THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Thursday, May 18, 1995                 TAG: 9505180725
SECTION: BUSINESS                 PAGE: D2   EDITION: FINAL 
SOURCE: Associated Press 
DATELINE: RALEIGH                            LENGTH: Short :   47 lines

RALEIGH NEWSPAPER BEING SOLD TO MCCLATCHY NEWSPAPERS INC.

The News & Observer of Raleigh, a family-owned institution for more than a century, is being sold to a California-based newspaper chain, the newspaper announced Wednesday.

During a meeting in the newsroom, Executive Editor Frank Daniels III said the deal with McClatchy Newspapers Inc. has been in the works for two months. The definitive agreement for the purchase was signed Tuesday, with an expected closing date of Aug. 1, 1995.

McClatchy said in a statement that it had agreed to pay about $250 million for the stock of The News and Observer Publishing Co. and to assume N&O debt of about $123 million. Some of the debt was incurred by The N&O for plant expansion and the installation of new presses, which is still under way.

The News & Observer has been owned by the Daniels family since 1894 and has a circulation of about 153,000 daily and 200,000 on Sunday. Also included in the purchase are six non-daily newspapers, Business North Carolina magazine, and NandOnet, an on-line information service providing access to the Internet.

``The N&O is a fine newspaper company with a tradition of family ownership similar to our own,'' Erwin Potts, president of McClatchy, said in a news release. ``This is a company which, like ours, places a high priority on quality newspapers and community service. It's an excellent fit.''

McClatchy's holdings include The Sacremento (Calif.) Bee and The Herald of Rock Hill, S.C.

Josephus Daniels bought The N&O in 1894, and his descendants have owned the newspaper since then. Its editorial pages have been an unabashed voice for Democratic Party causes.

Frank Daniels Jr., the newspaper's president and publisher, will continue as publisher, Frank Daniels III told employees. Frank Daniels Jr. is also chairman of the board of directors of The Associated Press.

McClatchy earned $46.6 million on sales of $471.4 million in 1994. The News & Observer company's total revenues in 1995 are projected to be $118 million, compared to $107 million in 1994, and come primarily from The News & Observer. by CNB