By John Temple Ligon 

Newspaper giant Knight Ridder, publisher of The State and The Charlotte Observer , delayed its April annual shareholders’ meeting to proceed with the sale of the company. Knight Ridder is the country’s second largest newspaper publisher. The sale was announced early last November in response to demands from Knight Ridder’s major shareholders. The prospective buyers include newspaper publishers, private equity firms, and a newspaper union.

Gannett, the country’s largest newspaper publisher, is toying with the idea of joining forces with MediaNews Group, another large publisher, to buy Knight Ridder. A recent article in Business Week offered the possibility The McClatchy Co. ( Sacramento Bee , among more than 20 other newspapers) and The New York Times Co. could combine their resources for a run at Knight Ridder.

The private equity firms looking into Knight Ridder are the buyers the journalists don’t want. A private equity buyer would be expected to slash and burn overhead, unloading plenty of newspaper people. And in several years the company would be back on the auction block as an exit strategy for the private equity firm’s profit taking.

The newspaper union is interested in only the eight or so unionized newspapers at Knight Ridder, which leaves out The State and The Charlotte Observer . United Airlines tried an employee– run operation and went bankrupt. 

 A provision in Knight Ridder’s articles of incorporation limits the field of buyers. Unless the Knight Ridder board of directors determines a buyer would continue the company’s quality of journalism, the buyer would have to win 80% of the shareholders’ votes to close the deal. If the board approves the buyer and its presumed quality, only 66% of the shareholders’ votes are required.

Hardly free–flowing capitalism, the provision slows down suitors. Gannett, for instance, is the frontrunner to take over Northcliffe Newspapers, a British operation worth about $2.25 billion. If the Northcliffe deal goes through for Gannett, it is unlikely Gannett would continue its pursuit of Knight Ridder, said to be selling for as much as $6 billion. On the other hand, if the Knight Ridder sale to Gannett is closed first, it is unlikely Gannett would stay in the hunt for Northcliffe.

 Through it all, the chances of a separate sale of The State still appear possible.