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McClatchy Reports Fourth Quarter 2006 Results

Released 02/06/2007

The McClatchy Company (NYSE: MNI) today reported fourth quarter 2006 income from continuing operations of $75.5 million, or 92 cents per share. A loss from discontinued operations of $354.8 million, or $4.33 per share was recorded in the quarter relating to the results of the Star Tribune newspaper which the company is selling (see discussion below). The loss from discontinued operations includes a $363.0 million after tax write-down of the net assets of the Star Tribune to the agreed-upon selling price. The company's total net loss for the 2006 quarter was $279.3 million, or $3.41 per share, including discontinued operations.

The company's fiscal 2006 reporting period is a 53-week year versus a 52-week year in 2005, and as a result, the fiscal fourth quarter of 2006 includes 14 weeks compared to 13 weeks in the 2005 fiscal quarter. The company estimates that income from continuing operations is higher by approximately $5.3 million in 2006 because of the additional week being reported.

Results of the Star Tribune newspaper are shown as discontinued operations for all periods presented (including 2005) due to its impending sale. Income from continuing operations was $34.1 million, or 73 cents per share, in the fourth quarter of 2005. Net income in the fourth quarter of 2005 was $45.4 million, or 97 cents per share, including income from discontinued operations of $11.3 million, or 24 cents per share.

On June 27, 2006, the company completed the acquisition of Knight-Ridder, Inc. and its 32 daily newspapers (the Acquisition). The company sold 12 former Knight Ridder newspapers, four of which closed concurrently with the closing of the Acquisition, while eight of the newspapers were held by the company for a short time following the acquisition.

On December 26, 2006 the company announced that it had reached a definitive agreement to sell the Star Tribune newspaper of Minneapolis, MN to Avista Capital Partners for $530 million in cash proceeds and expects to receive an additional approximately $160 million in cash income tax benefits related to the sale in 2008. These after-tax proceeds represent a multiple of cash flows greater than the company paid for Knight Ridder. This transaction is expected to close in the first quarter of 2007.

The company's results from continuing operations since the close of the Knight Ridder acquisition (and all pro forma amounts for prior periods discussed) include the operations of the 20 retained former Knight Ridder newspapers and all of the company's previously owned newspaper operations except for the Star Tribune newspaper (continuing operations of the "newly combined company").

Revenues from continuing operations of the newly combined company in the fourth quarter of 2006 were $673.6 million, up $463.3 million from fourth quarter 2005 revenues of $210.3 million, primarily due to the Knight Ridder acquisition. On a 13-week basis, fourth quarter total revenues were $630.7 million, down 3.4% compared to pro forma fourth quarter 2005 revenues of the newly combined company, with advertising revenues of $539.5 million, down 3.1% and circulation revenues of $71.7 million, down 3.1%. Income from continuing operations for the full year of 2006 was $179.9 million or $2.78 per share. Income from continuing operations included a pre-tax gain of $9.0 million related to the sale of land in the third quarter of 2006. Income from continuing operations was $174.5 million or $2.70 per share excluding the gain on the land sale. The loss from discontinued operations for the full-year 2006 was $335.5 million, or $5.19 per share, and the company's total net loss was $155.6 million or $2.41 per share.

Income from continuing operations was $119.5 million or $2.54 per share in 2005. Income from discontinued operations was $41.0 million, or 87 cents per share, and total net income in 2005 was $160.5 million, or $3.42 per share.

Revenues from continuing operations of the newly combined company in 2006 were $1.68 billion, up $867.7 million from 2005 revenues from continuing operations of $807.5 million, due primarily to the addition of the 20 former Knight Ridder newspapers beginning in the third quarter. Advertising revenues totaled $1.43 billion and circulation revenues were $194.9 million.

On a pro forma basis, including all continuing operations of the newly combined company for the full years of both 2006 and 2005, and stating 2006 on a comparable 52-week basis to 2005, total revenues in 2006 would have been $2.45 billion, down 0.4%, with advertising revenues of $2.09 billion, up 0.5%, and circulation revenues of $290.0 million, down 4.0%.

Commenting on fourth quarter results, Gary Pruitt, chairman and chief executive officer, said, "The overall advertising environment grew more difficult in the fourth quarter. Retail advertising softened and national and classified continued to decline. The increases we had been reporting in real estate advertising, which had helped offset the declines in employment and automotive classified advertising, declined along with the slowdown in the real estate market. However, online and direct marketing revenues continued to show strength, and their growth helped offset some of the weakness in classified and national advertising.

"This environment calls for strong cost controls and we have delivered. We reduced cash operating expenses 5.8% compared to the 2005 pro forma quarter. When factoring out the stock-related compensation which was not recorded in 2005, this expense saving grows to 6.2%.

"For all of 2006, our pro forma advertising revenues were up 0.5%, and we expect to be one of the few companies to report revenue growth in newspaper advertising on a 52-week basis. Indeed, we believe that once all the results are in that McClatchy will have outperformed the industry in advertising revenue growth for the sixth consecutive year," said Mr. Pruitt. "We are committed to our three-pronged strategy: We acquire and operate high-quality newspapers in growth markets. Second, we extend these franchises by supplementing the mass reach of the newspaper with direct marketing and direct mail products so that advertisers can capture broad appeal and targeted audiences with one-stop shopping. And finally, we operate the leading local internet business in each of our daily newspaper markets.

"As we look to 2007, we continue to anticipate, as we said at our Media Week investor presentation, that advertising revenues on a pro forma basis will be down in the first half. We don't have enough visibility right now to project revenue trends in the second half of 2007 with any confidence, but we do have confidence in our proven ability to adapt and innovate to meet challenging conditions and be an industry leader in performance.

"We continue our focus on reducing employee head count by attrition and are reviewing all costs on a line-by-line basis as we look to 2007. We expect to continue to reap benefits from synergies as we further integrate the former Knight Ridder papers, and we expect cost savings from lower newsprint prices and retirement benefits costs.

"The operating environment for media companies certainly is challenging -- requiring sure leadership in these turbulent times. We have made the tough decisions to re-align our operating portfolio, retaining the assets that will best allow us to build a 24/7 multi-media enterprise that's responsive to all our audiences and advertisers, resulting in a preeminent news company for our shareholders." said Mr. Pruitt. "Newspapers are profitable brands, and they provide the foundation of the integrated multiplatform news company we have become. We believe this integrated approach will pay handsome dividends in both audience growth and profitability."

Pat Talamantes, McClatchy's vice president of finance and CFO, said, "Debt at the end of the year was approximately $3.3 billion including public bonds we assumed in the Knight Ridder acquisition, which are valued at approximately $1.5 billion. We have used the proceeds from the sales of the former Knight Ridder newspapers, certain internet investments and land in the Sacramento area to pay down a portion of the bank debt used to buy Knight Ridder; but as planned we increased debt in December to pay taxes on these sales.

"We plan to use the $530 million in pre-tax proceeds from the sale of the Star Tribune, which is expected to close in the first quarter of 2007, to further reduce debt. Our commitment to repaying debt has never been stronger, and we firmly believe that as we continue to do so we will build leveraged equity returns for our shareholders."

The company noted the following items related to the Knight Ridder acquisition and other matters that impacted its 2006 results: * The company issued 35.0 million Class A shares in connection with the Acquisition. As a result, the weighted average diluted shares used to calculate earnings per share in 2006 increased. Weighted average shares in 2007 are expected to be in line with fourth quarter 2006 amounts. * The company sold the 12 Knight Ridder newspapers identified as not fitting with its operating strategy. Eight of the 12 were held for periods ranging from two to 36 days following the closing of the Knight Ridder acquisition, and their results, including the interest expense and debt financing costs related to the debt incurred until their sale, were recorded as discontinued operations in its financial results. The $2.1 billion in pre-tax cash proceeds from their sales were used to repay the debt used to purchase these newspapers. No gain or loss was recorded related to the disposition of the newspapers. * In December 2006 the company entered into a definitive agreement to sell the (Minneapolis) Star Tribune newspaper for $530 million in cash proceeds and is expected to receive an additional approximately $160 million in cash income tax benefits related to the sale in 2008. The sale is expected to close in the first quarter of 2007. The company recorded a write down in the fourth quarter of 2006 of the Star Tribune's net assets to fair market value based on the expected sale proceeds and included this charge in discontinued operations. Additionally, the results of Star Tribune's operations, including interest allocated to debt related to its acquisition, have been recorded as discontinued operations in all periods presented. * The company implemented Financial Accounting Standard No. 123 (revised 2004), "Share-Based Payments" (FAS 123R), at the beginning of fiscal 2006 and recorded share based compensation of $2.0 million in the fourth quarter and $7.8 million in the year ended December 31, 2006. * As a result of the anticipated Star Tribune disposition, the company's mix of state tax jurisdictions has resulted in a lower overall state tax rate. Accordingly, the company has recalculated its deferred tax liabilities and assets in the fourth quarter of 2006 at its new lower effective state tax rate. The company's effective tax rate was affected by similar calculations related to the Acquisition in both the third and the fourth quarters of 2006. This resulted in a reduction to the fourth quarter income tax provision of $12.3 million, and the full year tax provision was lower by $18.1 million, bringing the company's annual effective tax rate on continuing operations to 33.6%. The company's effective tax rate on continuing operations is expected to be between 39.0% and 39.5% in 2007. * The purchase price for the Knight Ridder acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of June 27, 2006, the date of the Acquisition. The purchase price allocation, while substantially completed, is subject to further adjustments based upon completion of analyses of deferred income tax assets and liabilities and other items.

The company's pro forma statistical report, which summarizes its revenue performance for the month of December, the fourth quarter and the full year 2006, follows. This report includes advertising revenues for the 20 Knight Ridder newspapers the company has retained, but did not own in the first half of its fiscal 2006 or any part of fiscal 2005, and excludes the revenues of the Star Tribune newspaper which is being sold. The pro forma information is meant to provide investors a sense of what the advertising results of the continuing operations would have been in each interim period. In addition, the company has reclassified Real Cities' advertising revenues from a gross basis to net of amounts remitted to the third party newspaper websites for which Real Cities acts as a broker for national advertising. This reclassification has the effect of reducing both revenues and expenses with no impact on earnings. Due to a lack of historical detail from 2005, the 2005 pro forma amounts do not include reclassifications necessary to compare online revenues on the same basis. Hence, comparisons to online only and national online advertising are not meaningful. A reconciliation of pro forma 2006 revenues to GAAP reported revenues can be found on the company's website at the Investor Relations page.

At noon Eastern Time today, McClatchy will review its results in a conference call (877-278-1205 pass code 6828794) and webcast (http://www.mcclatchy.com). The webcast will be archived at McClatchy's website.

The McClatchy Company is the third largest newspaper company in the United States (after the sale of the Star Tribune newspaper), with 31 daily newspapers and approximately 50 non-dailies. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, The Kansas City Star, the (Fort Worth) Star-Telegram, The Charlotte Observer, and The (Raleigh) News & Observer. In addition, McClatchy has a robust network of internet assets, including leading local websites in each of its daily newspaper markets, offering users information, comprehensive news, advertising, e-commerce and other services. The company also owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development; Real Cities (http://www.RealCities.com), the largest national advertising network of local news websites, including more than 130 newspaper websites; and 15.0% of CareerBuilder, the nation's largest online job site. McClatchy also owns 25.6% of Classified Ventures, a newspaper industry partnership that offers classified websites such as cars.com and apartments.com. McClatchy is listed on the New York Stock Exchange under the symbol MNI.

ADDITIONAL INFORMATION
Statements in this press release regarding the proposed transaction between McClatchy and Avista Capital Partners, the expected timetable for completing the transaction, future financial and operating results, benefits of the transaction (including but not limited to tax benefits), future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," estimates and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the transaction; to realize the benefits from the transaction and to realize future opportunities; and the other factors described in McClatchy's Quarterly Report on Form 10-Q for the quarter ended September 24, 2006 and the final Prospectus/Proxy Statement/Information Statement contained in McClatchy's Registration Statement on Form S-4 (Registration No. 333-133321. McClatchy disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.
                            THE McCLATCHY COMPANY
                         SUMMARY OF UNAUDITED RESULTS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended Year Ended Dec. 31, Dec. 25, Dec. 31, Dec. 25, 2006 2005 2006 2005

Revenues - net $673,599 $210,300 $1,675,190 $807,480

Operating expenses: Compensation 250,129 78,819 652,582 321,312 Newsprint and supplements 94,366 27,548 231,068 103,292 Depreciation and amortization 42,343 9,947 98,865 39,311 Other operating expenses 141,076 40,264 345,767 152,262 Total operating expenses 527,914 156,578 1,328,282 616,177

Operating income 145,685 53,722 346,908 191,303

Interest expense (46,985) -- (93,664) -- Interest income 1,527 7 3,562 47 Equity (losses) income in unconsolidated companies, net 4,870 262 4,951 635 Gain on land sale and other - net 738 14 9,128 231 Income from continuing operations before income tax provision 105,835 54,005 270,885 192,216 Income tax provision 30,330 19,894 91,000 72,701 Income from continuing operations 75,505 34,111 179,885 119,515 Income (loss) from discontinued operations, net of income taxes (354,776) 11,270 (335,462) 41,004 Net income (loss) $(279,271) $45,381 $(155,577) $160,519

Net income (loss) per common share: Basic: Income from continuing operations $0.92 $0.73 $2.79 $2.56 Income (loss) from discontinued operations (4.34) 0.24 (5.21) 0.88 Net income (loss) per share $(3.41) $0.97 $(2.42) $3.44

Diluted: Income from continuing operations $0.92 $0.73 $2.78 $2.54 Income (loss) from discontinued operations (4.33) 0.24 (5.19) 0.87 Net income (loss) per share $(3.41) $0.97 $(2.41) $3.42

Weighted average number of common shares: Basic 81,803 46,680 64,415 46,606 Diluted 81,995 46,996 64,645 46,996

The McClatchy Company Consolidated Statistical Report (In thousands, except for preprints)

December Combined As Reported *Pro Forma *Pro Forma 5-week 2006 4-week 2006 2005 % Change

Revenues - Net: Advertising Retail $99,112 $81,222 $83,763 -3.0% National 19,691 15,349 18,378 -16.5% Classified Total 58,516 46,735 52,254 -10.6% Automotive 16,582 12,410 13,153 -5.6% Real Estate 15,649 13,117 15,049 -12.8% Employment 19,167 15,578 17,713 -12.1% Other Class 7,119 5,631 6,340 -11.2% Direct Marketing 18,362 15,828 13,690 15.6% Other Adv Rev 115 77 88 -12.5% Total Advertising $195,796 $159,211 $168,173 -5.3%

Circulation 26,729 21,343 22,383 -4.6% Other 5,339 4,361 7,175 -39.2% Total Revenues $227,864 $184,915 $197,731 -6.5%

Advertising Revenues by Market: California $38,546 $31,089 $32,815 -5.3% Southeast 46,749 37,630 38,944 -3.4% Florida 33,553 28,325 29,103 -2.7% Midwest 27,444 22,223 23,565 -5.7% Northwest 21,329 17,370 17,562 -1.1% Texas 20,500 16,449 17,195 -4.3% Other 7,675 6,125 8,989 -31.9% Total Advertising $195,796 $159,211 $168,173 -5.3%

December Print Only As Reported *Pro Forma *Pro Forma 5-week 2006 4-week 2006 2005 % Change

Revenues - Net: Advertising Retail $97,230 $79,613 $82,732 -3.8% National 21,682 17,473 17,603 -0.7% Classified Total 47,891 38,090 43,406 -12.2% Automotive 14,766 10,873 11,714 -7.2% Real Estate 14,404 12,062 14,004 -13.9% Employment 12,134 9,929 11,790 -15.8% Other Class 6,588 5,226 5,898 -11.4% Direct Marketing 18,362 15,828 13,690 15.6% Other Adv Rev 115 77 88 -12.5% Total Advertising $185,280 $151,081 $157,519 -4.1%

Circulation Other Total Revenues

Advertising Revenues by Market: California $36,541 $29,440 $31,482 -6.5% Southeast 43,081 34,695 36,386 -4.6% Florida 31,655 26,639 27,723 -3.9% Midwest 25,488 20,664 21,908 -5.7% Northwest 19,730 15,988 16,519 -3.2% Texas 19,449 15,608 16,369 -4.6% Other 9,336 8,047 7,132 12.8% Total Advertising $185,280 $151,081 $157,519 -4.1%

Advertising Statistics for Dailies: Full Run ROP Linage 3,131.3 2,453.3 2,748.6 -10.7% Millions of Preprints Distributed 823.7 700.7 706.6 -0.8%

Average Paid Circulation:** Daily 2,806.2 2,879.8 -2.6% Sunday 3,475.8 3,553.4 -2.2%

* Pro Forma includes Knight Ridder acquisitions and excludes Star Tribune newspaper. ** Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

Online only revenues are not shown as the amounts are not comparable.

The McClatchy Company Consolidated Statistical Report (In thousands, except for preprints)

Quarter 4 Combined As Reported *Pro Forma *Pro Forma 14-week 2006 13-week 2006 2005 % Change Revenues - Net: Advertising Retail $273,979 $256,089 $257,930 -0.7% National 57,064 52,723 60,600 -13.0% Classified Total 193,495 181,713 192,330 -5.5% Automotive 49,866 45,694 47,633 -4.1% Real Estate 58,871 56,339 56,277 0.1% Employment 62,849 59,260 66,184 -10.5% Other Class 21,908 20,420 22,236 -8.2% Direct Marketing 51,308 48,774 45,323 7.6% Other Adv Rev 277 239 511 -53.2% Total Advertising $576,123 $539,538 $556,694 -3.1%

Circulation 77,037 71,651 73,957 -3.1% Other 20,439 19,464 22,027 -11.6% Total Revenues $673,599 $630,653 $652,678 -3.4%

Advertising Revenues by Market: California $114,646 $107,189 $110,638 -3.1% Southeast 140,756 131,637 132,419 -0.6% Florida 95,656 90,428 94,815 -4.6% Midwest 80,085 74,863 77,785 -3.8% Northwest 63,698 59,739 58,350 2.4% Texas 59,185 55,135 57,109 -3.5% Other 22,097 20,547 25,578 -19.7% Total Advertising $576,123 $539,538 $556,694 -3.1%

Quarter 4 Print Only As Reported *Pro Forma *Pro Forma 14-week 2006 13-week 2006 2005 % Change Revenues - Net: Advertising Retail $268,449 $250,832 $254,790 -1.6% National 55,210 51,001 57,606 -11.5% Classified Total 161,954 152,153 162,755 -6.5% Automotive 44,349 40,456 43,083 -6.1% Real Estate 54,896 52,554 52,797 -0.5% Employment 42,270 40,066 46,172 -13.2% Other Class 20,439 19,077 20,703 -7.9% Direct Marketing 51,308 48,774 45,323 7.6% Other Adv Rev 277 239 511 -53.2% Total Advertising $537,198 $502,999 $520,985 -3.5%

Circulation Other Total Revenues

Advertising Revenues by Market: California $108,444 $101,342 $105,683 -4.1% Southeast 129,198 120,811 123,402 -2.1% Florida 89,654 84,637 90,336 -6.3% Midwest 73,672 68,847 72,137 -4.6% Northwest 58,824 55,082 54,680 0.7% Texas 55,773 51,933 54,406 -4.5% Other 21,633 20,347 20,341 0.0% Total Advertising $537,198 $502,999 $520,985 -3.5%

Advertising Statistics for Dailies: Full Run ROP Linage 9,468.2 8,790.2 9,198.8 -4.4% Millions of Preprints Distributed 2,229.7 2,106.7 2,111.0 -0.2%

Average Paid Circulation:** Daily 2,859.7 2,930.8 -2.4% Sunday 3,494.3 3,603.2 -3.0%

* Pro Forma includes Knight Ridder acquisitions and excludes Star Tribune newspaper. ** Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

Online only revenues are not shown as the amounts are not comparable.

The McClatchy Company Consolidated Statistical Report (In thousands, except for preprints)

December Year-to-Date Combined As Reported *Pro Forma *Pro Forma 53-week 2006 52-week 2006 2005 % Change Revenues - Net: Advertising Retail $623,675 $891,378 $893,462 -0.2% National 133,779 201,578 219,719 -8.3% Classified Total 555,919 819,499 809,619 1.2% Automotive 136,372 196,971 217,244 -9.3% Real Estate 179,237 252,360 223,335 13.0% Employment 183,649 283,054 279,700 1.2% Other Class 56,661 87,114 89,341 -2.5% Direct Marketing 118,003 177,486 156,546 13.4% Other Adv Revenue 1,536 1,511 2,083 -27.5% Total Advertising $1,432,912 $2,091,452 $2,081,429 0.5%

Circulation 194,940 289,959 302,138 -4.0% Other 47,337 73,095 79,565 -8.1%

Total Revenues $1,675,189 $2,454,506 $2,463,132 -0.4%

Advertising Revenues by Market: California $421,993 $427,984 $417,951 2.4% Southeast 344,187 504,097 503,433 0.1% Florida 176,229 356,411 349,870 1.9% Midwest 147,986 283,604 291,058 -2.6% Northwest 189,546 227,255 221,038 2.8% Texas 109,989 213,089 211,327 0.8% Other 42,982 79,012 86,752 -8.9% Total Advertising $1,432,912 $2,091,452 $2,081,429 0.5%

December Year-to-Date Print Only As Reported *Pro Forma *Pro Forma 53-week 2006 52-week 2006 2005 % Change

Revenues - Net: Advertising Retail $610,093 $874,555 $883,130 -1.0% National 126,864 190,303 209,954 -9.4% Classified Total 474,396 687,254 698,563 -1.6% Automotive 122,063 176,100 200,201 -12.0% Real Estate 168,166 236,625 209,925 12.7% Employment 131,364 193,280 205,499 -5.9% Other Class 52,803 81,248 82,939 -2.0% Direct Marketing 118,003 177,486 156,546 13.4% Other Adv Revenue 1,536 1,511 2,083 -27.5% Total Advertising $1,330,892 $1,931,109 $1,950,276 -1.0%

Circulation Other Total Revenues

Advertising Revenues by Market: California $398,053 $403,588 $398,233 1.3% Southeast 315,950 458,957 470,281 -2.4% Florida 164,624 332,046 333,113 -0.3% Midwest 135,514 258,232 269,262 -4.1% Northwest 174,997 209,015 207,230 0.9% Texas 103,203 199,157 201,271 -1.1% Other 38,551 70,114 70,886 -1.1% Total Advertising $1,330,892 $1,931,109 $1,950,276 -1.0%

Advertising Statistics for Dailies: Full Run ROP Linage 24,286.4 34,741.4 35,691.2 -2.7% Millions of Preprints Distributed 5,071.3 7,234.2 6,840.1 5.8%

Average Paid Circulation:** Daily 2,842.5 2,928.7 -2.9% Sunday 3,523.2 3,655.6 -3.6%

* Pro Forma includes Knight Ridder acquisitions and excludes Star Tribune newspaper. ** Reflects average paid circulation based upon number of days in period. Does not reflect ABC reported figures.

Online only revenues are not shown as the amounts are not comparable.