters........................ 26
Experts.............................. 27
Index to Consolidated Financial
Statements......................... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

1,355,000 SHARES

MCCLATCHY NEWSPAPERS, INC.

CLASS A COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
------------------

PROSPECTUS

------------------
GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO.

REPRESENTATIVES OF THE UNDERWRITERS

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 47

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated except the
Securities and Exchange Commission registration fee and the New York Stock
Exchange fee and the National Association of Securities Dealers, Inc. filing
fee.

<TABLE>
<CAPTION>
PAYABLE BY
REGISTRANT
----------
<S> <C>
SEC registration fee............................................. $ 12,762
NASD filing fee.................................................. 4,192
New York Stock Exchange listing fee.............................. 1,500
Blue sky fees and expenses....................................... 10,000
Accounting fees and expenses..................................... 50,000
Legal fees and expenses.......................................... 100,000
Printing expenses................................................ 25,000
Registrar and transfer agent's fees and expenses................. 5,000
Miscellaneous.................................................... 1,546
----------
Total.................................................. $210,000
----------
----------
</TABLE>

The Company intends to pay all expenses of registration, issuance and
distribution with respect to shares being sold by Selling Stockholders
hereunder, with the exception of underwriting discounts, commissions, stock
transfer taxes and any independent legal fees and expenses.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits the Company's
board of directors to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding in which such person is made a party by
reason of his being or having been a director, officer, employee or agent of the
Company, in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Act"). The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.

Article VII of the Company's Restated Certificate of Incorporation provides
for indemnification of its directors, officers, employees and other agents to
the maximum extent permitted by law. In addition, the Company has entered into
separate indemnification agreements with its directors and officers that will
require the Company, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or
officers to the fullest extent not prohibited by law.

The Underwriting Agreement provides for indemnification by the Underwriters
of the Company, its directors and officers, and by the Company of the
Underwriters, for certain liabilities, including liabilities arising under the
Act, and affords certain rights of contribution with respect thereto.

II-1
<PAGE> 48

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
-------- ------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
5.1* Opinion of Pillsbury Madison & Sutro.
23.1 Consent of Deloitte & Touche.
23.2 Consent of Pillsbury Madison & Sutro (included in Exhibit 5.1).
24.1** Powers of Attorney of certain officers and directors of the Company.
</TABLE>

- ------------

* To be filed by amendment.

** Previously filed.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Company hereby undertakes that for purposes of determining
any liability under the Act:

(1) the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and

(3) each filing of the Company's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-2
<PAGE> 49

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, McClatchy
Newspapers, Inc. certifies that it has reasonable grounds to believe it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sacramento, State of California, on the 21st day
of March, 1994.

McCLATCHY NEWSPAPERS, INC.

By: JAMES B. McCLATCHY*
---------------------------------
James B. McClatchy
Chairman of the Board

*By: /s/ JAMES P. SMITH
---------------------------------
James P. Smith
Attorney-in-Fact

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the 21st day of March, 1994.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICERS:

JAMES B. McCLATCHY* Publisher and Chairman of the Board
-----------------------------
James B. McClatchy

ERWIN POTTS* President, Chief Executive Officer and
----------------------------- Director
Erwin Potts

PRINCIPAL FINANCIAL OFFICER:

/s/ JAMES P. SMITH Vice President, Finance, Treasurer and
----------------------------- Director
James P. Smith

PRINCIPAL ACCOUNTING OFFICER

ROBERT W. BERGER* Controller
-----------------------------
Robert W. Berger

DIRECTORS:

BOOTH GARDNER* Director
-----------------------------
Booth Gardner

WILLIAM K. COBLENTZ* Director
-----------------------------
William K. Coblentz
</TABLE>

II-3
<PAGE> 50

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
WILLIAM L. HONEYSETT* Executive Vice President
------------------------
William L. Honeysett and Director

JOAN F. LANE* Director
------------------------
Joan F. Lane

BETTY LOU MALONEY* Director
------------------------
Betty Lou Maloney

WILLIAM ELLERY McCLATCHY* Director
------------------------
William Ellery McClatchy

S. DONLEY RITCHERY, JR.* Director
------------------------
S. Donley Ritchey, Jr.

WILLIAM M. ROTH* Director
------------------------
William M. Roth

FREDERICK R. RUIZ* Director
------------------------
Frederick R. Ruiz

H. ROGER TATARIAN* Director
-------------------------
H. Roger Tatarian

*By /s/ JAMES P. SMITH
----------------------------------
James P. Smith
Attorney-in-Fact
</TABLE>

II-4

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITOR'S CONSENT

We consent to the use in this Registration Statement of McClatchy
Newspapers, Inc. on Form S-3 of our report dated February 1, 1994, included in
the Annual Report on Form 10-K of McClatchy Newspapers, Inc. for the year ended
December 31, 1993, and to the use of our report dated February 1, 1994,
appearing in the Prospectus, which is part of this Registration Statement. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE
Sacramento, California

March 21, 1994