Knight Ridder, Inc.

1875–1974

Knight Ridder, Inc. is the second largest newspaper publisher in the United States, with 31 daily and 26 nondaily newspapers in 28 U.S. markets, including the well known and prize-winning Detroit Free Press, Miami Herald, Philadelphia Inquirer, and San Jose Mercury News. Knight Ridder's newspapers have won 84 Pulitzer Prizes, and its online news service with the Tribune Company has become equally respected and used by millions around the world. Second only to the Gannett Company, Inc., the U.S.'s largest newspaper publisher with more than 100 dailies (including the most widely read domestic paper, USA Today) and 500 nondaily papers, Knight Ridder has not given up hope of one day equaling its $7 billion rival.

Two Destinies: 1890s to 1940

What is today's Knight Ridder empire began as two separate newspaper groups which merged in 1974. The Ridder group originated in 1875 with the publication of the Catholic News, based in New York City. A second publication was acquired in 1892 when Herman Ridder purchased the Staats-Zeitung, the nation's largest German-language paper, also based in New York. The Knight group began in 1903 when Charles Landon (C.L.) Knight bought the Akron Beacon Journal, in Ohio, which the company still owns. Knight soon bought two smaller Ohio newspapers, the Springfield Sun and the Massillon Independent.

Knight, considered a brilliant writer, began training his son John at an early age to replace him. John S. Knight worked as copy boy and reporter, then went to college and fought in World War I. In 1919 at age 25, he joined the Beacon Journal's staff and became managing editor in 1925. He carefully observed the operations of better newspapers and applied his insights to the Beacon Journal. C.L. Knight died in 1933, in the depths of the Great Depression, leaving an estate of $515,000 and debts of $800,000 to his sons, John S. and James L. Knight. The Beacon Journal faced stiff competition from another Akron paper, the Times-Press, owned by Scripps-Howard, while the Great Depression was at its most severe. John Knight froze family earnings and took on the Times-Press, running more news and features than his competitor to win over readers. He paid off the Beacon Journal's debts within four years, and made it Akron's leading newspaper.

John Knight's first major test as publisher came during a 1936 Akron rubber strike. Rubber was the city's major industry, and as the strike dragged on, money and advertising dried up. The Times-Press cut back on editorial pages, but Knight increased local news coverage and won readers from the Times-Press. When the strike ended, he kept the readers and won new advertising.

On October 15, 1937 John Knight became president and publisher of the Miami Herald, after purchasing it for $2.25 million. The business side of the paper had been run poorly before the Knights bought it, so James Knight, who had studied the business and production side of newspaper publishing, became operations manager. The Knights' first move was to distance the paper from the Miami political establishment, with whom it had close ties. The Herald had two competitors; the Knights soon bought one, the Miami Tribune, which had been losing money. For a cost of $600,000 plus the Massillon Independent, the Knights bought the Tribune, eliminating a competitor and acquiring the Tribune's building, new printing press, and other equipment. Knight closed the Tribune on December 1, 1937, taking six of the paper's best people with him.

The Knights added more photographs, comics, and new columnists to the Herald. In the next two years two local stories--a kidnapping case and a controversy over pasteurized milk--received national attention and won 14,000 new readers. Having turned the Miami Herald around, the Knights bought another paper, the Detroit Free Press, in 1940.

World War II Era Expansion: 1941-60

In 1941 Knight Newspapers, Inc. was incorporated in Ohio. World War II found German submarines off the Florida coast driving away tourists and the business that had supported the Herald. The paper lost much of its staff to the army, but several large military bases were set up in the Miami area, and the soldiers boosted the Herald's circulation again. Lee Hills was brought in as news editor. He immediately recruited talented journalists from other Florida papers to make up for the staff the Herald had lost to the war effort. When a serious newsprint shortage created problems toward the end of the war, Hills and James Knight decided to cut advertising and circulation outside the Miami metropolitan area rather than editorial content, which wrested a large number of readers from its remaining competitor, the Miami News.

In 1944 the Knights bought the Chicago Daily News for $3 million and took on the paper's $12 million in debt. The Daily News had won a reputation for having the most thorough foreign news section of any Chicago paper, but John Knight found the stories too long and poorly written. He ordered the stories be more succinct, creating a brief storm of protest among some writers and readers.

The population of Dade County, Florida, nearly doubled in the years from 1940 to 1950 and the Herald's circulation grew from 86,313 in 1941 to 175,985 in 1951. In 1946 Lee Hills began the Clipper Edition, a streamlined version of the Herald distributed in 23 Latin American countries. The paper won prestige and readership in Latin America, while the Herald's Miami edition began to specialize in coverage of Latin America. Because of these early efforts, the paper is considered by many to have the best Latin American coverage of any U.S. newspaper.

On October 15, 1937 John Knight became president and publisher of the Miami Herald, after purchasing it for $2.25 million.

1892–1973

In 1948 the Herald's printers began a lengthy, sometimes violent strike over wages and the length of their work week. They were among the best paid printers in the country but wanted to receive the same wages for working 35 hours as they were getting for working 40. The strike dragged on, and on October 1, 1949 the paper's newsprint warehouse burned down in a mysterious fire. Because of the strike, the Herald experimented with alternative production methods and ended up with production methods years ahead of those at most other papers.

Changing Times: 1950-69

In 1950 the paper won its first Pulitzer Prize for fighting government corruption in southern Florida. The next year Hills became executive editor of the Herald and the Detroit Free Press. He encouraged individual style and quality writing, drawing a large number of excellent reporters and columnists from other papers. In 1955 Knight bought the Charlotte Observer, in North Carolina, and went on to purchase its rival, the Charlotte News, in 1959. In the same year, the Knights sold the Chicago Daily News to Marshall Field for $17 million.

In 1960 Knight took a gamble and built a $30 million building containing offices and printing presses for the Miami Herald. At the time it was the biggest building in Florida and the most extensive newspaper printing plant ever built. It reflected the Knights' belief that the Herald--and Miami--would continue to grow, which they did.

As the group grew larger, the Knights wanted to increase financial coordination among the newspapers. At the suggestion of Lee Hills, the Knights formed an executive committee in 1960 to undertake quarterly reviews of the operations of the Knight newspapers. They also hired finance man Alvah H. Chapman, Jr., as James Knight's assistant; he rose within ten years to be president of the Herald and executive vice-president of Knight Newspapers. He introduced computers for administration, layout, typesetting, and production; and for improving the circulation, advertising, and business departments. Chapman mandated budgeting at all Knight newspapers, which was rarely done at small and medium-sized newspapers.

Knight Newspapers began an aggressive acquisition campaign during the same period, looking for newspapers in growing cities with at least 50,000 inhabitants. The Tallahassee Democrat, in Florida, was added to the group in 1965, and in 1969 the son of Moses Annenberg (the former Miami Tribune owner who had sold his paper to the Knights), Walter Annenberg, sold the Philadelphia News and the Philadelphia Inquirer to Knight Newspapers for $55 million. Additional papers bought by Knight in 1969 continued the company's strategy of owning more than one newspaper in a market, often eliminating competition.

By the end of the 1960s Knight's combined daily circulation had risen to 2.2 million and the company made $12.7 million in profit on revenues of $162.8 million, largely on rising advertising earnings. Knight was considered a well-managed, highly profitable, and very aggressive newspaper group, although its editorial content was not always top quality. In 1969 Knight Newspapers, Inc. went public, the first offering immediately selling out at $30 a share.

A Shift in Priorities: 1970s

Knight acquired five more dailies in 1973: the Lexington Herald and the Lexington Leader, both in Kentucky; the Columbus Ledger and the Columbus Enquirer, both in Georgia; and the Bradenton Herald in Florida.

Herman Ridder, founder of the Ridder group, had worked his way up through the ranks at the Staats-Zeitung after its purchase in 1892. He was a founder and president of the Associated Press and an early supporter of the American Newspaper Publishers Association, becoming its president in 1907. His sons Bernard, Joseph, and Victor bought the New York Journal of Commerce and the St. Paul Dispatch-Pioneer Press in 1927. Ridder Publications was incorporated in Delaware in 1942.

After World War II the company expanded westward in search of well-priced properties in growing markets. They bought the Long Beach Press-Telegram, Long Beach Independent, San Jose Mercury News, and the Pasadena Star News, all in California, as well as some smaller California papers; a 65 percent stake in the Seattle Times, in Washington; the Gary Post Tribune in Indiana; and radio and television station WCCO, in Minneapolis, Minnesota. The San Jose Mercury News was the most profitable Ridder publication. The company bought the Boulder Daily Camera in Colorado in 1969 and the Wichita Eagle and Beacon Publishing Company of Kansas in 1973.

1969–1994

Ridder's 1973 earnings were $14.3 million on revenue of $166 million while Knight's 1973 earnings were $22.1 million on revenue of $341.9 million. Their merger grew out of talks between friends Lee Hills and Bernard Ridder, Jr., grandson of Herman Ridder, who were interested in expansion. Influenced by the success of the rival Gannett group, both Knight and Ridder had gone public in 1969 to raise capital for acquisitions. The groups described the potential benefits of a merger to their stockholders as "a broader and more diversified income base, greater newspaper size, mix and geographical distribution, and a stronger balance sheet." The merger was accomplished through an exchange of stock, and five Ridder representatives joined ten from Knight Newspapers, to form Knight-Ridder's board of directors.

The Knight group had focused on the South and East, while Ridder had focused on the West and Midwest. At the time of the merger Knight owned 16 dailies in seven states, while Ridder owned or had a substantial interest in 19 dailies in ten states. The Ridder dailies were all in exclusive markets, while the Knight's three largest revenue yielders--in Miami, Detroit, and Philadelphia--all faced competition. At the time of the merger Time magazine reported (July 22, 1974) that in general, "the Ridder papers do not have the heft and influence of the Knight dailies."

When the groups merged on November 30, 1974, Ridder became a wholly owned subsidiary of Knight, and the renamed Knight-Ridder Newspapers, Inc. became the largest newspaper company in the United States with newspapers from coast to coast. The new company had 35 newspapers in 25 cities, combined circulation averaging 3.8 million daily and 4.2 million on Sunday, total assets of $465 million, and profits of $36 million. Other large companies published newspapers but were diversified, while Knight-Ridder focused on newspapers alone (both had agreed to sell noncore holdings as part of the Federal Communications Commission's conditions for merging). The new company continued to give its newspapers editorial autonomy while maintaining strict central control of business operations with papers organized into three groups along geographical lines.

In 1976 Knight-Ridder Newspapers, Inc. became Knight-Ridder, Inc. Alvah H. Chapman, Jr., was elected chief executive officer succeeding Lee Hills, and Bernard H. Ridder, Jr., was elected chairman of the executive committee succeeding James L. Knight, who resigned. James Knight died in 1991 at the age of 81. John Knight also retired as editorial chairman in 1976. He died in 1981 at the age of 81. Lee Hills took his place until 1979 when he retired and Bernard H. Ridder, Jr., succeeded him.

The Perils of Diversification: 1980s

While other media companies went on newspaper-buying binges, Knight-Ridder watched from the sidelines, believing newspapers were a mature market. Knight-Ridder instead moved into other areas, buying radio stations and entering the cable television market in 1981. In addition, the company started Viewdata Corporation, which offered news and financial services on home computers. The company also moved into computer-based graphics services; the Knight-Ridder Graphics Network went online in October 1985, at first servicing only newspapers in the group. It began to offer a full-scale daily service to papers outside Knight-Ridder in 1986. Within a year it was used by 28 of the chain's newspapers and had 110 outside subscribers in North America and Europe. Subscribing newspapers paid $50 to $300 a month, depending on their circulation, for the privilege of using the system.

Viewdata, however, did not fare well and was closed in 1986 after losing $50 million. By this time Knight-Ridder returned to its roots by acquiring the six-paper State-Record Company, based in Columbia, South Carolina, for $311 million. By the later years of the decade, many felt Knight-Ridder had lost touch with its readers. Hispanics accounted for half the population of the Miami area, but only 20 percent of them read the Miami Herald. In 1986 several of the Herald's offices were closed. The following year, the company undertook a cost-cutting campaign headed by P. Anthony Ridder, president of the newspaper division, and redesigned the Spanish version of the Miami Herald, to win Hispanic readership.

By 1988 Knight-Ridder's business information services division was growing three times as fast as its newspapers, which prompted the $353 million purchase of Dialog Information Services, Inc. The same year James Batten was appointed CEO, replacing Alvah Chapman, and Anthony (Tony) Ridder became president. In 1989, however, the company's debt approached $1 billion and Batten sold the company's broadcasting group and the Pasadena Morning Star News, netting $425 million. Still, the company was sufficiently wary of a takeover for its shareholders to vote a "quality of journalism" amendment to prevent a buyout by a media baron such as Rupert Murdoch.

New Frontiers: 1990s

Under Batten and Ridder's leadership in the early and mid-1990s, Knight-Ridder refocused on newspapers and business information services by making additional divestments. The company stayed away from costly bleeding-edge gambles similar to Viewdata, working instead to extend its core businesses. One such move was the partnership of Knight-Ridder's San Jose Mercury News and online service provider America Online (AOL) in 1993, making the Mercury News the first newspaper in the country to offer its readers an online version of its paper. The flat rate service offered news and features from the paper, advertising, and bulletin boards for messaging. A similar venture was developed for the Detroit Free Press, this time in partnership with AOL's rival CompuServe. Knight-Ridder hoped to have all of its papers online within a few years.

In its business information services division, Knight-Ridder was disappointed with Dialog's lackluster growth of 10 percent a year. To remedy the situation, the company adopted two strategies--geographic growth and user growth. In 1993 it acquired Data-Star, a European online service, from the Swiss engineering company Motor-Columbus. In its first year under Knight-Ridder, Data-Star helped boost Dialog's revenue 19 percent over 1992. In 1994 the company moved into the Canadian market through a joint venture with Southam, Inc. called Infomart DIALOG. The company's three online services--DIALOG, Data-Star, and Infomart DIALOG--were then grouped within the newly named Knight-Ridder Information, Inc. (KRII), replacing Dialog Information Services. With regard to the second strategy, KRII's services were used primarily by librarians and other information specialists who had mastered the complex and powerful software of its services. In order to expand the potential user base, KRII began to develop user-friendly interfaces for the services to attract a broader client base.

1993–2004

In early 1995 Tony Ridder took over as CEO and assumed the title of chairman upon Batten's death. Ridder began revamping the company, selling off its noncore assets such as the Journal of Commerce to Britain's Economist Group for $115 million and its financial newswire after it failed to compete successfully with rivals Reuters, Dow Jones, and Bloomberg Financial News. Next Knight-Ridder made another significant divestment--this one outside the business information sector--when it sold its stake in TKR Cable to its partner Tele-Communications Inc. for about $420 million in cash and stock.

With the newspaper division more important than ever to Knight-Ridder's future, the company initiated a two-year, $120 million modernization of the Miami Herald's main plant and spent $360 million to acquire four daily newspapers in the San Francisco Bay area from Lehser Communications, Inc. The acquired papers had a combined circulation of 190,000 daily and 206,000 on Sunday. In 1997 Knight-Ridder bought four additional papers from the Walt Disney Company, sold its KRII division, and decided to move its headquarters to the Silicon Valley area in San Jose, California. The move was completed in 1998, the same year Knight-Ridder joined competitors Gannett and the Tribune Company to create Classified Ventures, an online automotive and real estate classifieds service.

In 1998 Knight Ridder was recognized as a "Web pioneer" and earned the top slot on the InformationWeek 500, the IT magazine's annual poll of businesses with the most innovative use of technology. Knight Ridder had not only been the first major newspaper publisher to put one of its papers online (the San Jose Mercury News in 1993), but was also the first to get versions of all of its newspapers on the Web. Knight Ridder bested a wide range of billion-dollar firms to earn the InformationWeek honor, including rival Gannett, as well as multinational giants Coca-Cola Company, Philip Morris, and IBM.

The following year, 1999, the company formed KnightRidder.com to oversee its burgeoning online services and web operations, which included another joint venture with the Tribune Company, this one to create CareerBuilder, an online job search service. Knight Ridder finished the century with revenues topping $3.2 billion.

Frugality and Reorganization: 2000s

In the new millennium Knight Ridder continued to focus on the Internet and its ever increasing opportunities. In 2000 the company reached an agreement with Yahoo!, the huge Internet search engine, to provide banners of top news stories on its pages. The following year KnightRidder.com was renamed Knight Ridder Digital and Chairman and CEO Ridder began tightening the firm's belt, reducing its workforce and instituting cost-cutting measures across the board. By the end of the year, Knight Ridder still retained its rank as the world's second largest newspaper company, with 31 dailies in 28 U.S. markets, and readership of 8.5 million daily and 12.6 million on Sunday.

In 2003 the web-savvy Knight Ridder was struck by a virus that shut down its newspaper sites for several hours. The company's IT team, however, had the sites back online by day's end, proving why Knight Ridder's Digital unit was hitting its projections and posting strong earnings. The company finished the year with overall operating revenues of just under $2.9 billion, slightly less than the previous year due to several factors, including weaker advertising rates. Knight Ridder Digital, however, contributed a profit of $15.2 million and revenues were up 44 percent from 2002.

The following year, 2004, Knight Ridder bought Star Publications and was poised for further acquisitions should complementary businesses become available. Chief Executive Ridder, who was nearing retirement age, concentrated on leaving Knight Ridder as a publishing powerhouse in terms of both product and profit. While he had been increasingly criticized in the new century for putting profits ahead of journalistic integrity, Ridder was determined to have both. Goals for the remainder of the decade included acquiring additional newspapers in underserved areas, keeping operating costs down, and increasing national readership not only through Pulitzer Prize-winning journalism (the Miami Herald earned its 18th Pulitzer and the company its 84th in 2004), but by reaching out to younger and minority readers as well.