SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 13, 1997
MCCLATCHY NEWSPAPERS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-9824 940666175
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
2100 "Q" STREET, SACRAMENTO, CA 95816
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(Address of principal executive offices) (Zip Code)
(916) 321-1846
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(Registrant's telephone number,
including area code)
Page 1 of 4
Exhibit Index located at page 4
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Item 5. Other Events.
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McClatchy Newspapers, Inc. (the "Registrant") announced an agreement to
acquire Cowles Media Company, a Delaware corporation ("Cowles"), publisher of
the STAR TRIBUNE, the largest circulating newspaper in the Twin Cities of
Minneapolis/St. Paul, Minnesota, in a press release dated November 14, 1997,
attached hereto as Exhibit 99.1, which is incorporated by reference and made a
part of this Current Report on Form 8-K. Registrant proposes to acquire Cowles,
a newspaper, magazine, and information services company headquartered in
Minneapolis, in a transaction valued at $1.4 billion, including the assumption
of approximately $90 million in existing Cowles debt. The agreement has been
approved by the directors of both companies and the transaction is expected to
close in March 1998, pending regulatory and stockholder approvals.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
99.1 Press Release dated November 14, 1997.
Page 2 of 4
Exhibit Index located at page 4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 13, 1997
McClatchy Newspapers, Inc.
By /s/ Karole Morgan-Prager
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Karole Morgan-Prager
General Counsel and Corporate
Secretary
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Exhibit Index located at page 4
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EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
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99.1 Press Release dated November 14, 1997
Page 4 of 4
Exhibit Index located at page 4
McClatchy Newspapers
Since 1857
Contact: Elaine Lintecum Frank Parisi
McClatchy Newspapers, Inc. Cowles Media Company
(916) 321-1846 (612) 673-7013
MCCLATCHY NEWSPAPERS TO ACQUIRE COWLES MEDIA COMPANY
SACRAMENTO, CA, AND MINNEAPOLIS, MN, NOVEMBER 14, 1997 -- MCCLATCHY
NEWSPAPERS, INC. (NYSE: MNI) AND COWLES MEDIA COMPANY (CMC), announced today an
agreement for McClatchy to acquire Cowles, publisher of the STAR TRIBUNE in the
Twin Cities of Minneapolis/St. Paul, in a transaction valued at $1.4 billion,
including the assumption of approximately $90 million in existing Cowles debt.
The merger creates the eighth-largest newspaper company in the nation based on
daily and Sunday circulation.
"The acquisition of the STAR TRIBUNE is a rare opportunity for
McClatchy to obtain a quality newspaper while adding geographic diversification
in a premier growth market," Gary Pruitt, McClatchy's President and Chief
Executive Officer, said. "The transaction is consistent with our long-standing
strategic vision. The Twin Cities market growth, together with the synergies
created by the merger, will position McClatchy for greater opportunities and
rewards as we look ahead."
David Cox, Cowles President and Chief Executive Officer, said, "Cowles
shareholders couldn't have found a better strategic partner than McClatchy
Newspapers. McClatchy's operating philosophy and commitment to editorial
excellence are consistent with Cowles Media's practices."
Members of the McClatchy and Maloney families, the controlling families
of McClatchy Newspapers, and representatives of trusts created for the benefit
of the family members have signed voting agreements representing approximately
70% of the voting power of McClatchy shareholders in support of the merger. "I
know our Class B shareholders are excited about joining with the Cowles
shareholders in this venture," said Pruitt. "These families share the strategic
vision and embrace the opportunities that this combination will create."
Cowles family members controlled approximately 56 percent of the
Cowles' voting, power also have signed voting agreements in favor of the merger.
2100 Q Street
P.O. Box 15779
Sacramento o CA o 95852
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The STAR TRIBUNE, recognized as one of the top newspapers in the nation
for journalistic integrity and quality, has won a Pulitzer Prize for
investigative reporting, three Robert F. Kennedy awards, and numerous other
national honors. "The STAR TRIBUNE's rich tradition of quality journalism and
exemplary service to its community is a wonderful fit with McClatchy's core
values and culture. McClatchy's strong commitment to local autonomy ensures that
the STAR TRIBUNE 's management will continue to set editorial policy for the
newspaper," Pruitt said.
In an announcement to STAR TRIBUNE employees, Joel Kramer, publisher
and president said, "The Cowles family has been a great owner for the Star
Tribune, and now they have done a great job of passing the torch. McClatchy is
an outstanding newspaper company and I am personally very excited about the
future of the STAR TRIBUNE under this new ownership."
The STAR TRIBUNE is the leading newspaper in Minnesota with circulation
of 387,000 daily and 673,000 on Sunday. It ranks as the 16th largest daily and
the 12th largest Sunday newspaper in the country.
The STAR TRIBUNE's daily circulation is nearly twice that of its
primary competitor in the Twin Cities market, the 15th largest in the country.
On Sunday, its circulation is two and one half times larger than is competitor
and its penetration is the highest among two-paper markets in the United States.
The STAR TRIBUNE's strong name-brand recognition has enabled the
company to leverage its core business into a powerful marketing information
company. It has extended its market share throughout the Twin Cities region
through the introduction of new products and services, including special
interest publications, online services, voice services, non-subscriber products,
direct mail and event sponsorships.
In addition to the STAR TRIBUNE, Cowles operates three other business
units which McClatchy expects to sell as soon as possible, using the proceeds to
reduce debt. The other business units are: Cowles Business Media, Inc., a
publisher of specialized business magazines and information services; Cowles
Enthusiast Media, Inc., a publisher of 27 special-interest consumer magazines
and related books and products, and Cowles Creative Publishing, Inc., a
specialty publisher, distributor and direct marketer of books, videos and
interactive media for the home arts, home improvement and outdoor markets.
From 1993 to 1997 (fiscal year-end March 31) the STAR TRIBUNE's
compound annual growth rate in revenue was 7.6% and its EBITDA growth rate was
9.1%. Based on expected 1998 revenues and EBITDA, and giving effect to divesting
the non-newspaper operations, McClatchy's purchase price represents a multiple
of approximately three times revenue and between 11 and 12 times EBITDA.
Under terms of the agreement, which has been approved by the directors
of both companies, a minimum of 75 percent and a maximum of 85 percent of Cowles
shares will be exchanged for $90.50 per share in cash. The remaining 15 to 25
percent, at the election of the shareholders, may be exchanged for $90.50 in
value of McClatchy Class A common
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shares, subject to a minimum exchange ratio of 2.6882 and a maximum exchange
ratio of 3.01667 shares of McClatchy Class A common for each Cowles share.
One director of Cowles Media Company's current board of directors will
join McClatchy's board, representing Class A shareholders.
The transaction, expected to close by the end of March 1998, pending
regulatory and shareholder approvals, is expected to be accretive to cash
earnings (adding back amortization) by the year 2000. It will be diluting to
McClatchy's GAAP earnings per share due to the amortization of goodwill and
interest costs resulting from the transaction.
The revenues from the combined companies in the calendar year 1997 are
expected to be approximately $1.0 billion (excluding Cowles' non-newspaper
business units). McClatchy will then employ more than 10,000 employees and have
a circulation of approximately 1.36 million daily and more than 1.85 million on
Sunday.
MCCLATCHY NEWSPAPERS, INC., headquartered in Sacramento, California,
currently publishes 10 daily annual and 13 non-daily newspapers located in
western coastal states and North and South Carolina the company reported 1996
revenues of $624 million and had daily circulation of 972,600 and Sunday
circulation of 1,175,100. McClatchy's newspapers include, among others, THE
SACRAMENTO BEE, THE NEWS AND OBSERVER (Raleigh, No), THE FRESNO (CA) BEE, THE
NEWS TRIBUNE (Tacoma, WA) and the ANCHORAGE DAILY NEWS. McClatchy also owns and
operates other media-related businesses, including Nando.net, a national online
publishing operation and The Newspaper Network, a national newspaper marketing
company. McClatchy is listed on the New York Stock Exchange under the symbol
MNI.
COWLES MEDIA COMPANY is a newpaper, magazine and information services
company headquartered in Minneapolis. Its operating units currently include Star
Tribune, serving the cities of Minneapolis and St. Paul; Cowles Enthusiast
Media, Inc., publishers of special interest consumer magazines and related
products; Cowles Business Media, Inc., publishers of magazines, online research
products and conferences for the media and marketing services industries and
Cowles Creative Publishing, a specialty publisher, distributor and direct
marketer of books, videos and interactive media for the home arts, home
improvement and outdoor markets.
-ADDITIONAL INFORMATION-
This release contains estimates and other forward-looking statements
covering subjects related to operational and financial results of McClatchy
Newspapers, Inc. and Cowles Media Company. These forward-looking statements, and
any other statements going beyond historical facts that have been discussed, are
subject to risks and uncertainties that could cause actual results to differ.
These include increases in newsprint prices and/or printing and distribution
costs over anticipated levels, competition from other forms of media in the
companies' principal markets, increased consolidation among, major retailers in
the companies' newspaper markets or other events depressing the level of
advertising, an economic downturn in the local economies of California's Central
Valley, Washington state,
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Alaska, the Carolinas or the Twin Cities of Minneapolis/St. Paul, or other
occurrences leading to decreased circulation and diminished revenues from both
display and classified advertising.
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