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SAN JOSE, Calif. - Knight Ridder's corporate charter could force a buyer of the newspaper company to win 80 percent of shareholder votes unless the board of directors finds that a new owner would maintain Knight Ridder's "journalistic excellence."
A buyer the majority of the board deems to be acceptable would need two-thirds, or about 66 percent, of shareholder votes for a sale to be approved.
Knight Ridder, the nation's second-largest newspaper company, has put itself up for sale under pressure from its largest shareholders.
The San Jose-based company's articles of incorporation require the board to form an independent panel of experts to review a winning bidder. The panel would hear presentations both from Knight Ridder and the prospective buyer. However, the panel's findings are not binding on the board.
The process puts the board's decision under a spotlight in the journalism community, where fears have been expressed by some that a new owner might impose drastic cuts to improve profits at several newspapers.
The independent review panel would be made up of journalism experts with no connection to Knight Ridder, which owns 32 daily newspapers.
The board must determine whether a buyer will maintain Knight Ridder's journalism standards at papers representing "at least" 90 percent of the company's combined daily circulation.
The board of directors, with input from the independent panel, would have to determine that the new buyer would "continue to serve their respective communities and other constituencies ... with the same degree of journalistic excellence, integrity and independence" that Knight Ridder did.
Nearly 90 percent of Knight Ridder's shares are held by institutional investors.
Knight Ridder spokeswoman Lee Ann Schlatter declined to comment.
Two independent groups of private equity firms are considering bids for the company.
A third private equity consortium has teamed with MediaNews Group, whose chairman and chief executive officer, William Dean Singleton, toured the San Jose Mercury News on Friday. Singleton said he had no comment on the proceedings.
Newspaper companies McClatchy and Gannett also have expressed interest in buying Knight Ridder.
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(c) 2006, San Jose Mercury News (San Jose, Calif.). Distributed by Knight Ridder/Tribune News Service.
