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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2002
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number                     

MEDIANEWS GROUP, INC.

Registrant’s telephone number, including area code: (303) 563-6360

Securities registered pursuant to Section 12(b) of the Act:
NONE

Securities registered pursuant to Section 12(g) of the Act:
NONE

     Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

     State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the close of the latest practicable date.

Common Stock at September 16, 2002
Class A		2,298,346 shares

     Documents Incorporated by Reference: None

Table of Contents

PART I

Item 1. Business

General

     MediaNews Group, Inc. (“MediaNews” or “the Company”) is the successor issuer to Garden State Newspapers, Inc. MediaNews and its predecessor companies were founded in March 1985 by William Dean Singleton and Richard B. Scudder. We are the seventh largest newspaper company in the United States in terms of circulation and, including The Reporter in Vacaville, California, the purchase of which is scheduled to close October 1, 2002, we control 47 market dominant daily, and approximately 80 non-daily newspapers in ten states (including suburban markets in close proximity to the San Francisco Bay area, Los Angeles, New York, Baltimore and Boston). We also own metropolitan daily newspapers in Denver and Salt Lake City, which operate under Joint Operating Agreements (“JOA”). Our principal sources of revenue are print advertising and circulation. Other sources of revenue include commercial printing and electronic advertising. Our newspapers had a combined daily and Sunday paid circulation of approximately 1.7 million and 2.4 million, respectively, as of March 31, 2002.

     We have grown primarily through strategic acquisitions, partnerships and to a lesser extent, through internal growth. See pages 18 through 20 for a description of significant acquisitions, dispositions and partnerships for the years ended June 30, 1998 through 2002. Our main acquisition focus is on newspaper markets contiguous to our own, allowing us to realize certain operating synergies. We refer to this strategy as “clustering.” A majority of our newspapers are located in regional clusters, allowing them to achieve higher operating margins through efficient use of shared labor and equipment and by providing opportunities to cross-sell advertising. We occasionally divest newspaper properties when they no longer have strategic value and when we believe the property’s value to us has been maximized. This strategy has enabled us to reinvest sale proceeds in newspaper properties that are available at attractive prices and can be clustered with our newspapers. This has historically allowed us to achieve greater revenue and EBITDA growth than we otherwise would have been able to achieve.

     Our newspapers are geographically diverse and generally positioned in markets with limited direct competition for local newspaper advertising. Start-ups of new daily newspapers in suburban markets with pre-existing local newspapers are rare. We believe our newspaper markets, taken as a whole, have above average population and sales growth potential. Most suburban and small city daily newspapers, such as a majority of the newspapers we own, have the leading or sole distribution in the market areas served by the newspaper. Suburban newspapers address the specific needs of the community by publishing a broad spectrum of local news as well as advertiser-specific editions which television, because of its broader geographic coverage, is unwilling or unable to provide. Thus, in many communities the local newspaper provides a combination of social and economic services in a way that only it can provide, making it attractive for both consumers and advertisers.

     Sizeable weekly newspapers are generally found in and around metropolitan areas in addition to smaller towns and cities. Suburban weeklies, such as the weekly newspapers operated by our divisions, ANG Newspapers, Los Angeles Newspapers Group, and the Connecticut Newspapers Group, have several advantages over metropolitan dailies, including (1) a lower cost structure, (2) the ability to publish only on their most profitable days such as one midweek and one weekend day, and (3) the ability to more effectively exploit zoned advertising. Zoned advertising provides a means for small merchants, individuals, and other local advertisers to advertise solely in their own local market at a cost lower than that of a full-run metropolitan daily newspaper. Thus, the typical suburban weekly newspaper has a broader advertiser base and does not rely to the same degree as a metropolitan daily on major retailers for advertising revenues. A majority of our weekly newspapers are distributed in markets where we own and distribute daily newspapers. This strategy allows us to achieve greater market penetration and eliminate or reduce the threat of direct-mail competition in many of our markets.

Industry Background

     Newspaper publishing is the oldest and largest segment of the media industry. We believe the focus on local news has allowed newspapers to remain the dominant medium for local advertising, accounting for over 40% of all local media advertising expenditures in the United States in calendar year 2001⁽¹⁾. In calendar year 2001, newspaper advertising expenditures in the United States were approximately $44.3 billion, representing a compounded annual growth rate of 4.0% since 1991⁽¹⁾. Newspapers continue to be viewed as the best medium for retail advertising, which emphasizes the price of goods, in contrast to television, which is generally used for image advertising.

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Industry Background (continued)

     Readers of newspapers tend to be more highly educated and have higher incomes than non-newspaper readers. For instance, 60% of college graduates and 64% of households with income greater than $75,000 are reported to read a daily newspaper⁽¹⁾. We believe that newspapers continue to be the most cost-effective means for advertisers to reach this highly targeted demographic group.

     Total morning daily and Sunday circulation has increased nationally from 29.4 million and 54.7 million in 1980 to 46.8 million and 59.1 million in 2001, respectively⁽¹⁾. Total reported daily circulation, including evening editions, however, declined nationally from 62.2 million in 1980 to 55.6 million in 2001⁽¹⁾. This decrease can be directly attributed to the national decline in the circulation of evening newspapers, which is reported to have decreased from 32.8 million in 1980 to 8.8 million in 2001⁽¹⁾. The decline in evening newspaper circulation is the result of most evening newspapers’ inability to compete with existing morning newspapers in the same market. Many evening newspapers have converted to morning newspapers or ceased publishing altogether. Circulation statistics for suburban daily newspapers are not published separately from circulation statistics for daily newspapers as a whole. Reliable circulation statistics for weekly newspapers are not available.

     Newspaper advertising revenues are cyclical and are generally affected by changes in national and regional economic conditions. Classified advertising, which makes up approximately 38%⁽¹⁾ of newspaper advertising revenues, is the most sensitive to economic improvements or slowdowns as it is affected by employment trends, real estate transactions and automotive sales.

Recent Company Developments

     Effective August 1, 2002, we took over management of Kearns-Tribune, LLC, our wholly-owned subsidiary and the publisher of The Salt Lake Tribune. As a result, we have begun to integrate its business, utilizing our methods and strategy of operating a newspaper. See additional discussion of Salt Lake and the legal issues associated with this acquisition under Item 3. Legal Proceedings.

     In August 2002, the California Newspapers Partnership (“CNP”), a 54.23% owned subsidiary of MediaNews, agreed to acquire substantially all of the operating assets used in the publication of The Reporter, a morning daily newspaper, and Valu-Pack, a total market coverage product, both published in Vacaville, California. The newspaper has daily and Sunday paid circulation of approximately 18,000 and 20,000, respectively. The purchase price of $31.0 million includes $30.0 million of cash, net of working capital, plus future payments under a covenant not to compete with a discounted value of approximately $1.0 million. Closing is scheduled to be effective on October 1, 2002 and will be funded by the CNP partners’ capital contributions. Our share of capital funding is $16.3 million.

Significant Transactions in Fiscal Year 2002

     We had no significant acquisitions or dispositions in fiscal year 2002.

Operating Strategy

     Our strategy is to increase revenues and cash flows through geographic clustering and internal growth. The key components of our long-term internal growth strategy are targeted marketing programs, local news leadership, circulation growth, cost control, Internet delivery of news and advertising and convergence. These strategies are more fully described below.

Geographic Clustering. We have acquired and assembled newspapers, and may continue to acquire newspapers, in contiguous markets. We refer to this strategy as “clustering.” Clustering enables us to realize operating efficiencies and economic synergies, such as the sharing of management, accounting, newsgathering, advertising and production facilities. In addition, we seek to increase operating cash flows at acquired newspapers by reducing labor costs, page width of the newspapers, and overall improved cost management. Clustering also enables management to maximize revenues by selling advertising into newspapers owned by us in contiguous markets. As a result of clustering, we believe that our newspapers are able to obtain higher operating margins than they would otherwise be able to achieve on a stand-alone basis. CNP and the Denver JOA are extensions of this strategy.

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Operating Strategy (continued)

Targeted Marketing Programs. Through a strong local presence and active community relations, we are able to develop and implement marketing programs that maximize our advertising revenues. We utilize research, demographic studies and zoning (marketing directed to a particular sub-segment of a local area) in developing marketing programs and new products that meet the unique needs of specific advertisers.

Local News Leadership. We are dedicated to being the leaders in providing high quality local news. Our newspapers generally have the largest local newsgathering resources in their markets. We believe that our focus on local news coverage is key to our success. Providing high quality local and regional news makes us unique in our markets. Our newspapers include local sports, local business, weekend sections, highlights of people in the community, local editorials and letters to the editors, in addition to national and international news. With the timeliness and availability of national and world news 24 hours a day on television, we believe that providing in-depth local news coverage is invaluable and sets us apart from other news sources, generating reader loyalty and increasing franchise value. Statistics have shown newspapers that focus on local news and content achieve greater market penetration. Additionally, our ongoing involvement in the communities in which we operate not only strengthens our relationships with these communities but also provides our advertisers a superior product for promoting their goods and services.

Our newspapers are committed to editorial excellence by providing the proper mix of local and national news to effectively serve the needs of their local markets. The majority of our newspapers receive awards annually for excellence in various editorial categories in their respective regions and circulation size. During 2000, The Denver Post achieved the highest award for editorial excellence, winning a Pulitzer Prize for its coverage of the Columbine High School tragedy. Our other newspapers have also received numerous awards from state press associations as well as other peer organizations for their editorial content, local news and sports coverage, and photography. In addition, our newspapers are designed to visually attract readers through attractive layouts and color enhancements.

Circulation Growth. We believe that circulation growth is essential to the creation of long-term franchise value at our newspapers. Accordingly, we have and will continue to make significant investments in promotion, telemarketing and other circulation growth campaigns to increase circulation and readership. Our management incentive programs are also designed to reward our publishers for circulation growth, at each of their daily newspapers. We continue to balance our commitment to circulation growth with circulation profit by instituting programs that target the replacement of higher churn short-term circulation orders with longer term, more profitable circulation. This strategy has improved circulation profits but may at times decrease circulation volumes in the short-term.

Cost Control. We emphasize cost control with a particular focus on managing staffing requirements. At newspapers with collective bargaining unions, management strives to enter into long-term agreements with minimal annual increases. In addition, we further control labor costs through investments in state-of-the-art production equipment that improve production quality and increase efficiency. We are equally focused on newsprint cost control. Each of our newspapers benefits from the discounted newsprint pricing we obtain as the seventh largest newspaper group in the United States. We purchase newsprint from several suppliers under arrangements resulting in what we believe are some of the most favorable newsprint prices in the industry. We have also entered into fixed price newsprint contracts and newsprint swaps, which expire in June 30, 2004 and May 31, 2005, as well as newsprint purchasing arrangements with certain of our other suppliers, which delay the adverse effect of newsprint price increases. All of our fixed price and hedged newsprint is used by the Denver JOA.

We were the first newspaper company in the United States to convert all of our newspapers to a 50-inch web width, which reduced the width of a single newspaper page to 12.5 inches from either 13.5 inch or 13.75 inch page widths. These conversions have permanently reduced our newsprint consumption in excess of 8% over levels prior to conversion. While converting to the 50-inch web-width cut our newsprint costs, it also had the added benefit of improving customer satisfaction.

Internet. To take advantage of the increasing use of the Internet and its advertising growth opportunities, we established MediaNews Group interactive (“MNGi”), to develop and maintain websites for each of our daily newspapers. Statistics show that in 2001, 62% of general Internet users and 86% of online newspaper users went to their local newspapers’ websites for local news(1). MNGi has developed websites that provide an online editorial news product and full online classified services for each of our daily newspapers. We have also made strategic investments related to our Internet strategy, including PowerOne Media (successor to AdOne LLC), Employment Specialists and Mortgage Rate Watch, to expand and enrich our online content as is

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Operating Strategy (continued)

more fully described below. Although we believe that providing an online product is important to broaden the reach of our newspapers and ultimately increase our revenues by upselling value added products and services to our advertisers, we believe that almost all of our customers still prefer the newspaper in a printed form. By being the leading, and in certain instances the sole, provider of local news in most of our markets, we believe that our newspapers are well positioned to respond to and benefit from changes in the way in which advertising, news and information are delivered to customers in the future. Our online newspapers can be found at www.newschoice.com.

In January 1999, MediaNews, the Hearst Corporation, E.W. Scripps, Stephens Media Group (previously Donrey Media Group) and Advance Publications each acquired a 20.0% interest in AdOne LLC, which was formed to acquire the assets of AdOne Classified Network, Inc. (“AdOne”) and its consumer website, abracat.com, a fully searchable classified advertising database. In July 1999, Belo Corporation, Journal Register Company, Lee Enterprises, Media General, Morris Communications Corporation and Pulitzer, Inc. each made an equity investment in AdOne LLC, reducing our interest to approximately 12.1%. In November 2001, AdOne merged with PowerAdz.com to form PowerOne Media (“PowerOne”) www.powermedia.com. Our interest in PowerOne is now approximately 6.1%. PowerOne provides interactive vertical advertising solutions, primarily for the newspaper industry.

One of PowerOne’s main products is a hosted website for classified advertising. Approximately 90% of our hosted newspaper websites employ this product to display their classified advertising on-line. Other interactive solutions provided by PowerOne include Zwire!, a content publishing solution, and Carcast, an on-line automotive marketplace. PowerOne currently has classified listings from approximately 1,500 daily and weekly newspapers, in 95 of the top 100 markets representing 83% of total United States households. As of June 30, 2002, PowerOne’s database aggregates and delivers over 1 million paid newspaper classified ads daily. PowerOne’s network averages 45 million page views per month, representing approximately 1.5 million unique users. We believe PowerOne is solidly positioned to play a leading role in the expanding online classified marketplace.

In August 1999, we acquired an 80% interest in Employment Specialists, LLC. We re-launched the website under the name Employment Wizard, www.employmentwizard.com, in December 1999. In June 2001, Employment Specialists, LLC merged with CareerSite, which has reduced our interest in Employment Specialists, LLC to approximately 40%. The combination of Employment Specialists and CareerSite created a stronger company, better positioned to develop and sell Internet based application tools that allow job seekers and employers to search job opportunities and resumes for the best match. Employment Specialists has one of the most powerful and robust employment tools allowing more job seekers and employers to find exact matches. Employment Specialists currently hosts over 150 different e-recruitment sites that support over 70,000 registered advertisers, contains over 90,000 current jobs, supports almost 1,650,000 registered candidates and serves over 500,000 unique visitors per month. As of June 30, 2002, approximately 100 newspapers are using Employment Specialists as their Internet employment vertical, of which more than 50 are not owned or controlled by MediaNews. Employment advertising is an important revenue stream at our newspapers, and with our investment in Employment Specialists, LLC, we are able to integrate and provide the best of newspaper and Internet functionality for users and advertisers.

Mortgage Rate Watch provides various video promotion services to participating realtors and newspaper affiliates. Operating under the name “See It Buy It” (www.seeitbuyit.com), this company provides realtors: the service of video photography of real estate for sale; the conversion of photo shoots into online home tours with full video streaming; and production of brochures, street signs, direct mail pieces, and other items used by realtors in the home sales process. Our newspapers sell this service to new and existing real estate advertisers. In addition, newspapers use the service to gather full video clips of schools, parks, downtown and other public areas, for use on their web sites, which enhances the real estate selling process. In short, when this strategy is fully developed, our newspapers in combination with See It Buy It will provide a one stop shopping marketing solution for our real estate advertising customers.

Convergence. We have also made strategic investments in other media outlets beginning with our acquisition of radio stations in and around Graham, Texas, which are operated in conjunction with our weekly newspapers published in and around Graham. We also own the CBS television affiliate in Anchorage, Alaska, which is now operated in conjunction with the Fox affiliate in Anchorage under the terms of a Joint Sales Agreement and a Shared Services Agreement. In addition, many of our newspapers have a television partner, which provides promotional value and enables the sharing of newsgathering resources and cross-selling opportunities.

Several of our newspapers are currently working with Employment Television, Inc. to produce television shows exclusively focused on employment advertising, illustrating how our newspapers are actively leveraging content across multiple platforms (in this case, print, television and Internet) to create multimedia packages. While our share of revenue under this multimedia package is currently not significant, it is growing rapidly.

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Operating Strategy (continued)

	As the digital age continues to evolve and FCC rules and regulations change, we will continue to explore new and innovative ways to leverage our content across multiple platforms with a clear focus toward profitable new revenue streams. We will continue to develop strategic partners, such as Employment Television, Inc. to assist in the development of this strategy in a cost efficient manner.

     We may, from time to time, make strategic or targeted acquisitions and dispositions. Acquisitions will be considered only when they contribute to our clustering strategy or represent a compelling value proposition due to the attractiveness of the price in relation to the growth potential of the asset, as was the case with The Salt Lake Tribune. Furthermore, our acquisition strategy will continue to be governed by the strong financial disciplines that have enabled us to grow through acquisitions without substantial increases to our leverage ratio in the short term. We will also continue to invest conservatively in the Internet and other electronic media companies and enter into partnerships that complement our existing newspapers or our other electronic media investments to the extent that such investments and partnerships enhance our convergence strategy.

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Paid Circulation

     The following table sets forth paid circulation of each of our daily newspapers. The JOA data for daily circulation reflects only our newspapers’ share of the combined circulation:

Circulation figures are based on the Audit Bureau of Circulation (ABC) Fas-Fax Statements for the six-month period ended March 31, 2002, except for Deming, which does not report to ABC.

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Newspaper Properties

     The following is a description of our newspapers and the markets in which they serve as of the date of this report.

     Denver. The Denver Post is our largest daily newspaper and is the 6th and 7th largest Sunday and daily newspaper, respectively, in the United States. We believe it is one of the most respected newspapers in its region. On January 23, 2001, the formation of the Denver Newspaper Agency (“DNA”) was completed and The Denver Post and the Rocky Mountain News began to operate under the terms of a JOA. Under the terms of the JOA, DNA controls all operations, other than news and editorial. We are responsible for the editorial staff and producing the news and editorial content of The Denver Post. The Denver Post and the Rocky Mountain News are each published five days a week as morning editions, with the Rocky Mountain News being published exclusively on Saturday and The Denver Post exclusively on Sunday.

     Los Angeles Newspaper Group. The Los Angeles Newspaper Group (“LANG”) is located in Los Angeles County, California, and publishes eight daily newspapers. LANG consists of the Daily News, the Press-Telegram, which are owned by MediaNews, and newspapers owned by the California Newspapers Partnership, which include the San Gabriel Valley Newspaper Group, San Bernardino, Ontario, and Redlands and are described below under “California Newspapers Partnership.” These newspapers cover the San Fernando Valley region of Los Angeles, Long Beach, Pasadena, West Covina, Whittier, San Bernardino, Ontario, and Redlands, California. According to the March 31, 2002 ABC Fas-Fax Statements, LANG’s total daily circulation was 0.5 million and total Sunday circulation was 0.6 million. LANG also publishes several weekly newspapers, in addition to those published by the San Gabriel Valley Newspaper Group, including the Star Watch and El Economico (a Spanish language newspaper), which are distributed in and around the Los Angeles Newspaper Group markets.

     Salt Lake City. The Newspaper Agency Corporation (“NAC”), a partnership owned 50% by Kearns-Tribune, LLC, a wholly owned subsidiary of MediaNews, publishes The Salt Lake Tribune and the Deseret News under the terms of a JOA. Net income of NAC is distributed 58% to Kearns-Tribune, LLC and 42% to the Deseret News Publishing Company (the other party to the JOA). NAC controls all business functions other than news and editorial for both newspapers. Kearns-Tribune, LLC is responsible for the editorial staff producing the news and editorial content of The Salt Lake Tribune. The Salt Lake Tribune and the Deseret News are each published seven days a week with The Salt Lake Tribune as a morning edition and the Deseret News as an evening edition.

     York. York Newspaper Company, a partnership owned 57.5% by York Newspapers, Inc. (“YNI”), a wholly owned subsidiary of MediaNews, publishes The York Dispatch, the York Sunday News and the York Daily Record in York, Pennsylvania, approximately 30 miles south of Harrisburg, Pennsylvania and 50 miles north of Baltimore, Maryland. These newspapers are published under the terms of a JOA. All operations, other than news and editorial, are controlled by the partnership. YNI maintains its own editorial staff and produces the news and editorial content of both The York Dispatch and the York Sunday News. The York Dispatch (evening) and the York Daily Record (morning) are published five days a week with the York Daily Record published exclusively on Saturday and the York Sunday News, exclusively on Sunday. The York Newspaper Company also publishes the Weekly Record each Tuesday.

     Charleston. Charleston Newspapers, is a joint venture operated under the terms of a JOA and publishes the Charleston Daily Mail (evening), the Charleston Gazette (morning) six days a week, and the Sunday Gazette-Mail, on Sunday in Charleston, West Virginia. All operations, other than news and editorial are controlled by the joint venture, and profits are split equally. We are responsible for maintaining the editorial staff and producing the editorial content for the Charleston Daily Mail.

     Bridgeport. The Connecticut Post is located in Bridgeport, Connecticut and publishes a morning newspaper seven days a week, distributed primarily in and around Fairfield County, Connecticut, one of the most affluent counties in the United States. The Connecticut Post also publishes the Westport News, Fairfield Citizen-News, Darien News-Review, and the Norwalk Citizen-News, weekly newspapers distributed in Fairfield County and surrounding areas.

     Lowell. The Sun is located in Lowell, Massachusetts, approximately 30 miles north of Boston, and publishes an evening newspaper five days a week and morning editions on Saturday and Sunday.

     Pittsfield. The Berkshire Eagle is located in Pittsfield, Massachusetts, approximately 30 miles southeast of Albany, New York, and publishes a morning newspaper seven days a week. The Berkshire Eagle also publishes a weekly newspaper, The Eagle Shopper.

     Las Cruces. The Las Cruces Sun-News is located in Las Cruces, New Mexico, approximately 45 miles north of El Paso, Texas, and publishes a morning newspaper seven days a week. The Las Cruces Sun-News also publishes the Voz del Valle, a weekly Spanish language newspaper, and The Shopping Times, a weekly shopper.

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Newspaper Properties (continued)

     Lebanon. The Lebanon Daily News is located in Lebanon, Pennsylvania, approximately 35 miles northeast of York, Pennsylvania. The Lebanon Daily News publishes an evening newspaper five days a week and morning editions on Saturday and Sunday. The Lebanon Daily News also publishes the Palm Advertiser, a weekly newspaper, which is distributed in and around Lebanon, Pennsylvania.

     Hanover. The Evening Sun is located in Hanover, Pennsylvania, approximately 20 miles southwest of York, Pennsylvania. The Evening Sun publishes an evening newspaper five days a week and morning editions on Saturday and Sunday. The Evening Sun also publishes a weekly newspaper, The Community Sun.

     Farmington. The Daily Times is located in Farmington, New Mexico approximately 160 miles northwest of Albuquerque, New Mexico and publishes a morning newspaper seven days a week. The Daily Times also publishes the San Juan Sun and the Four Corners Business Journal, both weekly newspapers.

     Fitchburg. The Sentinel & Enterprise is located in Fitchburg, Massachusetts, approximately 40 miles northwest of Boston, Massachusetts, and approximately 30 miles west of Lowell, Massachusetts, and publishes an evening newspaper five days a week and morning editions on Saturday and Sunday. The Sentinel & Enterprise also publishes nine weekly newspapers: North County Leader, The Weekender Plus, The Independent, Pepperell Free Press, Townsend Times, Groton Landmark, Harvard Hillside, The Public Spirit and the Shirley Oracle, which are all distributed in and around areas surrounding Fitchburg and Nashoba, Massachusetts.

     Eastern Colorado Publishing Company. Eastern Colorado Publishing Company (“Eastern Colorado”) publishes the Fort Morgan Times, the Journal-Advocate and the Lamar Daily News, daily newspapers published in Fort Morgan, Sterling and Lamar, Colorado. Each of these daily newspapers also publishes a weekly newspaper, which includes the Morgan Times Review, Journal-Advocate Shopper and the Tri-State Trader. These weekly newspapers are distributed free in and around each of the daily newspapers’ geographic markets. Eastern Colorado also publishes the Akron News Reporter, Brush News-Tribune, The Burlington Record, The Plains Dealer, The Estes Park Trail Gazette and the Julesburg Advocate, paid weekly newspapers distributed in Akron, Brush, Burlington, Estes Park and Julesburg, Colorado.

     Brattleboro. The Brattleboro Reformer is located in Brattleboro, Vermont, approximately 65 miles northeast of Albany, New York, and publishes a morning newspaper seven days a week. The Brattleboro Reformer also publishes The Town Crier, a weekly shopper.

     Carlsbad. The Carlsbad Current-Argus is located in Carlsbad, New Mexico, approximately 210 miles east of Las Cruces, New Mexico. The Carlsbad Current-Argus publishes a morning newspaper six days a week (excluding Monday).

     Bennington. The Bennington Banner is located in Bennington, Vermont, approximately 35 miles northeast of Albany, New York, and publishes a morning newspaper five days a week and a weekend edition. The Bennington Banner also publishes the Manchester Journal, a paid weekly newspaper distributed on Wednesdays in Manchester, Vermont, and The Bennington Shopper, a free weekly shopper.

     Alamogordo. The Alamogordo Daily News is located in Alamogordo, New Mexico, approximately 100 miles north of El Paso, Texas and 65 miles northeast of Las Cruces. The Alamogordo Daily News publishes an evening newspaper Monday through Friday and a Sunday edition.

     North Adams. The North Adams Transcript is located in North Adams, Massachusetts, approximately 30 miles east of Albany, New York, and publishes an evening newspaper six days a week (excluding Sunday).

     Deming. The Deming Headlight is located in Deming, New Mexico, approximately 60 miles west of Las Cruces, New Mexico, and publishes a morning newspaper Monday through Friday.

     Graham. The Graham Leader is located in Graham, Texas, approximately 90 miles northwest of Fort Worth, Texas. The Graham Leader is a bi-weekly newspaper with total paid circulation of approximately 4,100. Graham Newspapers also publishes the Lake Country Sun, the Lake Country Shopper, and The Olney Enterprise each Thursday; the Jacksboro Gazette-News and The Jack County Herald, weekly newspapers, published each Monday and Thursday, respectively; and the Breckenridge American, a bi-weekly newspaper located nearby in Breckenridge, Texas. We also own two AM and two FM radio stations in Graham and Breckenridge.

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Newspaper Properties (continued)

California Newspapers Partnership

     The California Newspapers Partnership includes the following newspaper properties:

     ANG Newspapers. ANG Newspapers is headquartered in Oakland, California, and publishes seven newspapers. ANG Newspapers consists of the Oakland Tribune, The Daily Review, Tri-Valley Herald, The Argus, Alameda Times-Star, San Mateo County Times, and the Marin Independent Journal. All the newspapers, except for the San Mateo County Times, are morning newspapers and also publish a Sunday newspaper. These newspapers cover the city of Oakland, California, and affluent suburban markets located in the immediate area surrounding Oakland in Alameda County, Marin County and San Mateo County. ANG Newspapers also publishes San Bruno Herald, Daly City Record and Brisbane Bee, Times Weekend, Millbrae Recorder-Progress, The Wave, The Pacifica Tribune, The Milpitas Post, The Fremont Bulletin, The Berryessa Sun and The Coastside Chronicle each week, and East Bay Real Estate Connection, monthly. Additionally, Marin is a print site for USA TODAY and Investor Business Daily.

     San Gabriel Valley Newspaper Group. The San Gabriel Valley Newspaper Group, is located in West Covina, California, approximately 10 miles east of Los Angeles California, and publishes three morning daily newspapers, the Pasadena Star-News, San Gabriel Valley Tribune, and Whittier Daily News. These newspapers cover the cities of Pasadena, West Covina and Whittier, California, as well as other cities in the San Gabriel Valley. The San Gabriel Valley Newspaper Group also publishes the Highlander Newspapers, Cheers, and The Star, weekly newspapers distributed in and around these same cities.

     San Bernardino. The Sun is located approximately 20 miles east of Ontario. The Sun publishes a morning newspaper seven days a week.

     Ontario. The Inland Valley Daily Bulletin is located in Ontario, California, adjacent to West Covina and the San Gabriel Valley Newspaper Group. The Inland Valley Daily Bulletin publishes a morning newspaper seven days a week.

     Chico/Oroville. The Enterprise-Record is located in Chico, California, approximately 150 miles northeast of San Francisco. The Enterprise-Record publishes a morning newspaper seven days a week in Chico and publishes an Oroville edition, The Mercury-Register, six mornings a week (excluding Sunday).

     Vallejo. The Times-Herald is located in Vallejo California, approximately 40 miles north of Oakland, California and publishes a morning newspaper seven days a week.

     Eureka. The Times-Standard is located in Eureka, California, approximately 250 miles north of San Francisco, and publishes a morning newspaper seven days a week. The Times-Standard also publishes three weekly newspapers, Times-Standard Plus, On The Market, Tri-City Weekly, and The Buyer’s Guide, which are distributed in and around the areas surrounding Eureka, California.

     Vacaville. The Reporter is located in Vacaville, California, approximately 25 miles northeast of Vallejo and approximately 35 miles southwest of Sacramento. The Reporter publishes a morning newspaper seven days a week. Valu-Pack, a total market coverage product is also published in Vacaville. We expect to complete the acquisition of Vacaville on October 1, 2002.

     Woodland. The Daily Democrat is located in Woodland, California, approximately 50 miles from Vallejo and 100 miles from Chico, California. The Daily Democrat publishes an evening newspaper seven days a week.

     Ukiah. The Ukiah Daily Journal is located in Ukiah, California, approximately 110 miles north of San Francisco and 140 miles south of Eureka, California. The Ukiah Daily Journal publishes an evening newspaper six days a week (excluding Saturday). The Ukiah Daily Journal also publishes The Hometown Shopper.

     Red Bluff. The Daily News is located in Red Bluff, California, approximately 40 miles north of Chico, California and publishes an evening newspaper six days a week (excluding Sunday).

     Redlands. The Redlands Daily Facts is located in southern San Bernardino County and publishes an evening newspaper six days a week (excluding Saturday).

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Newspaper Properties (continued)

California Newspapers Partnership (continued)

     Lakeport. The Lake County Record-Bee is located in Lakeport, California, approximately 120 miles northeast of San Francisco and approximately 35 miles southeast of Ukiah. The Lake County Record-Bee publishes a morning newspaper five days a week (excluding Sunday and Monday). The Lake County Record-Bee also publishes weekly newspapers and shoppers including the Clearlake Observer-American, Willits News, Penny Slaver, and Bee-Smart Shopper, all distributed in and around Lakeport, California. The Fort-Bragg Advocate-News is also printed in Lakeport.

Advertising and Circulation Revenues

     Advertising is the largest component of a newspaper’s revenues followed by circulation revenue. Advertising rates at each newspaper are established based upon market size, circulation, readership, demographic makeup of the market, and the availability of alternative advertising media in the marketplace. While circulation revenue is not as significant as advertising revenue, circulation trends can impact the decisions of advertisers and advertising rates.

     Advertising revenue includes Retail (local and national department stores, specialty shops, preprinted advertising circulars and other local retailers), National (national advertising accounts), and Classified advertising (employment, automotive, real estate, private party and personals). The contributions of Retail, National, Classified and Circulation revenue to total revenues for fiscal years 2002, 2001 and 2000 are shown in the table below. Generally accepted accounting principles require us to use the equity method of accounting for the JOA investments we do not control. Therefore, our share of revenues for the JOAs we do not control (Charleston, Denver and Salt Lake City) is excluded from this summary (see further discussion under Significant Accounting Policies). However, if our pro rata share of revenues were included in this summary, the results would not be significantly different from the results shown below.

Newsprint

     Newsprint is one of the largest costs of producing a newspaper. We buy newsprint from several suppliers under arrangements, resulting in what we believe are some of the most favorable long-term newsprint prices in the industry. We also own, through Kearns-Tribune, LLC, a 6% interest in Ponderay Newsprint Company. During fiscal years 2002, 2001, and 2000, excluding our unconsolidated JOA operations, we consumed approximately 148,000, 226,000 and 293,000 metric tons of newsprint, respectively, and, during the same periods, incurred newsprint expense of approximately $74.8 million, $126.0 million and $147.2 million, respectively. Newsprint expense as a percentage of revenue from our newspaper operations for fiscal years 2002, 2001 and 2000 was approximately 10.6%, 14.9% and 15.7%, respectively. Newsprint expense in fiscal years 2002 and 2001 decreased primarily due to the formation of DNA on January 23, 2001 and in 2002 due to a 10% decrease in average price per metric ton. Prior to the formation of DNA, The Denver Post’s newsprint expense was consolidated in our results. Now the operations of DNA are accounted for under the equity method. In addition, because The Denver Post, prior to the JOA, had lower circulation rates and lower advertising costs per thousand of distribution than other metro markets of similar size and our market dominant suburban newspapers, our newsprint expense as a percentage of revenue was greater in fiscal years 2000 and 2001, prior to the JOA. As described above, newsprint prices decreased significantly during fiscal year 2002. For the year ended June 30, 2002, our average price per metric ton was $504, whereas for the year ended June 30, 2001, our average price was $558. See “Near Term Outlook” on page 30 for additional information on our newsprint pricing.

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Employee Relations

     We employ at our consolidated entities and unconsolidated JOAs approximately 8,600 full-time and 2,600 part-time employees, of which approximately 3,700 are unionized. There has never been a strike or work stoppage at any of our newspapers during our ownership, and we believe that our relations with our employees are generally good.

Seasonality

     Newspaper companies tend to follow a distinct and recurring seasonal pattern, with higher advertising revenues in months containing significant events or holidays. Accordingly, the fourth calendar quarter, or our second fiscal quarter, is our strongest revenue quarter of the year. Due to generally poor weather and a lack of holidays, the first calendar quarter, or our third fiscal quarter, is our weakest revenue quarter of the year.

Competition

     Each of our newspapers compete for advertising revenue to varying degrees with magazines, radio, television and cable television, as well as with some weekly publications, direct mail and other advertising media, including electronic media. Competition for newspaper advertising is largely based upon circulation, price and the content of the newspaper. Our suburban and small city daily newspapers are the dominant local news and information source, with strong name recognition in their market and no direct competition from similar daily newspapers published in their markets. However, as with most suburban small city daily newspapers, some circulation competition exists from larger daily newspapers, which are usually published in nearby metropolitan areas.

     We believe larger metro daily newspapers with circulation in our newspaper markets generally do not compete in any meaningful way for local advertising revenues, a newspaper’s main source of revenues. Our daily newspapers capture the largest share of local advertising as a result of their direct coverage of the suburban market by providing our reader with local stories and information that major metropolitan newspapers are unable or unwilling to provide. In addition, we believe advertisers generally regard newspaper advertising as a more effective method of advertising promotions and pricing as compared to television, which is generally used to advertise image. We may from time to time compete with other companies, which have greater financial resources than we do.

Electronic Media

     Many newspaper companies are now publishing news and other content on the Internet. In addition, there are many sites on the Internet, which are, by design, advertising and/or subscription supported. Many of these sites target specific types of advertising such as employment, real estate and automotive classified.

     Due to many issues associated with advertising on the Internet, such as fragmentation and lack of agreement and/or meaningful research on how to effectively measure viewers and penetration levels, we have not seen advertisers making a significant commitment to advertise on the Internet. After the issues mentioned above are resolved, we expect advertising on the Internet to grow to meaningful levels. Accordingly, we have invested and will continue to invest in our online strategy, which we believe allows us to capture our share of the advertising dollars being spent on the Internet advertising now and in the future.

     MNGi, MediaNews’ electronic publishing division, is responsible for developing and maintaining a website for each of our daily newspapers. In the fourth quarter of fiscal year 2001, MNGi began the installation of a state of the art Internet publishing system, which was substantially completed during fiscal year 2002 and is expected to be fully completed in second quarter of fiscal year 2003. MNGi also continues to develop strategic alliances to enhance content, functionality and delivery of advertising and information over the Internet. In addition, we have made strategic investments in PowerOne, Mortgage Rate Watch, See It Buy It, and Employment Specialists, each of which is an integral part of our online strategy. We believe the design, functionality, and content of our websites have attracted viewers that continually return to our websites for news and information, a key for advertisers. Our online newspapers can be found at www.newschoice.com.

Regulation and Environmental Matters

     Substantially all of our facilities are subject to federal, state and local laws concerning, among other things, emissions to the air, water discharges, handling and disposal of wastes or otherwise relating to protection of the environment. Compliance with these laws has not had, and we do not expect it to have, a material effect upon our capital expenditures, net income or competitive position.

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Regulation and Environmental Matters (continued)

     Environmental laws and regulations and their interpretation, however, have changed rapidly in recent years and may continue to do so in the future. Environmental Assessment Reports of our properties have identified historic activities on certain of these properties, as well as current and historic uses of properties in surrounding areas, which may affect our properties and require further study or remedial measures. No material remedial measures are currently anticipated or planned by us or required by regulatory authorities with respect to our properties. However, no assurance can be given that existing Environmental Assessment Reports reveal all environmental liabilities, that any prior owner of our properties did not create a material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any such property.

     Because we deliver certain newspapers by second-class mail, we are required to obtain permits from, and to file an annual statement of ownership with, the United States Postal Service.

Item 2. Property

     Our corporate headquarters are located in Denver, Colorado. Our production facilities are, in most cases, complete newspaper production and office facilities, but also include television and radio stations. The principal operating facilities we own are located in:

     Certain facilities located in Denver, Colorado; Oakland, Pasadena and Pleasanton, California are operated under long-term leases. With the January 23, 2001 formation of DNA in Denver, the Denver long-term lease obligations were transferred to DNA, except for long-term lease obligations related to our corporate headquarters.

     We believe that all of our properties are generally well maintained, in good condition and suitable for current operations. Our equipment is adequately insured.

Item 3. Legal Proceedings

     In December 2000, Salt Lake Tribune Publishing Company (“Salt Lake Publishing”) brought a lawsuit and moved for a preliminary injunction against MediaNews, AT&T Corporation, and AT&T Broadband, LLC. That lawsuit is now pending in the United States District Court for the District of Utah as case number 2:00 CV 936. Salt Lake Publishing was the manager at the time of The Salt Lake Tribune, a newspaper owned by our now wholly-owned subsidiary Kearns-Tribune, LLC (“Kearns, LLC”). Salt Lake Publishing initially moved to prevent us from acquiring Kearns, LLC from AT&T Broadband, LLC. The district court denied the preliminary injunction motion by order dated December 15, 2000, and we acquired Kearns, LLC on January 2, 2001. After Kearns, LLC was acquired by us, Salt Lake Publishing filed a second motion for a preliminary injunction claiming that actions taken by Kearns, LLC after its acquisition by us breached a certain Management Agreement and a certain Option Agreement between Kearns, LLC and Salt Lake Publishing, both of which are dated July 31, 1997. That motion sought to restore certain Salt Lake Publishing employees to certain director and officer positions at the Newspaper Agency Corporation (“NAC”) from which they were removed and to suspend the implementation of various amendments to a Joint Operating Agreement between Kearns, LLC and Deseret Publishing. The District Court granted Salt Lake Publishing’s motion in part by order dated February 21, 2001, and Salt Lake Publishing continued to manage Kearns, LLC until July 31, 2002.

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Item 3. Legal Proceedings (continued)

     In September 2001, Deseret News Publishing Company (“Deseret Publishing”), the publisher of the Deseret News, the other party to the Joint Operating Agreement with Kearns, LLC, joined the lawsuit pending in federal court between Salt Lake Publishing and us. Deseret Publishing named both Salt Lake Publishing and Kearns, LLC as defendants, and is seeking, among other things, damages (Deseret Publishing’s damages claims are confined to Salt Lake Publishing only and do not include Kearns, LLC) and declaratory and injunctive relief as to the meaning and enforceability of the Option, Management, and Joint Operating Agreements. Among Deseret Publishing’s claims against Kearns, LLC is its request for a declaration that the Management Agreement is unenforceable to the extent that it purports to authorize Salt Lake Publishing to take on behalf of Kearns, LLC certain required or permitted actions under the Joint Operating Agreement. In April, 2002 AT&T Broadband, LLC was dismissed from this lawsuit.

     In accordance with the Management Agreement, in January 2002 we notified Salt Lake Publishing that we would not be renewing the Management Agreement and that we would take over management of Kearns, LLC on July 31, 2002, when the Management Agreement expired by its terms. Seeking to continue its management of Kearns, LLC, Salt Lake Publishing filed an injunction seeking to stay on as manager until the issues surrounding the option exercise (more fully described below) are resolved on appeal. The injunction was denied, and on August 1, 2002, we began managing the operations of Kearns, LLC, subject to certain conditions imposed in the District Court’s Order dated July 22, 2002. That Order required MediaNews to provide Salt Lake Publishing with 30 days advance notice before disposing of any Tribune Asset exceeding $250,000.00 in value and to refrain from amending the Joint Operating Agreement or proceeding with irrevocable acts to acquire land and build a new press facility until 10 days after an entry of judgment in the case by the District Court. Salt Lake Publishing is appealing the denial of the injunction to the United States Court of Appeals for the Tenth Circuit, which will hear oral argument on the appeal on November 18, 2002.

     In January 2002, certain controlling members of Salt Lake Publishing filed a separate lawsuit in Colorado State Court in Denver. This lawsuit names all the same defendants, arises from the same underlying facts, and seeks overlapping equitable relief and compensatory and punitive damages as the pending federal case discussed above. We and the other defendants filed motions seeking to have this lawsuit dismissed or, in the alternative, stayed pending resolution of the federal action. On February 21, 2002, the Colorado court granted defendants’ motion to stay the Colorado action until the Utah federal court action has been resolved.

     On May 31, 2002, the Utah District Court issued an Order on Motions for Summary Judgment ruling that Salt Lake Publishing held a valid and enforceable option to purchase the Tribune Assets owned by Kearns, LLC. However, the District Court also ruled that one of the key components of the Tribune Assets, stock in Newspaper Agency Corporation (“NAC”), was subject to an anti-alienation provision contained in the Joint Operating Agreement that precludes the sale, assignment or transfer of the NAC stock by either party absent waiver or modification of the provision. Subsequent to the court ruling, Deseret Publishing notified Salt Lake Publishing that it would not waive or modify the anti-alienation provision or consent to the sale or transfer of the NAC stock to Salt Lake Publishing. On August 21, 2002, the District Court certified for immediate appeal to the United States Court of Appeals for the Tenth Circuit the question of whether the anti-alienation provision contained in the Joint Operating Agreement is enforceable, as the District Court held in its Summary Judgment Order, or is instead void as against public policy, as Salt Lake Publishing contends. On September 6, 2002, the appellate court agreed to hear an immediate appeal of this issue, and consolidated it with the appeal of the denial of the injunction which is scheduled to be argued on November 18, 2002.

     On August 23, 2002, we filed a motion asking that the District Court amend its prior certification order to request that the United States Court of Appeals for the Tenth Circuit consider an additional legal issue arising out of the Summary Judgment Order: whether the Option Agreement, as construed by the Court, is void and unenforceable. Salt Lake Publishing has opposed any amendment of the certification order, and the District Court has not yet ruled on the request. If the District Court grants the request to amend its certification order, the Tenth Circuit has discretion to either add this legal issue to the issues it is already considering in the pending appeal or to decline to consider the additional legal issue in the currently pending interlocutory appeal.

     Notwithstanding Deseret Publishing’s communication to Salt Lake Publishing and us that it will not waive the anti-alienation provision of the Joint Operating Agreement, Salt Lake Publishing has notified Kearns, LLC of its intention to exercise its option to acquire the Tribune Assets owned by Kearns, LLC. Salt Lake Publishing is seeking a judicial order requiring Kearns, LLC to specifically perform the Option Agreement. MediaNews and Deseret Publishing oppose specific performance. In the event the option were to be exercised, the Option Agreement provides for the purchase of “all, and not less than all” of the Tribune Assets held by Kearns, LLC at their fair market value as determined by an appraisal process involving up to three appraisers. That appraisal process is ongoing. We continue to believe that the Tribune Assets will be appraised at a value substantially in excess of our $200.0 million purchase price.

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Item 3. Legal Proceedings (continued)

     Salt Lake Publishing has amended its original complaint several times and currently asserts against MediaNews and Kearns, LLC various claims, including claims for breaches of contract, tort claims and claims for declaratory and injunctive relief relating to the Management, Option, and Joint Operating Agreements. Salt Lake Publishing is seeking, among other things, both compensatory and punitive damages and specific performance of the Option Agreement. MediaNews and Kearns, LLC have pending counterclaims against Salt Lake Publishing seeking declaratory and injunctive relief relating to the Management, Option and Joint Operating Agreements, and damages for breaches of contract and interference with contract. Additionally, MediaNews and Kearns, LLC have pending counterclaims for declaratory judgment, but no damages claims, naming Deseret Publishing. A trial on the issues that remain after the District Court’s Summary Judgment Order is currently scheduled to commence January 13, 2003. We are not in a position at this time to comment on the likely outcome of the damage portion of the litigation or the success of any appeals of the Utah District Court rulings; however, we do not believe that the litigation will have a materially adverse impact on our financial condition, results of operations, or liquidity. The cost of defending these lawsuits has been and may continue to be substantial.

     Other

     In November 2001, one of our former newsprint vendors brought a lawsuit against us seeking actual and compensatory damages relating to our alleged breach of a newsprint agreement between the vendor and us. We believe we have meritorious arguments in defense of the alleged breach and intend to vigorously defend ourselves in this matter. In addition, we have filed a counterclaim against the plaintiff related to damages caused by the plaintiff’s breaches. While we do not expect an unfavorable outcome, we do not believe an unfavorable outcome would have a material adverse impact on our financial condition, results of operations, or liquidity. We are currently seeking to resolve this legal action through mediation.

     We are involved in other litigation arising in the ordinary course of business. In our opinion, the outcome of these legal proceedings will not have a material adverse impact on our financial condition, results of operations, or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters.

     The Class A Common Stock is not registered and has no established trading market and is not widely held. As of September 16, 2002, there were 25 shareholders of record.

     We have never paid a dividend on our common stock and do not intend to pay any cash dividends on our common stock in the foreseeable future. In addition, our long-term debt agreements contain covenants, which among other things restrict the payment of dividends to our shareholders.

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Item 6. Selected Financial Data

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(footnotes from preceding page)

(a)

Revenues and operating expenses are affected by the following significant acquisition and disposition transactions. The revenue numbers provided below are from the actual fiscal year results of operations of the respective newspapers since the date of acquisition or prior to their disposition.

     Fiscal Year 2002

     There were no significant acquisition or disposition transactions.

     Fiscal Year 2001

	•		Effective May 31, 2001, we acquired substantially all of the assets used in the publication of The Ruidoso News, a bi-weekly newspaper published in Ruidoso, New Mexico for approximately $3.8 million. This newspaper contributed approximately $0.1 million in revenue in fiscal year 2001.
	•		Effective March 31, 2001, we purchased substantially all of the assets used in the publication of Alamogordo Daily News, a daily newspaper published in Alamogordo, New Mexico, for $9.5 million. This newspaper contributed approximately $0.6 million in revenue in fiscal year 2001.
	•		Effective February 1, 2001, the California Newspapers Partnership purchased substantially all of the assets used in the publications of the Lake County Record-Bee, Clearlake Observer-American, Willits News, Penny Slaver, and Bee-Smart Shopper, located in and around Lakeport, California, for approximately $7.3 million. These publications contributed approximately $1.7 million in revenue in fiscal year 2001.
	•		Effective January 31, 2001, the California Newspapers Partnership sold substantially all of the assets used in the publication of The Lompoc Record in Lompoc, California for approximately $8.0 million, resulting in a pre-tax gain of approximately $4.6 million. This newspaper contributed approximately $1.8 million in revenue in fiscal year 2001 prior to the sale and approximately $2.8 million in fiscal year 2000.
	•		Effective January 23, 2001, MediaNews Group and E.W. Scripps Company, owner of the Rocky Mountain News, began the operations of the Denver Newspaper Agency. Upon formation of DNA, MediaNews and Scripps each contributed substantially all of their operating assets used in the publication of The Denver Post and the Rocky Mountain News to DNA. In addition to the assets contributed to DNA, Scripps also paid MediaNews $60.0 million to obtain its 50% interest in DNA. We recognized a pre-tax gain on the payment from Scripps of approximately $46.7 million. Prior to the formation of DNA, The Denver Post contributed approximately $139.7 million in revenue in fiscal 2001 and approximately $242.5 million in fiscal 2000. Our total revenues have declined because we no longer consolidate the operations of The Denver Post that were transferred to DNA. Our investment in DNA is accounted for under the equity method.
	•		Effective January 2, 2001, we purchased the stock of Kearns-Tribune, LLC for $200.0 million. Kearns-Tribune, LLC owns the masthead of The Salt Lake Tribune and a 50% interest in the Newspaper Agency Corporation (“NAC”). Net income of NAC is distributed 58% to Kearns-Tribune, LLC and 42% to the Deseret News Publishing Company. NAC publishes The Salt Lake Tribune (morning) and the Deseret News (evening) under the terms of a JOA between Kearns-Tribune, LLC and the Deseret News Publishing Company. We account for our investment in NAC under the equity method.
	•		Effective October 31, 2000, we sold substantially all the assets used in the publication of the Daily Nonpareil, in Council Bluffs, Iowa and the related daily and weekly newspapers located in the Southwestern Iowa cluster, in exchange for $32.0 million in cash and substantially all the assets of the Carlsbad Current-Argus, a daily newspaper located in Carlsbad, New Mexico, valued at approximately $7.0 million. The sale resulted in a pre-tax gain of approximately $23.6 million. The newspapers in the Southwestern Iowa cluster contributed approximately $4.0 million in revenue in fiscal year 2001 prior to the sale and approximately $11.5 million in fiscal year 2000. The Carlsbad newspaper contributed approximately $2.0 million in revenue in fiscal year 2001.
	•		Effective October 1, 2000, The Sun Company of San Bernardino California (“Gannett”) contributed the Marin Independent Journal, published in Marin, California, to the California Newspapers Partnership. Effective with the contribution, MediaNews, Stephens Media Group (previously Donrey Newspapers, LLC) and Gannett’s interests in the California Newspapers Partnership were adjusted to 54.23%, 26.28% and 19.49%, respectively. Prior to the contribution, MediaNews held a 58.8% interest in the partnership. This newspaper contributed approximately $22.5 million to revenue in fiscal year 2001.
	•		Effective October 1, 2000, we acquired all of the assets used in the publication of the Connecticut Post, a morning newspaper published in Bridgeport, Connecticut for approximately $194.0 million, net of working capital of approximately $5.0 million. This newspaper contributed approximately $48.9 million of revenue in fiscal year 2001.

     Fiscal Year 2000

	•		In fiscal year 2000, MediaNews and Garden State merged, with MediaNews as the surviving entity and the successor issuer to Garden State Newspapers, Inc. Garden State Newspapers owned 80% of The Denver Post Corporation. As a result of the reorganization, The Denver Post Corporation has been consolidated with the operations of MediaNews effective July 1, 1999.
	•		Effective June 30, 2000, we sold substantially all of the assets used in the publication of The Express Times, in Easton, Pennsylvania; the Gloucester County Times, in Woodbury, New Jersey; Today’s Sunbeam, in Salem, New Jersey; The Bridgeton News, in Bridgeton, New Jersey and our North Jersey weekly newspapers for $145.0 million. We recognized a pre-tax gain on the sale of approximately $114.3 million. These newspapers contributed approximately $55.0 million and $53.3 million of revenue in fiscal years 2000 and 1999, respectively.
	•		Effective May 26, 2000, we acquired the stock of Northern Television, Inc. KTVA, a CBS affiliate broadcasting in Anchorage, Alaska, for approximately $7.0 million. KTVA contributed $0.3 million to revenue in fiscal year 2000.

(footnotes continued on following page)

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(footnotes continued from preceding page)

     Fiscal Year 2000 (continued)

	•		Effective March 1, 2000, we acquired substantially all the assets used in the publication of six weekly newspapers and three monthly publications, distributed in and around Ayer, Massachusetts, for approximately $4.2 million. These weekly newspapers contributed approximately $0.8 million to revenue in fiscal year 2000.
	•		Effective October 31, 1999, we acquired substantially all of the assets used in the publication of the Deming Headlight, a morning newspaper published in Deming, New Mexico, for approximately $2.0 million cash. This newspaper contributed approximately $0.7 million in revenue during 2000.
	•		Effective October 1, 1999 and January 1, 2000, the California Newspapers Partnership purchased a shopper in Ukiah, California and a weekly newspaper in Milpitas, California, respectively, for approximately $2.7 million. These weekly newspapers contributed approximately $1.4 million to revenue in fiscal year 2000.
	•		Effective July 31, 1999, the California Newspapers Partnership sold the assets of The Hemet News and Moreno Valley Times for pre-tax gain of approximately $3.3 million. These newspapers each contributed approximately $0.4 million to revenue in fiscal year 2000 and 1999, respectively.

     Fiscal Year 1999

	•		On March 31, 1999, through our wholly owned subsidiary, West Coast MediaNews LLC, we formed the California Newspaper Partnership with Stephens Media Group (formerly Donrey Newspapers LLC) and the Sun Company of San Bernardino California (“Gannett”). We contributed ANG Newspapers, comprised of six daily newspapers published in the San Francisco Bay area; San Gabriel Valley Newspapers, which includes three daily newspapers published in the Los Angeles area; and the Times-Standard, a daily newspaper published in Eureka, California in exchange for a 58.8% partnership interest. The Stephens Media Group and Gannett newspapers contributed to the partnership added approximately $31.6 million of revenue in fiscal year 1999.
	•		Effective October 1, 1998 we acquired substantially all of the assets used in the publication of the Daily Times, a morning newspaper published in Farmington, New Mexico for cash and discounted notes with the prior owners. This newspaper contributed approximately $5.0 million of revenue in fiscal year 1999.
	•		On August 22, 1998 we acquired for approximately $47.0 million, a 50% interest in Charleston Newspapers, a joint venture, which publishes the Charleston Gazette (morning) and Charleston Daily Mail (evening), six days a week and the Sunday Gazette-Mail, under the terms of a JOA. This newspaper contributed approximately $16.0 million of revenue in fiscal year 1999.

     Fiscal Year 1998

	•		On May 11, 1998 we acquired substantially all the assets used in the publication of The Tri-City Weekly, a weekly newspaper published in Eureka, California for approximately $2.6 million in cash, plus a covenant not to compete with a discounted value of $0.5 million. This newspaper contributed approximately $0.4 million of revenue in fiscal year 1998.
	•		On May 1, 1998, we acquired substantially all the assets used in the publication of the Valley News Today, a morning newspaper published five times a week in Shenandoah Iowa, and seven weekly publications distributed primarily in Shenandoah and Dennison, Iowa. These assets were purchased for approximately $5.1 million in cash, plus covenants not to compete with a discounted value of $0.6 million. These newspapers contributed approximately $0.7 million of revenue in fiscal year 1998.
	•		On January 29, 1998, we acquired substantially all the assets used in the publication of the Daily News, a daily newspaper published in the San Fernando Valley of Los Angeles, California, for approximately $130.0 million. This newspaper contributed approximately $36.9 million of revenue in fiscal year 1998.
	•		On December 16, 1997, we acquired substantially all the assets used in the publication of the Press-Telegram, a daily newspaper published in Long Beach, California, for approximately $38.2 million in cash. Proceeds from the sale of the North Jersey Herald & News were used to fund the acquisition. This newspaper contributed approximately $22.7 million of revenue in fiscal year 1998.
	•		On December 5, 1997, we sold substantially all the assets used in the publication of the North Jersey Herald & News and sixteen weekly publications for $43.0 million in cash plus an adjustment for working capital. The Company recognized a pre-tax gain on the sale of approximately $31.8 million, net of selling expenses. These newspapers contributed $16.2 million of revenues prior to the sale and $36.2 million in fiscal year 1997.
	•		On July 31, 1997, we acquired substantially all the assets used in the publication of The Sun, an evening newspaper published in Lowell, Massachusetts. The assets were purchased for approximately $60.8 million. The Sun contributed $22.3 million of revenue in fiscal 1998.

(b)		Change in Accounting Principle. Effective June 15, 2000, the Financial Accounting Standards Board issued EITF Issue 00-1, which required us to change our method of accounting for JOAs from pro-rata consolidation to: (i) consolidation for the JOAs we control, and (ii) the equity method for the JOAs we do not control. Accordingly, fiscal year 1999 and 1998 financial statements have been reclassified to reflect this change in accounting. The Denver and Salt Lake JOAs, new beginning in fiscal year 2001 are accounted for under the equity method.
(c)		Corporate Reorganization. During fiscal years 1999 and 2000 we underwent a corporate reorganization, whereby, MediaNews Group, Inc. (MediaNews) became the successor issuer to Garden State Newspapers, Inc. The reorganization included our June 30, 1999 purchase of an additional 20% interest in The Denver Post Corporation, bringing our total ownership interest in The Denver Post Corporation to 80%. In addition, The Denver Post Shareholder Agreement was modified,

(footnotes continued on following page)

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(footnotes continued from preceding page)

		giving us control of The Denver Post Corporation board of directors. Accordingly, effective June 30, 1999, The Denver Post Corporation became a consolidated subsidiary. Additionally, on September 1, 1999, Garden State Newspapers, Inc. was merged into MediaNews, with MediaNews as the surviving corporation. As a result of this reorganization, the consolidated financial statement data for each fiscal year after 1999 include the consolidated results of MediaNews and its subsidiaries (including The Denver Post Corporation, parent company for The Denver Post and Eastern Colorado Publishing Company). The consolidated financial statement data for fiscal years 1999 and 1998 include Garden State Newspapers, Inc. information only.
(d)		EBITDA and EBITDA Available to Company. EBITDA and EBITDA Available to Company are not measures of performance recognized under GAAP. However, we believe that they are indicators and measurements of our leverage capacity and debt service ability. EBITDA and EBITDA Available to Company should not be considered as a measure of profitability, liquidity or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in our consolidated financial statements or any other GAAP measure as an indicator of our performance.
		EBITDA is calculated by deducting cost of sales, selling and general and administrative expense from total revenues. EBITDA Available to Company is calculated by: (i) reducing EBITDA by the minority’s interest in the EBITDA generated from the California Newspapers Partnership, York Newspaper Company, and The Denver Post Corporation, our less than 100% owned consolidated subsidiaries; and (ii) increasing EBITDA by our combined proportionate share of the EBITDA generated by our unconsolidated JOAs, in Denver, Salt Lake City and Charleston.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

     The following analysis of the financial condition and results of operations should be read in conjunction with the Selected Financial Data and the Consolidated Financial Statements of MediaNews Group, Inc. and the notes thereto appearing elsewhere herein.

Overview

     We are in the business of owning and operating daily and weekly newspapers and websites related thereto. In addition, we own radio stations in Graham and Breckenridge, Texas. We also own a CBS affiliate television station in Anchorage, Alaska. However the combined results of these non-newspaper operations are insignificant to us, comprising less than 0.5% of our consolidated revenue. Our newspapers derive their revenues primarily from advertising and circulation. Our primary operating expenses (before depreciation and amortization) are employee salaries, newsprint, marketing, and distribution.

     Since our inception, we have grown primarily through acquisitions. A large portion of the value of the assets acquired in these transactions are attributable to intangible assets, principally subscriber accounts, mastheads and goodwill, which we believe are generally the most valuable assets of a newspaper. As a result of the amortization expense historically associated with these intangible assets, the interest expense associated with acquisition indebtedness, and debt fees, including the make whole premiums, we have historically operated at a loss or near break-even levels (before factoring in the gain from the sale of newspaper properties). On July 1, 2001, we adopted the Financial Accounting Standards Board, SFAS No. 142, Goodwill and Other Intangible Assets. Under the new standard, excess of cost over fair value of assets acquired (goodwill) and other indefinite life intangibles are no longer amortized, but instead are periodically reviewed for impairment, which significantly reduced our amortization expense beginning in fiscal year 2002.

Significant Accounting Policies

     Generally speaking, the preparation of financial statements in accordance with generally accepted accounting principles at times requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosure of contingent matters. Notes to our consolidated financial statements contain a more complete discussion of our significant accounting policies. Significant accounting policies for us involve our assessment of the recoverability of our long-lived assets, including goodwill and other intangible assets, which are based on such factors as estimated future cash flows and current fair value estimates. Our accounting for pension and retiree medical benefits requires the use of various estimates concerning the work force, interest rates, plan investment return, and involves the use of advice from consulting actuaries. Our accounting for federal and state income taxes is sensitive to interpretation of various laws and regulations and the valuations of deferred tax assets. We base our estimates on historical experience, actuarial studies and other assumptions, as appropriate, concerning the carrying values of its assets and liabilities and disclosure of contingent matters. We re-evaluate our estimates on an ongoing basis. Actual results could differ from these estimates.

     During 2000, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue 00-1, Balance Sheet and Income Statement Display under the Equity Method of Investments in Certain Partnerships and Other Unincorporated Joint Ventures (“EITF 00-1”), effective for periods ending after June 15, 2000, which prohibits the use of pro-rata consolidation except in the extractive and construction industries. Prior to our adoption of EITF 00-1, we accounted for all of our JOA operations using the pro-rata consolidation method for those JOAs which we do not control. Upon adoption of EITF 00-1, effective June 30, 2000, we began accounting for our unconsolidated JOA investments under the equity method. Accordingly, we now report our share of our unconsolidated JOA operations as a single net amount in our consolidated statement of operations under the financial statement line item “Equity Income in Unconsolidated JOAs.” Our investments in unconsolidated JOAs are included in the consolidated balance sheet under the financial statement line item “Investment in Unconsolidated JOAs.” In accordance with EITF 00-1, all previously reported financial statements have been reclassified to conform to the new reporting classification requirements.

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141, Business Combinations and Statement No. 142, Goodwill and Other Intangible Assets, collectively the “Statements.” Statement No. 141 requires business combinations initiated after June 30, 2001 to use the purchase method of accounting. Under the new Statements, excess of cost over fair value of net assets acquired (goodwill) and other indefinite life intangibles are no longer amortized but instead are periodically reviewed for impairment. All other intangible assets with a finite useful life will continue to be amortized over their remaining useful lives. We adopted the Statements effective July 1, 2001.

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Operating Results

     We have provided below certain summary historical financial data for fiscal years ended 2002, 2001 and 2000, including the percentage change between fiscal years.

Summary Historical Financial Data
(Dollars in thousands)

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     Summary Supplemental Pro Forma Financial Data

     Joint operating agencies, or JOAs, represent a unique operating structure within the newspaper industry. Prior to the Financial Accounting Standard Board issuing EITF 00-1, which eliminated the use of pro-rata consolidation except in the extractive and construction industries, we reported the results of our JOA interests, on a pro-rata consolidated basis. Under this method, we consolidated (on a line-item basis) our proportionate share of the JOA’s operations. Although pro-rata consolidation is no longer considered an acceptable method of financial reporting under GAAP, we believe it provides a meaningful presentation of the results of our operations. Accordingly, we have presented in the table below, the results of operations of our JOAs using pro-rata consolidation. Our JOAs include York Newspaper Company and Charleston Newspapers for all periods presented, the Denver Newspaper Agency since formation on January 23, 2001, and the Newspaper Agency Corporation (Salt Lake City) since acquisition on January 2, 2001. See Note 3 of the consolidated financial statements for additional discussion of the accounting for our JOAs.

THE INFORMATION IN THE FOLLOWING TABLE IS NOT PRESENTED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND DOES NOT COMPLY WITH ARTICLE 11 OF REGULATION S-X FOR
PRO FORMA FINANCIAL DATA

Summary Selected Pro Forma Financial Data
(Dollars in thousands)

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COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2002 AND 2001

     Certain transactions in fiscal year 2001 had a significant impact on the comparison of results between the years ended June 30, 2002 and 2001.

     Significant acquisitions that affect comparisons between the years ended June 30, 2002 and 2001 include the October 1, 2000 acquisition of the Connecticut Post, the October 1, 2000 contribution of the Marin Independent Journal to the California Newspapers Partnership, and the October 31, 2000 purchase of the Carlsbad Current-Argus. Additionally, on January 2, 2001, we purchased Kearns-Tribune, LLC, which publishes The Salt Lake Tribune and owns a 58% profit interest in the Newspaper Agency Corporation (“NAC”), a 50% controlled JOA in Salt Lake City. We consolidate the editorial expenses of The Salt Lake Tribune; however, our investment in NAC is accounted for under the equity method of accounting. Comparisons are also affected by our acquisitions in Lakeport, California and Alamogordo and Ruidoso, New Mexico that were completed in the third and fourth quarters of fiscal year 2001.

     The impact of these transactions was offset in part by the October 31, 2000 sale of our Southwestern Iowa newspaper cluster, the January 23, 2001 formation of the Denver Newspaper Agency (“DNA”), after which we no longer consolidate the results of The Denver Post (other than editorial), and the sale of a small newspaper in Lompoc, California.

Revenues

     Revenues for the years ended June 30, 2002 and 2001 were $711.7 million and $853.0 million, respectively. This represents a $141.3 million, or 16.6% decrease. The aforementioned transactions in fiscal year 2001 had the net impact of decreasing reported revenues by $120.6 million for the year ended June 30, 2002 as compared to the year ended June 30, 2001, primarily associated with deconsolidation of the revenues of The Denver Post because of the formation of the Denver JOA.

     Excluding the transactions described above, total revenues at our other newspaper operations (“existing newspapers”) decreased in fiscal year 2002 by $20.7 million, or 3.3%, as compared to fiscal year 2001. Advertising revenues at our existing newspapers decreased by 5.0% during fiscal year 2002. The decrease in advertising revenues was felt across all major advertising categories; however, national advertising and classified advertising experienced the largest percentage declines. In classified advertising, auto and real estate had increases compared to the prior year, but these increases were offset by the decline in employment classified. Employment and national advertising in particular were hit hard by the economic slowdown that has been experienced throughout the United States. The events of September 11, 2001, also had a negative impact on an already soft advertising market, further compounding revenue declines in most advertising categories. These revenue decreases were somewhat mitigated by increases associated with new sales initiatives which focused on creating new revenue streams by attracting new regional and local advertisers by providing niche products and other programs specifically targeted to their needs.

     Circulation revenues at existing newspapers remained flat between years despite small decreases in circulation volumes due in part to our efforts to improve circulation profitability in certain of our markets by increasing single copy and home delivery prices.

     Revenues from our interactive media division, MNGi, increased $3.4 million or 140% for the year ended June 30, 2002 compared to the year ended June 30, 2001, as a result of new revenue initiatives and acceleration in the market acceptance of the value of combined print and online advertising packages that we offered to our advertisers, particularly in the online employment and classified categories.

Cost of Sales

     Cost of sales for the years ended June 30, 2002 and 2001 was $250.4 million and $312.7 million, respectively. This represents a $62.3 million, or 19.9%, decrease. The aforementioned transactions in fiscal year 2001 had the net impact of decreasing cost of sales by $50.7 million for the year ended June 30, 2002 as compared to the year ended June 30, 2001, again primarily associated with the deconsolidation of The Denver Post operating results (except editorial).

     On an existing newspaper basis, our cost of sales in fiscal year 2002 decreased $11.6 million, or 5.6%, as compared to the prior fiscal year. The majority of the decrease for the year ended June 30, 2002 was due to substantially lower newsprint prices experienced during fiscal year 2002, as well as lower page counts resulting from the decline in advertising volumes we experienced during the year. The lower page counts resulted in a 4.7% decrease in newsprint consumption, and related production supplies for the fiscal year ended 2002, as compared to prior fiscal year. Lower newsprint prices also reduced expenses in fiscal year 2002 as compared to prior fiscal year 2001 as our average price per metric ton of newsprint consumed decreased 9.0% during fiscal year 2002. Our editorial expenses remained relatively flat for the fiscal year ended June 30, 2002, as compared to the prior fiscal year.

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COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2002 AND 2001 (continued)

Selling, General and Administrative

     Selling, general and administrative (“SG&A”) expense for the years ended June 30, 2002 and 2001 was $330.0 million and $383.1 million, respectively. This represents a $53.1 million, or 13.9% decrease for the year ended June 30, 2002 as compared to the year ended June 30, 2001. The aforementioned transactions in fiscal year 2001 had the net impact of decreasing SG&A expense by $52.2 million for the fiscal year ended June 30, 2002 as compared to the fiscal year ended June 30, 2001, primarily associated with the deconsolidation of The Denver Post operating results.

     On an existing newspaper basis, SG&A expense in fiscal year 2002 decreased $0.9 million, or 0.3%, for the fiscal year ended 2002, as compared to fiscal year ended 2001. The decrease in SG&A expense is in part the result of a decrease in order solicitation expenses associated with our strategy to improve circulation profitability by reducing churn and a reduction in delivery costs as a result of small declines in circulation volume at some newspapers. This strategy was implemented in the third quarter of our fiscal year 2001. Marketing and advertising expenses were down $0.8 million for the fiscal year ended June 30, 2002, as compared to the prior fiscal year. This decrease is primarily the result of declines in advertising revenues; however, we have implemented new sales initiatives and the associated start up costs partially offset the fiscal year 2002 marketing expense reductions. These initiatives and the related start up costs will continue into fiscal year 2003. In addition, SG&A expense has decreased as a result of cost-cutting measures that began during the second half of fiscal year 2001 with additional cuts being made in the first half of fiscal year 2002. These decreases have been offset in small part by increased costs associated with the revenue growth experienced in our Internet operations.

Depreciation and Amortization

     Depreciation and amortization expense for the years ended June 30, 2002 and 2001 was $49.9 million and $64.5 million, respectively. This represents a decrease of $14.6 million, or 22.6%, for the fiscal year ended June 30, 2002, as compared to the prior fiscal year.

     The decrease is primarily the result of a decrease in amortization expense associated with our adoption of the Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”) on July 1, 2001. Under the new standard, goodwill and other indefinite life intangibles are no longer amortized, but instead are periodically reviewed for impairment. All other intangibles with a finite useful life continue to be amortized over their remaining useful life. Had SFAS No. 142 been in effect during the year ended June 30, 2001, amortization expense would have been $14.8 million less.

Interest Expense

     Interest expense for the years ended June 30, 2002 and 2001 was $75.3 million and $82.2 million, respectively. This represents a $6.9 million, or 8.4%, decrease for the year ended June 30, 2002, as compared to the prior fiscal year.

     For the year ended June 30, 2002, despite debt paydowns of $53.7 million throughout the year, our average debt increased by approximately $48.6 million, or 5.1%, as compared to the same period in the prior year as a direct result of our 2001 acquisition transactions in which we borrowed $180.1 million, net of proceeds from newspaper sales and cash on hand. However, our weighted average cost of debt decreased 117 basis points during this same period, more than offsetting the increase in our average debt. As a result, interest expense decreased 8.4% for the year ended June 30, 2002 as compared to the same period in the prior year. The decrease in the weighted average cost of debt would have been greater except for the negative impact of unfavorable hedges which did not expire until October 2001.

Other (Net) Expense

     Other (net) expense for the years ended June 30, 2002 and 2001 was $14.1 million and $14.9 million, respectively. We include in other (net) expense costs which are considered to be non-recurring charges and those costs not related to ongoing operations. The decrease is primarily a result of one-time charges for transition team payroll and consulting fees related to the integration planning for the formation of DNA of $7.7 million, which were included in our results for fiscal year 2001. The decrease associated with DNA integration planning was partially offset by litigation expense associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City), $0.7 million in bank fees paid to amend our bank credit facility and a one-time charge associated with employee reductions at certain of our newspapers and at corporate. The impact of $3.0 million related to marking to market our fixed to floating interest rate derivative instruments entered into during the third quarter 2002, which did not qualify for hedge accounting, is also reflected here. An

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COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2002 AND 2001 (continued)

Other (Net) Expense (continued)

additional component of other expense is the ongoing accretion of the cost to repurchase an option held by a third party to acquire one of our newspapers. The holder of the option can exercise the option beginning in January 2003 and may hold the option until 2010.

Equity Income in Unconsolidated JOAs

     Equity income from unconsolidated JOAs for years ended June 30, 2002 and 2001 was $50.1 million and $10.3 million, respectively. Equity income in unconsolidated JOAs represents our share of the net income from our unconsolidated JOA operations, which as of June 30, 2002 includes Charleston Newspapers, the Denver Newspaper Agency, and the Newspaper Agency Corporation in Salt Lake City. The $39.8 million increase in equity income in unconsolidated JOAs for year ended June 30, 2002 as compared to the prior fiscal year is due to the January 23, 2001 formation of DNA, a significant improvement in the fiscal year 2002 net income at DNA, and the January 2, 2001 acquisition of our interest in NAC in Salt Lake City. Also impacting the increase was a small increase in the results of operations of Charleston Newspapers for the year ended June 30, 2002 as compared to the same period in the prior year.

EBITDA and EBITDA Available to Company

     EBITDA Available to Company, which includes pro-rata EBITDA from Unconsolidated JOAs and excludes EBITDA related to minority interests, increased by $19.6 million, or 14.3%, for the year ended June 30, 2002 as compared to the same period of the prior year.

     The aforementioned fiscal year 2001 transactions increased EBITDA Available to Company by $24.9 million for the year ended June 30, 2002, as compared to the same period the prior year. The increase associated with the fiscal year 2001 transactions was offset in part by a $5.3 million reduction in net EBITDA Available to the Company from our existing newspapers compared to the same period of fiscal year 2001 (excluding The Denver Post). Pro-rata EBITDA from The Denver Post increased $8.1 million, primarily associated with the significantly improved Denver JOA results.

     EBITDA and EBITDA Available to Company are not measures of performance recognized under GAAP. However, we believe that they are indicators and measurements of our leverage capacity and debt service ability. EBITDA and EBITDA Available to Company should not be considered as an alternative to measuring profitability, liquidity, or performance, nor should they be considered an alternative to net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in our consolidated financial statements. EBITDA is calculated by deducting cost of sales and SG&A expense from total revenues. EBITDA Available to Company is calculated by: (i) reducing EBITDA by the minority’s interest in the EBITDA generated from the California Newspapers Partnership, York Newspaper Company and The Denver Post Corporation, our less than 100% owned consolidated subsidiaries; and (ii) increasing EBITDA by our combined proportionate share of the EBITDA generated by our unconsolidated JOAs in Denver, Salt Lake City and Charleston.

Net Income

     We reported net income for the years ended June 30, 2002 and 2001 of $12.4 million and $25.2 million, respectively.

     In addition to the year over year changes described above, net income was impacted by a $16.5 million change in income taxes (from an expense in fiscal year 2001 to a benefit in fiscal year 2002), and a $74.3 million gain on sale of newspaper properties that was recognized in fiscal year 2001. The change in income tax expense was primarily associated with the $74.3 million gain on sale of newspaper properties for the year ended June 30, 2001, as well as a change in tax regulation in fiscal year 2002, which allowed us to recognize deferred tax assets related to a loss carryforward that had been previously disallowed. Excluding the $74.3 million gain in fiscal year 2001, income before taxes improved $44.9 million in fiscal year 2002 compared to fiscal year 2001.

COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2001 AND 2000

     In addition to the fiscal year 2001 transactions described earlier, certain fiscal year 2000 transactions affect comparisons between June 30, 2001 and 2000.

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COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2001 AND 2000 (continued)

     Significant fiscal year 2000 transactions that affect comparisons between the years ended June 30, 2001 and 2000 include our June 30, 2000 disposition of our newspaper in Easton, Pennsylvania and our New Jersey newspapers. Comparisons are also affected by the sale of two small newspapers in southern California in fiscal year 2000. The impact of these transactions was offset in part by our fiscal year 2000 acquisitions in California, New Mexico, Massachusetts and Alaska.

Revenues

     Revenues for the years ended June 30, 2001 and 2000 were $853.0 million and $947.1 million, respectively. This represents a decrease of $94.1 million or 9.9% in fiscal year 2001 as compared to fiscal year 2000. The aforementioned transactions in fiscal year 2001 and 2000 had the net impact of decreasing revenue by $88.1 million for the year ended June 2001 as compared to the year ended June 30, 2000. Excluding the fiscal year 2001 and 2000 acquisition and disposition transactions and the previously discussed Denver JOA, our existing newspapers experienced a $6.0 million or 1.0% decrease in revenues in fiscal year 2001. National advertising and classified advertising revenues remained relatively flat for the year as a whole (second half decreases offset first half increases), while retail advertising revenues and circulation revenues experienced decreases of 2.7% and 3.0%, respectively. The majority of the decrease in these two revenue categories came from our southern California newspapers. The decrease in retail advertising revenues is due to the economic slowdown that has been experienced throughout the United States; however, the effects of the downturn in the economy hit southern California earlier in fiscal year 2001 than the rest of our operations. The decrease in circulation revenues was primarily due to temporary declines in circulation volume at certain of our southern California newspapers as a result of our strategy to replace higher churn, short-term circulation orders with more profitable, long-term circulation. This strategy has produced both short-term and long-term circulation expense savings but at times may decrease circulation volumes in the short-term. In an effort to grow circulation revenues, the majority of our southern California newspapers also implemented single copy and home delivery price increases in the fourth quarter of fiscal year 2001. In addition to the changes described above, revenue from our Internet operations in fiscal 2001 increased $3.2 million as compared to fiscal year 2000.

Cost of Sales

     Cost of sales decreased $27.0 million or 7.9% in fiscal year 2001 compared to fiscal year 2000. The aforementioned acquisition and disposition transactions in fiscal year 2001 and 2000 and the Denver JOA had the net impact of decreasing cost of sales by $28.1 million for the year ended June 30, 2001 as compared to the year ended June 30, 2000. Cost of sales, excluding these transactions increased $1.1 million or 0.5%. The majority of this increase in cost of sales was caused by newsprint price increases during fiscal year 2001. On an existing newspapers basis, our fiscal year 2001 newsprint consumption declined by approximately 6.3% as compared to fiscal year 2000, while the average cost per metric ton of newsprint consumed during these same periods increased approximately 12.0%.

Selling, General and Administrative

     Selling, general and administrative (“SG&A”) expenses decreased $38.9 million or 9.2% in fiscal year 2001 as compared to fiscal year 2000. The aforementioned acquisition and disposition transactions in fiscal year 2001 and 2000 and the Denver JOA had the net impact of decreasing SG&A by $42.3 million for the year ended June 30, 2001 as compared to the year ended June 30, 2000. SG&A expenses, excluding these transactions, increased $3.4 million or 1.2%. The increase in SG&A on a existing newspapers basis is primarily the result of increased advertising commissions in the California Newspapers Partnership associated with their substantial advertising revenue growth in the first half of fiscal year 2001 and increased costs associated with the growth experienced in our Internet operations. These cost increases have been partially offset by cost reductions related to the circulation strategy discussed above and cost-cutting measures we put in place in the second half of fiscal year 2001 to reduce expenses.

Interest Expense

     Interest expense increased $6.5 million in fiscal year 2001 as compared to fiscal year 2000. Interest expense increased as a result of an $82.3 million, or 9.5%, increase in average debt outstanding, primarily associated with acquisitions, net of proceeds from dispositions. The increase in average debt was offset by a 100 basis point reduction in the weighted average cost of debt, primarily associated with changes in short-term interest rates in fiscal year 2001.

Other (Net) Expense

     Other (net) expense increased approximately $6.4 million in fiscal year 2001 as compared to fiscal year 2000. As mentioned previously, we include in other (net) expense costs, which are considered to be non-recurring charges and those costs not related to

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COMPARISON OF FISCAL YEARS ENDED JUNE 30, 2001 AND 2000 (continued)

Other (Net) Expense (continued)

ongoing operations. The majority of the increase is due to increases in equity losses from our investment in PowerOne (successor to AdOne), $1.3 million in bank fees and legal costs associated with the $150.0 million term loan entered into in January 2001, and the non-recurring costs associated with the formation of DNA. The DNA expenses were primarily related to transition team payroll and consulting fees related to integration planning in anticipation of the Denver JOA. An additional component of other (net) expense is the ongoing accretion of the cost to repurchase an option held by a third party to acquire one of our newspapers. The holder of the option can exercise the option beginning in January 2003 and may hold the option until 2010.

Equity Income in Unconsolidated JOAs

     Equity income in unconsolidated JOAs represents our pro-rata share of the net income from our unconsolidated JOA operations, which as of June 30, 2001 includes Charleston Newspapers, the Denver Newspaper Agency, and the Newspaper Agency Corporation (“NAC”) in Salt Lake City. The $7.7 million increase in equity income in unconsolidated JOAs in fiscal year 2001 compared to fiscal year 2000 is due primarily to the January 23, 2001 formation of DNA and the January 2, 2001 acquisition of our interest in NAC. The increase associated with the addition of DNA and NAC were partially offset by a decrease in the results of operations of Charleston Newspapers in fiscal year 2001 compared to fiscal year 2000 caused by the advertising slowdown in the second half of the year.

EBITDA and EBITDA Available to Company

     EBITDA Available to Company (inclusive of our share of JOAs and exclusive of minority interest) declined $8.9 million or 6.1% in fiscal year 2001 as compared to fiscal year 2000. Approximately $9.6 million of the decrease in EBITDA Available to Company is due to a decrease in EBITDA, net of minority interest, from The Denver Post. EBITDA at The Denver Post decreased primarily as a result of implementing a strategy, prior to our agreement to form the Denver JOA in May 2000, in which The Denver Post sought to grow circulation volumes by selling low priced long-term circulation orders. The result was a large growth in circulation volumes, newsprint and delivery cost, with little revenue to offset the substantial cost increase. Also contributing to the decrease in The Denver Post EBITDA was the fact that integration efforts under the JOA did not get under way until April 2001, and once it did, the economic downturn in Denver eroded much of the cost savings initially achieved in the JOA. EBITDA Available to Company from our existing newspapers (other than The Denver Post), decreased $10.3 million as a result of the previously discussed decrease in revenues and increase in newsprint expense. These decreases in EBITDA Available to Company were partially offset by the $10.9 million net increase in EBITDA associated with the previously discussed acquisition and disposition transactions and the contribution of Marin to the California Newspapers Partnership.

     As mentioned previously, EBITDA Available to Company is not a measure of performance recognized under GAAP. However, we believe it is an indicator and measurement of our leverage capacity and debt service ability. EBITDA Available to Company is calculated by: (i) reducing EBITDA by the minority’s interest in the EBITDA generated from the California Newspapers Partnership, York Newspaper Company, and The Denver Post Corporation, our less than 100% owned consolidated subsidiaries; and (ii) increasing EBITDA by our combined proportionate share of the EBITDA generated by our unconsolidated JOAs, in Denver, Salt Lake City, and Charleston.

Net Income

     In addition to the year over year changes described above, net income was impacted by the $23.6 million gain recognized on sale of Council Bluffs, the $46.7 million gain resulting from the payment from Scripps and the $4.6 million gain on the sale of Lompoc, net of minority interest. In fiscal year 2000, we recognized gains on sales of newspaper properties of approximately $116.3 million and a $1.5 million loss on the sale of land and buildings in California Newspapers Partnership (“CNP”).

LIQUIDITY AND CAPITAL RESOURCES

     Our sources of liquidity are existing cash and other working capital, cash flow provided from operating activities, distributions from JOAs and partnerships and the borrowing capacity under our credit facility. Our operations, consistent with the newspaper industry, require little investment in inventory, as less than 30 days of newsprint is generally maintained on hand. We, from time to time, increase our newsprint inventories in anticipation of price increases. We are currently building newsprint inventories to take advantage of the current low prices since the majority of the major newsprint suppliers announced a $50 per metric ton price increase for August 2002 deliveries. In general, our receivables have been collected on a timely basis.

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LIQUIDITY AND CAPITAL RESOURCES (continued)

June 30, 2002 Compared to June 30, 2001

     Net cash flows from operating activities were approximately $57.6 million and $43.7 million for fiscal years ended June 30, 2002 and 2001, respectively. The $13.9 million increase in cash flows from operating activities was primarily the result of a $29.8 million dollar change in operating assets and liabilities, partially offset by a $25.9 million decrease in EBITDA, in fiscal year 2002 compared to the prior year. Also contributing to the change was a $10.9 million decrease in cash tax expense. The decrease in EBITDA related to the Denver JOA has shifted in part to investing activities as net distributions from unconsolidated JOAs.

     Net cash flows from investing activities were $34.4 million and ($307.5) million for fiscal years ended June 30, 2002 and 2001, respectively. The $341.9 million change was primarily the result of our spending $385.1 million on acquisitions, net of proceeds from dispositions, and the $60.0 million payment from E. W. Scripps Company (“Scripps”) in fiscal year 2001 for Scripps to obtain its 50% interest in DNA. In fiscal year 2002, we had no significant acquisitions or dispositions. Also contributing to the increase in cash from investing activities was an $8.0 million increase in net distributions from unconsolidated JOAs.

     Net cash flows from financing activities were ($97.2) million and $126.4 million for fiscal years ended June 30, 2002 and 2001, respectively. The increase is attributable to a $219.9 million decrease in our net borrowings during fiscal year 2002, compared to fiscal year 2001, primarily associated with our 2001 acquisitions activity. Cash on hand, asset sales and the $60.0 million Scripps payment helped reduce borrowings related to the acquisition activity. In fiscal year 2002, we had a net debt paydown of $53.7 million.

Capital Expenditures

     Our capital expenditure plan for fiscal year 2003 for wholly owned subsidiaries (not including business acquisitions) provides for capital expenditures for improvements of approximately $7.3 million and other capital projects totaling approximately $8.3 million. Our share of capital expenditures planned for both maintenance and other capital projects in fiscal year 2003 for non-wholly owned subsidiaries is approximately $5.3 million; the majority of these expenditures are for improvements at DNA and the California Newspapers Partnership. Non-maintenance expenditures planned during fiscal 2003 include the consolidation of Las Cruces and Alamogordo press and mailroom operations, and building projects in Las Cruces and Graham, which include increasing press capacity and production facilities. Significant improvements in the Farmington press and production machinery and equipment are also planned. Carryover expenditures from the prior year are approximately $10.0 million and are primarily for a new printing plant to consolidate certain printing in New England. Our total expected capital expenditures for wholly owned subsidiaries, plus our share of partnerships and JOAs, is $30.9 million, including the carryover expenditures from the prior year. Management will review the capital expenditure plan throughout the year and will modify it as required to meet our current business needs. Capital expenditures related to these projects are expected to be funded either through available cash or borrowings under our bank credit facility.

Liquidity

     Based upon current and expected future operating results, we believe that we will have sufficient cash flows from operations to fund scheduled payments of principal and interest and to meet anticipated capital expenditure and working capital requirements for at least the next twelve months. In addition to cash flows from operations, we have approximately $134.8 million available under our bank credit facility, which should be more than sufficient to fund unanticipated needs.

     The holder of an option to purchase one of our newspapers has the right to cancel the option and require us to purchase the option and redeem a related note payable after January 31, 2003. The current amount accrued at June 30, 2002 to repurchase the option and redeem the related note is $71.9 million. Should the option purchase and note redemption be required, it will likely be funded from borrowings under our existing bank credit agreement.

     Through Kearns-Tribune, LLC, we have a 6.0% interest in Ponderay Newsprint Company (“Ponderay”). As a result of our interest in Ponderay, we also are guarantors for 6.0% of approximately $125.0 million owed by Ponderay and due on April 12, 2006. While we have guaranteed the debt, we do not currently expect any payments to be made in conjunction with the guarantee.

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LIQUIDITY AND CAPITAL RESOURCES (continued)

     We have commitments under operating leases, which are as follows at June 30, 2002 (in thousands):

     Additionally, our share of long-term debt of unconsolidated JOAs is approximately $4.0 million at June 30, 2002.

     We may, from time to time, consider strategic or targeted newspaper acquisitions and dispositions. In the event an acquisition opportunity is identified, management expects that it would be able to arrange financing on terms and conditions satisfactory to us to the extent current resources are insufficient.

Near Term Outlook

Newsprint Prices

     To minimize the influence of newsprint price fluctuations, we periodically enter into fixed price newsprint contracts and newsprint swap agreements. In December 2001, a counterparty to one of our newsprint swap agreements declared bankruptcy. As a result, we terminated the related swap agreement on February 5, 2002. The decline in the market rates of newsprint and changes in the associated long-term pricing curves used by analysts to value our newsprint swap agreements has caused the value of our remaining newsprint swap agreement to decrease since June 30, 2001. The decline has been recorded as a component of other comprehensive income in fiscal year 2002.

     During fiscal year 2002, we saw the market price for newsprint steadily decline as daily newspapers’ consumption continued to decline throughout the period as a result of the soft economy. North American newsprint suppliers continue to take downtime in an attempt to more closely match supply with the declining demand from newspaper publishers. Despite an announced price increase for August 2002 of $50 a metric ton for 30 pound newsprint, the August 2002 RISI (Resource Information Systems, Inc.) price index for 30 pound newsprint was $455 per metric ton compared to $435 in July 2002. Additionally, large buyers of newsprint are currently reporting spot market purchases of newsprint at prices below $425 per metric ton from domestic and foreign suppliers. As a result, we expect to continue to benefit at least in the short-term from the low newsprint prices. However, the low market price for newsprint has been and will continue to be partially offset by our fixed price newsprint contract and newsprint swap, which at June 30, 2002 are in excess of the market price. Currently, the weighted average price for our newsprint under both our fixed price agreement and the newsprint swap agreement is approximately $611 per metric ton. Less than 15% of our annual consumption, including our pro-rata share of JOAs, is subject to fixed price or swap agreements, all of which is used in our JOA operations. We anticipate the fiscal year 2003 average market price will be $475 per metric ton compared to our fiscal year 2002 average price per metric ton of $504.

Recently Issued Accounting Standards

     In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations for a disposal of a segment of a business. We expect to adopt SFAS No. 144 as of July 1, 2002, and while we have not yet determined the effect, if any, the adoption of SFAS No. 144 will have on our financial position and results of operations, we do not expect adoption of the pronouncement will have a material impact on our financial position.

     In April 2002, the FASB issued Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS No. 145”). This statement provides guidance on the classification of gains and losses from the extinguishments of debt and on the accounting for certain specified lease transactions. While we have not yet

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Recently Issued Accounting Standards (continued)

determined the effect, if any, the adoption of SFAS No. 145 will have on our financial position and results of operations as it relates to the rescission of Statement No. 4 (effective in fiscal years beginning after May 15, 2002) or the rescission of Statement No. 13 (effective for transactions occurring after May 15, 2002), we do not expect adoption of the pronouncement as it relates to these rescissions will have a material impact on our financial position. All other provisions of SFAS No. 145 are effective for financial statements issued on or after May 15, 2002 and, based on our evaluation, do not have any impact on our financial position or results of operations.

     In July 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”). The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Previous accounting guidance was provided by EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring (“EITF 94-3”). SFAS No. 146 replaces EITF 94-3 and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. We will apply the statement accordingly.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate

     The following table provides information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates as derived from appropriate annual spot rate observations as of the reporting date. For interest rate swaps, the table presents notional amounts and weighted-average interest rates by contractual maturity dates. Notional amounts are used to calculate the contractual cash flows to be exchanged under the contract.

     We periodically enter into interest rate swap agreements to reduce our exposure to the uncertainty of short-term interest rate fluctuations associated with our bank debt. Interest rate swap agreements on our variable rate debt are designated with a notional principal balance and generally have terms of 90 days. The amounts reflected in the table below represent the interest rate swap that we were committed to as of June 30, 2002, which terminates effective October 2, 2002.

     On February 28, 2002, we entered into several interest rate swaps on a portion of our fixed-rate debt, swapping the fixed-rate interest payments for a variable-rate interest payment. We entered into these swaps in order to mitigate the effects of a protracted and slow economic recovery and to take advantage of the current low interest rates. The amounts reflected in the table below represent the interest rate swaps that we are committed to as of June 30, 2002, all of which expire either in January or July 2004. In August 2002, we terminated two of these interest rate swaps, reducing the total notional amount to $150.0 million. As a result of monetizing these two interest rate swaps, we received $2.2 million in cash and realized a gain of $2.0 million, of which $1.1 million was recorded as a gain at June 30, 2002, due to the mark to market accounting for these swaps. We also recorded an offset of $0.2 million to interest expense from the net settlement in fiscal year 2003.

Interest Rate Sensitivity
Principal or Notional Amount by Expected Maturity
Average Interest or Swap Rate
Year Ended June 30,
(Dollars in thousands)