McClatchy Co. has announced plans to buy newspaper publisher Knight-Ridder Inc. for $4.5 billion in cash and stock.

McClatchy owns papers such as the Sacramento Bee and Minneapolis Start Tribune; Knight-Ridder operates several established papers like the Philadelphia Inquirer and the San Jose Mercury News. McClatchy says the combined company will become the number two U.S. newspaper chain based on a daily circulation of 3.2 million people.

Analysts interpret the sale as a means for the companies to compensate losing classifieds sales and subscriptions.

"McClatchy is among the best at running their online newspapers, so this is a welcome development," says Shawn Riegsecker, president, Centro. "This purchase is good for the newspaper industry as a whole because the battle for market share isn't newspaper versus newspaper anymore, its newspapers versus portals and pure-play internet companies. McClatchy was an original pioneer with The Nando Times, the first online newspaper in 1994, and ever since has been committed to a successful online strategy. So, as necessary and inevitable as consolidation is for the newspaper industry, we're glad to see McClatchy doing the buying."

McClatchy CEO Gary Pruitt says, "We have no plans for layoffs at the newspapers. There will of course be some consolidation at corporate offices and some internet operations. But we plan to maintain, sustain and further the journalism at these newspapers."