The publisher of the Fresno Bee, Miami Herald, The Kansas City Star and dozens of other newspapers across the country has filed for bankruptcy protection.

While McClatchy and others have pushed digital operations aggressively, advertising dollars have continued to flow toward internet giants like Facebook and Google.

The 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 internet giants like Facebook and Google.

McClatchy Co.’s 30 newsrooms, including The Charlotte Observer, The News & Observer in Raleigh, and The Star-Telegram in Fort Worth, will continue to operate as usual as the publisher reorganizes under Chapter 11 bankruptcy protection.

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

McClatchy has received $50 million in financing from Encina Business Credit that will enable it to maintain current operations for the company, which is still based in Sacramento.

“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 Has Suffered as Readers Give up Traditional Subscriptions and Get News Online

McClatchy expects fourth-quarter revenues of $183.9 million, down 14% from a year earlier. Its 2019 revenue is anticipated to be down 12.1% from the previous year. That would mean that the publisher’s revenue will have slid for six consecutive years.

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

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.

McClatchy has suffered as readers give up traditional subscriptions and get news online and like other publishers, it’s tried to follow them there.

Digital-only subscriptions have increased by almost 50% year over year, McClatchy said. The company has more than 200,000 digital-only subscribers and over 500,000 paid digital customer relationships.

Yet the migration to digital publications has not offset the loss of advertisers that once relied on newspapers.

The estimated total U.S. daily newspaper circulation including both print and digital in 2018 fell 8% from the prior year to 28.6 million for weekday. Sunday circulation fell 9% to 30.8 million, according to the Pew Research Center for Journalism and Media.

Even the Arrival of Moneyed Interests Can Prove Fleeting

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. 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.

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

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. Buffett is a lifelong booster of newspapers but he has said for several years that he expects most 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.

“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.

The company has also worked on its financials, trimming operating expenses by $186.9 million for the three-year period ended in December. It’s also paid off about $153.5 million in debt in the same period.

Forman said McClatchy doesn’t anticipate any adverse impact on qualified pension benefits for substantially all of the plan’s participants and beneficiaries.

2 Responses

  1. Monadnock Man

    This rag is getting what it deserves for being in bed with the dems and all the other foolish projects like the moonbeam boondoggle now converted into a slow diesel operation, that is failing just like the Bee. They forgot that the 4th estate has an obligation to report all sides of the news without bias. That paradigm change began back in the early 1950’s.

    It appears that the Bee will never get back on track, just like the boondoggle still has not laid any track even after 10+years of failing leadership, massive mistakes, massive cost overruns, no track on the ground with a total deaf ear to the experts who have told them time and again, it will not work plus costs will significantly exceed well over 100-billion Taxpayer dollars.

    Do the math, it does not pencil out regardless how this abusive public relations babble by the authority and dems in the assembly/senate try to sell it!

    Same for the Bee. (For the Fresno Bee region they have 50,000 subscriptions in a population of nearly 600,000++.) Therefore, for both entities, cut their losses now.

    For HSR, end the ever increase taxpayer obligations for a project that might go from nowhere to nowhere over either 119-miles or 171-miles. You cannot fix stupid!!!

    Reply
  2. Bill Thacker

    Hopefully the laid off reporters from the Fresno Bee who now write for GV wire dont get stiffed their hard earned pension. Fresno Bee is no longer a viable new source for central California. In fact it exists in name only with a s m.h all staff working out of Bitwise to sustain its lackluster online subscriptions.
    The selling of their huge building on E street ( owned by the pension fund) will be forthcoming as they reside in a co-OP building using many contractors.
    Too bad Fresno Bee sunk to such a low point it’s been in sharp decline 8 years hopefully they can stop the bleeding and maintain some sort of presence in Fresno besides lining bird cages and wrapping fish.

    Reply

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