Key questions from the second quarter earnings call conducted by The McClatchy Company on July 19, 2007.

John Janedis (Wachovia): Can you give a sense of the percentage of revenues in Florida and California that are related to the real estate weakness?

Gary B. Pruitt: The real estate has a ripple effect beyond just real estate itself.

Frank Whittaker: There are other categories that are directly related to the real estate slump, notably in retail, home improvement and furniture categories. We do not have good data on Florida because as we have included them in our financial systems it will take a full year before we have that a year-over-year comparison. In California, furniture is down almost 17% or $800,000 and the category of home improvement is down almost 16%, or $600,000.

Gary B. Pruitt: If you look at the second quarter for total advertising revenues in California and Florida together, they were down 17.8%. All other regions advertising was down 5%, so you can see the vastly disproportionate effect. Real estate in California and Florida was down 33.2%, real estate in all other regions combined was down 4.9%. California and Florida are taking a toll but they were our best performing states. California was McClatchy's best-performing state for many years and Miami and Florida was for Knight Ridder for many years, so we think the underlying growth of the market will bode well for the long-term but they are having a disproportionate impact right now.

John Janedis (Wachovia): If real estate starts to improve in the third quarter, would the other ones start to improve then or would it be like a first quarter 2008 thing?

Gary B. Pruitt: They are congruent and there may be lag but it would not be a long lag.

Frank Whittaker: It would not be a long lag but there is something. If people start buying then there is some time to get through the home purchase and then start thinking about improvements in furniture.

John Janedis (Wachovia): Do you expect growth at some point this year on direct mail or just at some point going forward?

Gary B. Pruitt: What we are saying is we do expect that it will increase when the general advertising environment increases, so we did not have a specific time on it. Right now what we are getting hit, this category from McClatchy includes all print revenue that is not in the newspapers. It includes all of our niche products but importantly includes our direct mail TMC products. While niche products are showing growth, it is those TMC products, the direct mail TMC products that are showing the declines, just as is more reflected in the newspapers. In particularly, Walgreen’s and Lowe’s eliminated their mid-week non-subscriber advertising products throughout the country, so that is effecting this category. They kept it in the paid product but removed it from the non-subscriber mail product mid-week.

Craig Huber (Lehman Brothers): How much is real estate down in each of California and Florida?

Frank Whittaker: In California, real estate revenues declined $5.8 million, which was 28.9% of the total decline; and the comparable number in Florida was a dollar decline of $5.3 million, which was a 39.7% of the total decline.

Craig Huber (Lehman Brothers): Retail store advertising was down 6.2% for the quarter overall. Why is it down so much in your opinion in your markets and how much of it is layered on top of Florida and California as opposed to the other regions?

Gary B. Pruitt: We are handicapped on the retail side right now because Knight Ridder did not have the same breakout and detail on the retail categories that we do but we know that we are seeing an effect in the home improvement areas, the spillover from real estate decline and we are still seeing a pullback in department stores, with Dillard’s pulling back double-digit and Macy’s pulling back. We are hopeful that Macy’s will increase its spending in print but we have not seen the effect of that currently. In California and Florida, their retail decline is steeper than the other regions, between 7% and 8% decline, whereas the rest of the regions are between 5% and 6%. It is the more broadly based decline. I think not just furnishings and home improvement, although we are seeing that impact with real estate decline but department stores are pulling back as well.

Craig Huber (Lehman Brothers): The EBITDA of the Minneapolis Star Tribune is down 40% to 50% year-to-date. Is there anything unique in the Minneapolis markets where you could not see those sort of fall-offs in EBITDA at some other papers out there?

Gary B. Pruitt: I am hesitant to talk about the Star Tribune. I am out of date there and happy to be spectator as opposed to an expert in terms of what is going on there.

Craig Huber (Lehman Brothers): Is there any other reason why you could not see those declines or worse in other markets around the country in some of your own papers?

Gary B. Pruitt: Larger metros have been hit harder in this era than smaller papers, in part because they had a larger classified base and the Internet competition was keener in the classified area, so that was one piece of it. The second piece is that metro papers typically have a higher cost structure for various reasons and so that has an impact. Some of that can be a union effect but not all of it. Finally, the Internet competition focused more on cities than it did on smaller markets and so they faced more Internet competition as well. All of those factors are not unique to Minneapolis. They apply to other metros and some other metros are struggling. Classified was a disproportionately large percentage of total advertising in Minneapolis so they may have been more vulnerable than some of the other papers. I say that just not based on looking specifically at the metro paper average but I believe that that is the case, so they may have been more vulnerable.

Karl Choi (Merrill Lynch): Could you quantify the percentage decline in compensation expense on a pro forma basis in the second quarter, excluding the Knight Ridder accrual in June a year ago?

Gary B. Pruitt: Half of our expense decline came from synergies in the second quarter but a majority of our compensation decline came from those synergies, whereas a minority of the expenses of course in newsprint and the all other category came from synergies. With compensation down 12.2, a majority of that was coming from the synergies, but we are building momentum in terms of the compensation category and compensation decline. FTEs were down 6.9% in the second quarter and the vast majority of those were from operations, not from synergies, so with three quarters or so of those coming from the operations so we would expect FTEs to be down in the mid single-digits in the third quarter.

Karl Choi (Merrill Lynch): In the first quarter there were some unusual items related to tax reserve. Was there anything like that in the second quarter?

Patrick J. Talamantes: We have still got interest expense on our tax reserves rolling through that line in the second quarter and we will have that going forward until we can work that tax reserve down. We have got $1.7 million in the interest expense line.