A blockbuster business deal between two U.S. publishing companies illustrates the continuing vitality of daily newspapers as an attractive investment, even in the Internet age. Actually, the online reach of both media chains was a factor in last week’s headline-making agreement.

Here’s what happened: McClatchy Co. is buying the much larger Knight Ridder Inc.for about $4.5 billion in cash and stock, along with becoming responsible for $2 billion in debt. The smaller company, which had just 12 daily papers, now will own leading newspapers in many of the fastest-growing U.S. markets -- including Miami, Fort Worth and Charlotte, N.C. After the sale is completed and McClatchy sells 12 Knight-Ridder newspapers it doesn't want, it will have 32 papers with a combined circulation of about 3.2 million – making it the No. 2 American newspaper publisher after Gannett Co.

Just as significant is that McClatchy expands its network of valuable Internet assets by gaining the national Real Cities network from Knight-Ridder and a one-third stake in CareerBuilder.com, a national job advertising site. Real Cities, which draws more than 29 million online visitors a month, makes it easy for national marketers to buy ads in more than 100 local news and entertainment web sites compiled by professionals. "We view this deal as an important Internet play," said McClatchy’s top executive. "The newspaper alone is insufficient. Each needs to be supported by the other product. That makes you the leading media provider in a market."

What’s ahead: The Washington Bureau chief for McClatchy, whose staff nearly quadruples in the merger, looks forward to presenting more news online in different formats -– such as blogs, audio clips, live chats and video. "We need to make sure the events in Washington are presented in this new world, too," said David Westphal, who started a blog this year. "It is not like the ground beneath newspapers is still. It is fast-changing."

Behind the deal: Newspapers embrace the Internet to stay relevant. They attract ad revenue to support free sites that combine “mainstream media” standards and professionalism with the web’s speed, agility and breadth. A New York University survey released this month shows that 86 of the nation’s 100 largest papers have blogs.

Are newspapers necessary? Journalists think so, naturally, and so do enough readers to make a publicly held company pay $4.5 billion to buy a bunch of papers. They serve as filters and presenters of diverse voices from their communities. Here’s how Tom Glocer, chief executive of the Reuters news service, put it in a recent speech: "The world will always need editing. Consumers place value in others making decisions about what is good and what is not. ... It is our job as media companies to find that new content gold in the pan of dust and dirt and give it a mass audience. In the news industry, professional and ‘amateur’ content combined creates a better product. It tells the story at a deeper level."