Monday, 26 October, 2020

McClatchy, 2nd-largest news publisher in US, files for bankruptcy

McClatchy files for bankruptcy protection Local News Company that operates Kansas City Star files for bankruptcy 41 Action News Staff 6
Ginger Lawrence | 14 February, 2020, 21:27

McClatchy Co., which owns The Kansas City Star and Wichita Eagle, says it hopes to shed about 60 percent of its $703 million in outstanding debt obligations as it continues its transition to digital media.

Newsroom employees at the Miami Herald promised an "unwavering commitment to strong local journalism" on Thursday in the wake of their parent company's bankruptcy and likely sale to a hedge fund, Chatham Asset Management. Twenty percent of all U.S. newspapers have closed since 2004, according to a recent report from PEN America, and the sector has shed 47 percent of its jobs.

McClatchy has been laboring under a heavy debt burden since acquiring the Knight-Ridder chain of newspapers in 2006 for $4.5 billion. "This restructuring is a necessary and positive step forward for the business, and the entire Board of Directors has made great efforts to ensure the company is able to operate as usual throughout this process. If you go digital you still can't compete for advertising with Google and Facebook". Chatham also has controlling stakes in the Canadian newspaper chain Postmedia, which publishes The National Post, and American Media, Inc., which owns the National Enquirer.

McClatchy expects fourth-quarter revenue of $183.9 million, down 14% from a year earlier. In November, the publisher said it would not be able to make a required $124 million payment to the fund, which, as of March 2019, was underfunded by $535 million.

The McClatchy reorganization plan would need court approval, and the company acknowledged it was still in discussions with its creditors including the Pension Benefit Guarantee Corporation, the government's insurer for pension funds.

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Hints of the industry's troubles emerged at the turn of the century, as circulation totals and share prices began slipping from their 1990s peaks.

"Publicly available information regarding the 2018 Transaction raises serious concerns about whether fraudulent transfers may have occurred, or whether CAM's (Chatham's) claims should be partially or completely subordinated", said the filing from Joseph K. Grekin, a lawyer with Schafer and Weiner, which is serving as outside counsel for the PBGC. Consolidation became rampant, closures increasingly common.

Just look at some of the work we have done in recent months.

The newspaper industry's workforce dropped from 71,000 in 2008 to 38,000 in 2018, according to a July 2019 Pew Research report. Buffett is a lifelong booster of newspapers but he has said for several years that he expects a lot of them to continue on their declining trajectory, save for a handful of national papers such as The New York Times and The Wall Street Journal. "People are becoming illiterate and innumerate in terms of what they know and how they can act as citizens in a democracy".