McClatchy newspaper chain files for bankruptcy protection

Andrew Cummings
February 14, 2020

To executives of McClatchy, Thursday's bankruptcy of the second largest newspaper chain in the U.S. is the fault of its pensioners, who outnumber current employees by a margin of 10 to one.

The McClatchy Company, the publisher of newspapers from the Miami Herald to the Kansas City Star, is filing for Chapter 11 bankruptcy protection.

McClatchy owns 30 newsrooms in 14 states. Now, the company is asking the bankruptcy court to terminate the pension plan and make the federal Pension Benefit Guaranty Corp. the plan's trustee. On a website the company created to address the Chapter 11 filing, leadership said it will "allow us to continue to operate as usual" and that employees' jobs would not be affected.

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.

McClatchy Co., which owns The Kansas City Star and Wichita Eagle, says it hopes to shed about 60 percent of its debt would as it transitions to digital.

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.

Dan Kennedy, a journalism professor at Northeastern University who follows the sector, said McClatchy's woes follow "the narrative that we've seen with corporate chain ownership" by accumulating debt that kept it from investing in future technologies.

"When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments", said CEO Craig Forman. We are privileged to serve the 30 communities across the country that together make McClatchy and are ever grateful to all of our stakeholders - subscribers, readers, advertisers, vendors, investors, and employees - who have enabled our legacy to date. For example, Google made $134 billion in digital ad revenue previous year, while Facebook took in $69 billion.

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. Two weeks ago, billionaire Warren Buffett said he was selling all of Berkshire Hathaway's publications: 31 daily newspapers in 10 states as well as 49 paid weekly publications with digital sites. "McClatchy remains a strong operating company and committed to essential local news and information", said Chairman Kevin McClatchy.

The company began with a small newspaper based in Sacramento, California, amid the Gold Rush.

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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