U.S. antitrust authorities said on Monday they had approved plans by McClatchy Co. to sell two California newspapers to Denver-based MediaNews Group Inc. as part of McClatchy's larger purchase of Knight Ridder Inc.
The U.S. Justice Department said it would not oppose MediaNews Group's acquisition of the San Jose Mercury News and the Contra Costa Times because the deal is "not likely to reduce competition substantially."
The department's statement said it had investigated whether the deal would affect competition in the East Bay region of northern California, where MediaNews already owns several daily newspapers.
It concluded that the deal would result in cost-savings that would be good for consumers, and that MediaNews would still face competition from the San Francisco Chronicle.
McClatchy is in the process of buying Knight Ridder for about $4.3 billion in a deal that will make it the second-largest U.S. newspaper chain by circulation.
The agreement involves the sale of 11 Knight-Ridder newspapers that McClatchy views as having low growth prospects.
The department has cleared another piece of the deal involving the sale of the Philadelphia Inquirer and Philadelphia Daily News.
The Justice Department decision came three days after a federal judge rejected a request for an injunction against the sale of the Mercury News, the Contra Costa Times and another paper, the Monterey Herald as part of a $1 billion deal that would place them in the California Newspaper Partnership, which privately held MediaNews Group controls.
Gannett Co. Inc. and Stephens Media Group also have stakes in the partnership.
