McClatchy Newspaper Sale Faces Suit

SAN FRANCISCO —  A millionaire real estate investor Friday filed a lawsuit in federal court to block McClatchy Co.’s plan to sell three Bay Area newspapers to MediaNews Group Inc.

Clinton Reilly claimed that the $737-million deal to cast off the San Jose Mercury News, Contra Costa Times and Monterey Herald as part of the acquisition of Knight Ridder Inc. would eliminate newspaper competition in the San Francisco Bay area, attorney Joseph A. Alioto said.

“The hope is to convince these very powerful people and influential people that competition is much better than monopoly,” Alioto said.

Reilly’s antitrust challenge comes six years after he turned the sale of the San Francisco Chronicle into a legal marathon.

The lawsuit names as defendants MediaNews Group; Hearst Corp., which publishes the Chronicle; Gannett Corp.; and Stephens Media Group, a privately held company.

McClatchy, based in Sacramento, reached an agreement in April to sell the three San Francisco Bay area papers to MediaNews with backing from Hearst and the other publishers.

Reilly tried to block Hearst from acquiring the San Francisco Chronicle in 2000, but a judge rejected his claims that the sale created a monopoly for Hearst, which already owned the rival San Francisco Examiner.

The McClatchy deal, which is under review by the U.S. Justice Department and California’s attorney general, would create a monopoly that would drive up newspaper prices and reduce jobs in the industry, Alioto said.

Denver-based MediaNews owns 22 newspapers in Northern California, including the Oakland Tribune, the Marin Independent Journal and the Vacaville Reporter.

MediaNews President Jody Lodovic has said the sale would create “virtually no overlap” in terms of circulation with the papers the company already owns.