McClatchy latest newspaper company seeking protection from creditors in bankruptcy

by Associated Press

The printed newspaper industry has been devastated by changing technology that has sent the vast majority of people online in search of news. While McClatchy and others have pushed digital operations aggressively, advertising dollars have continued to flow toward local Internet publishers like Historic City News and internet giants like Facebook and Google.

McClatchy Co.’s 30 newsrooms, including the Miami Herald, The Kansas City Star, The Charlotte Observer, The News & Observer in Raleigh, The Star-Telegram in Fort Worth and dozens of other newspapers across the country has filed for bankruptcy protection.  According to a statement from the company, the printed newspapers will continue to operate as usual as the publisher reorganizes as a debtor in possession under Chapter 11.

“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,″ said Chairman Kevin McClatchy, the great-great-grandson of the company founder, James McClatchy.

by Associated Press

The publisher’s origins date to 1857 when it first began publishing a four-page paper in Sacramento, California, following the California Gold Rush. That paper became The Sacramento Bee.

The company expects to pull its listing from the New York Stock Exchange as a publicly-traded company and go private.

McClatchy printed newspapers have suffered:

  • readers have given up traditional subscriptions and get news online
  • migration to digital publications has not offset the loss of newspaper advertisers
  • fourth-quarter revenues of $183.9 million expected, down 14% from a year earlier
  • 2019 revenue is anticipated to be down 12.1% from the previous year
  • publisher’s revenue will have slid for six consecutive years

According to overall print and digital circulation from the Pew Research Center for Journalism and Media:

  • daily newspaper circulation weekday fell 8% to 28.6 million in 2018
  • Sunday circulation fell 9% to 30.8 million in 2018

Last year a New York Times’ executive editor bleakly predicted the demise of “most local newspapers in America” “within five years”, except for those bought by billionaires.

  • The Washington Post and Los Angeles Times, both national publications, are thriving after being bought by billionaires.
  • The Boston Globe, Minneapolis Star-Tribune and Las Vegas Review-Journal are among other major American newspapers that appear to have steadied themselves after being sold to local wealthy individuals.

According to the AP article yesterday, even the arrival of moneyed interests can prove fleeting.

  • 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.
  • 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 moving with speed and focus to benefit all our stakeholders and our communities.”

McClatchy filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Its restructuring plan needs approval from its secured lenders, bondholders, and the Pension Benefit Guaranty Corp.