US private equity firms are assembling to make a play for the country's second biggest newspaper publisher, Knight Ridder.

The California-headquartered owner of 32 daily papers has been under increasing shareholder pressure as advertising revenues sag and stock market value slumps. It has reluctantly instructed investment bankers Goldman Sachs to "explore strategic alternatives".

To this end, an alliance of the Blackstone Group, Providence Equity Partners and Kohlberg Kravis Roberts is in the early stages of buy-out negotiations. Bidders are due to disclose preliminary interest next week (December 9).

A tentative value of $4 billion (€3.42bn; £2.3bn) has been placed on KR and other media companies may not offer much competition in the bidding. The only rival with enough muscle to make such a major acquisition is considered to be Gannett, the number one newspaper publisher in the US.

Doug Arthur, newspaper analyst at Morgan Stanley, says the "absolute prerequisite" for any potential buyer, whether a rival or a buyout firm, "is a view that a significant amount of both cost-cutting and value can be harvested and that some of KR's depressed markets can grow again".

Data sourced from Wall Street Journal Online; additional content by WARC staff