Knight-Ridder, Inc. - Information Services -  Category Directory

50 West San Fernando Street
Suite 1500
San Jose, California 95113
(408) 938-7700
www.kri.com

Sales

$2.9 billion

Business Description 

We are the nation’s second-largest newspaper publisher based on circulation, with products in print and online. We publish 31 daily newspapers in 28 U.S. markets, with a readership of 8.7 million daily and 12.6 million on Sunday. We also have investments in Internet and newsprint mill companies. Our Internet operation, Knight Ridder Digital (KRD), develops and manages our online properties. It is the founder and operator of Real Cities (www.Realcities.com), the largest national network of city and regional Web sites in more than 105 U.S. markets.

Approximately 77% of our newspaper operating revenue comes from the sale of newspaper advertising. Due to seasonal factors such as heavier retail selling around Christmas and Easter, our advertising revenue fluctuates significantly throughout the year. Consecutive quarterly results are not uniform or comparable and are not indicative of the results over an entire year.

Each of our newspapers is operated by local management appointed by our executive management in San Jose. Each newspaper manages its own news coverage, sets its own editorial policies and establishes local business practices. The basic business, accounting, financial and reporting policies, however, are set by the corporate staff. Editorial services and quality control also are provided by the corporate staff.

Each newspaper is served by the company-owned news bureau in Washington, D.C. Supplemental news, graphic and photographic services are provided by Knight Ridder/Tribune. In 2004, we expanded our news bureau in Sacramento, California, to merge the staff of the San Jose Mercury News and the Contra Costa Times, to provide more in-depth coverage of state affairs.

All of our newspapers compete for advertising and readers’ time and attention with broadcast, satellite and cable television, the Internet and other computer services, radio, magazines, suburban newspapers, free shoppers, billboards and direct mail. In some cases, the newspapers also compete with other newspapers published in nearby cities and towns – particularly in Miami, Saint Paul and Fort Worth. In Detroit and Fort Wayne, we have joint operating agreements with a second newspaper. Our other newspapers are the only daily and Sunday papers of general circulation published in their communities.

Our newspapers rely on local sales operations for local retail and classified advertising. Our larger newspapers are assisted by our national sales team for retail and national advertising and the Newspaper National Network and by Newspapers First in obtaining national advertising. Newspapers First, a national advertising sales cooperative, is the primary sales representative for many of our newspapers, many of the leading newspaper groups and several leading independents. It acts as an interface to national advertisers across the country. We own 28.9% of the voting stock of Newspapers First. Newspaper National Network, the sales arm of the Newspaper Association of America, was established in 1994 to focus national selling on behalf of the newspaper industry. It represents all our newspapers and more than 500 others. Like Newspapers First, it offers one-stop shopping and “one order, one bill.”

The following newspapers are our largest based on revenue:

The Philadelphia Inquirer and Philadelphia Daily News

Philadelphia Newspapers, Inc., publishes two of the most respected and nationally acclaimed newspapers in the country: The Philadelphia Inquirer and the Philadelphia Daily News. The Inquirer, Philadelphia’s largest newspaper, long renowned for its excellence in reporting, has won 18 Pulitzer Prizes. The Daily News, the city’s second-largest newspaper, is embraced by readers for its in-depth sports coverage, local investigative reporting and editorial flair. Both newspapers are available on the Internet at www.philly.com.

The primary market area for these two papers spans nine counties throughout southeastern Pennsylvania and southwestern New Jersey. The region contains more than 1.9 million households, making it the nation’s fourth-largest metropolitan area.

The Miami Herald and el Nuevo Herald

The Miami Herald Publishing Co. is Florida’s largest newspaper company. It publishes The Miami Herald, el Nuevo Herald, in-flight magazines, hotel tourist books, an apartment real estate magazine, a free-distribution weekly called StreetMiami, the Florida Keys Keynoter and The (Tavernier, Florida) Reporter.

The Miami Herald has won 17 Pulitzer Prizes, and it is sold in South Florida and throughout Latin America and the Caribbean. el Nuevo Herald, serving the growing number of Spanish readers in South Florida, is the premier

Spanish-language newspaper in the United States. Both newspapers are available worldwide through PEPC Worldwide, Newspapers Direct and the Internet at www.herald.com.

South Florida, which includes the Miami and Fort Lauderdale metropolitan areas, is one of the top retail markets in the United States. Total retail sales surpassed $56 billion in 2003 and on a per household basis exceeded those of many major markets, including Chicago, Washington, D.C., and New York. Tourism is a major driver of the economy in South Florida, attracting more than 20 million visitors a year from all over the world.

The Kansas City Star

The Kansas City Star, founded in 1880, is one of the largest newspapers in the Midwest. The Star has won eight Pulitzer Prizes and serves the Kansas City metropolitan area, encompassing 11 counties in Missouri and Kansas. The Star is available on the Internet at www.KansasCity.com.

Newsprint

We consumed approximately 647,000 metric tons of newsprint in 2003, excluding Detroit. Approximately 13% of our total operating expenses during the year were for newsprint. Purchases are made under long-term agreements with 14 newsprint producers, each having one or more newsprint mills. In 2003, we purchased approximately 67.2% of our newsprint consumption from 10 mills in the United States, 29.9% from 14 mills in Canada and 2.9% from other offshore sources. We believe that the current sources for newsprint are adequate to meet our current and foreseeable demand.

Approximately 94% of the newsprint we consumed contained some recycled content. The average content of these rolls was 57% recycled fiber. This translates into an overall recycled newsprint average of 54%.

We are a one-third partner with Cox Enterprises and Media General, Inc., in SP Newsprint Co. (SP). SP is the fifth-largest newsprint manufacturing company in North America. SP’s mill in Dublin, Georgia, produces more than 565,000 metric tons per year of 100% recycled-content newsprint. Its plant in Newberg, Oregon, produces more than 385,000 metric tons per year of newsprint with at least 40% of recycled content. SP provides recycled-content newsprint to its owners and more than 250 publishers and commercial printers. Its SP Recycling Corp. subsidiary recycles more than 1.1 million short tons of recovered material each year.

We also own a 13.5% equity interest in Ponderay Newsprint Company in Usk, Washington, which produced more than 261,000 metric tons of newsprint in 2003.

Our ownership in SP and Ponderay provides a hedge against price volatility for approximately 50% of our newsprint expense. In 2003, approximately 22% of our total newsprint consumption was sourced by these two companies. We enter into firm purchase commitments annually with these two companies. We estimate these purchase commitments will total approximately $56 million of newsprint in 2004, at current market prices.

Shared Services

We have a Shared Services Center located in Miami, Florida. Through this operation, which reports directly to our corporate headquarters, we have centralized the maintenance of our financial systems and processing, purchasing and strategic sourcing activities as well as many internal consulting initiatives for all Knight Ridder companies. Centralized purchasing includes commodities such as newsprint, ink, computers/software, newspaper delivery bags, credit card processing, office supplies, travel, employee relocation and telecommunications.
 

Joint Operating Agreements/Joint Ventures

Knight Ridder/Tribune. Knight Ridder/Tribune, a joint venture of Knight Ridder and Tribune Co., offers stories, graphics, illustrations, photos and paginated pages for print publishers; news animations, graphics and news specials for TV broadcasters; and Web-ready content for online publishers. Knight Ridder/Tribune editorial material is produced by all our newspapers, by our 14 foreign correspondents and by a number of other newspapers.

Knight Ridder/Tribune introduced a KRT Campus Web site for college and high school publications, opening up a profitable new revenue stream for the joint venture and exposing young journalists to Knight Ridder’s news reporting, photography and graphics.

We own a 75% equity interest in the Fort Wayne Newspapers Agency and consolidate the results of its operations. The minority shareholders’ interest in the partners' income has been reflected as an expense in the Consolidated Statement of Income in the caption “Minority interest in earnings of consolidated subsidiaries.” Also included in this caption is a contractual minority interest resulting from a joint operating agreement that runs through 2021 between The Miami Herald Publishing Co. and Cox Newspapers, Inc., covering the publication of The Herald and The Miami News. The Miami News ceased publication in 1988.

We own a 50% equity interest in Detroit Newspapers (DN), a joint operating agency between Detroit Free Press, Inc., our wholly-owned subsidiary, and The Detroit News, Inc., a wholly-owned subsidiary of Gannett Co., Inc. In 1989, business operations of the Detroit Free Press and The Detroit News were transferred to DN under a joint operating agreement that expires in 2089. We show our share of revenue and expenses as a net amount in the “Other revenue” line. Under our agreement, we are committed to supply 50% of their annual newsprint requirements. We intend to fulfill this commitment and we have the necessary means and resources available to meet this obligation.