Published: Fri, February 14, 2020
Markets | By Otis Pena

Newspaper giant McClatchy, owner of Miami Herald, files for bankruptcy

Newspaper giant McClatchy, owner of Miami Herald, files for bankruptcy

Complicating matters, internet companies Facebook and Google receive most online ad dollars.

The Sacramento-based company operates 29 newspapers including the Miami Herald, The Charlotte Observer, and The Kansas City Star. It's also paid off about $153.5 million in debt in the same period.

Last September, the New York Stock Exchange placed the company on notice that if it did not reverse its declining stock price, it would be delisted.

Initially, at least, McClatchy insists there will be no changes or cutbacks in its 30 newsrooms across 14 states, despite net losses of $364m in the first nine months of 2019.

What's next: If the court accepts the bankruptcy plan, the group of new owners would likely be led by hedge fund Chatham Asset Management, McClatchy's largest creditor.

"In this important moment for independent local journalism in the public interest, a reorganized capital structure will enable McClatchy to continue to pursue our strategy of digital transformation and continue to produce strong local journalism essential to the communities we serve", Forman said. But the agency asked the court to investigate a complex 2018 transaction between McClatchy and Chatham, a hedge fund, before it begins evaluating McClatchy's reorganization plan.

One media buyer Adweek spoke with said the filing won't have much impact on clients in the short term, since the bankruptcy allows the company to restructure its debts and clean up its pension obligations.

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The bottom line: "The filing foreshadows further cost-cutting and retrenchment for one of the biggest players in local journalism at a time when most American newsrooms already are straining to cover their communities", the Post notes.

McClatchy said it intends to stay in business and emerge from bankruptcy in the near future. For full-year 2019, revenues are expected to be $709.5 million, down 12-percent from 2018 with advertising revenues of $337.1 million and audience revenues of $321.8 million. "We are moving with speed and focus to benefit all our stakeholders and our communities". Chatham said it has been "a supportive investor" in McClatchy since 2009.

Last year, New York Times executive editor Dean Baquet bleakly predicted the demise of "most local newspapers in America" within five years, except for ones bought by billionaires.

In an ominous sign for the print newspaper industry, Warren Buffet's Berkshire Hathaway recently unloaded its 31 newspapers to Lee Enterprises for $130 million.

McClatchy's filing foreshadows further cost-cutting and retrenchment for one of the biggest players in local journalism, at a time when most United States newsrooms already are straining to cover their communities amid declining ad revenue and dwindling resources.

The McClatchy papers have won numerous awards but the company has been saddled in debt, which has increased with its 2006 acquisition of rival Knight-Ridder for $4.5 billion.

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