Local publishing giant McClatchy files for bankruptcy

Newspaper vending machine

The company has more than 200,000 digital-only subscribers and over 500,000 paid digital customer relationships.

McClatchy now owns and operates 30 local newspapers around the country, including 8 here in the Carolinas (The Charlotte Observer, The Herald, The Herald Sun, The State, The News and Observer, The Sun News, The Beaufort Gazette, and The Island Packet).

McClatchy is also known to have large pension obligations that eat into its profits.

The company expects to pull its listing (MNI) from the New York Stock Exchange as a publicly traded company, and go private. "That's not enough to sustain the newsrooms McClatchy inherited from Knight Ridder". In Thursday's filing with U.S. Bankruptcy Court in NY, it is seeking permission to appoint that corporation as the plan's trustee.

McClatchy Co. said Thursday that it will continue to run normally as it pursues approval of its restructuring plan under Chapter 11.

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.

While some national newspapers, like The Wall Street Journal and The New York Times, are adding digital subscribers, helping them navigate advertising declines, many local outlets have had a hard time.

McClatchy says it has obtained $50 million in debtor-in-possession financing, and there will be no changes to compensation of current employees as a result of the bankruptcy filing. McClatchy says the filing has "no immediate impact" on employees and the 30 newsrooms it controls across 14 states.

McClatchy said it intends to stay in business and emerge from bankruptcy in the near future.

"It's a big, big loss for American democracy", said Nicholas Lemann, the dean emeritus of the Columbia school of journalism.

"When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments", CEO Craig Forman said. 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. Chatham has shown some commitment to digital investment, Doctor said, but "whether it's going to be sufficient to turn that business around is another question".

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

"We have seen that hedge funds do not care about the long-term success of local news publications", Jon Schleuss, president of the NewsGuild - which represents McClatchy papers including The Miami Herald, The Sacramento Bee and The Lexington Herald-Leader - told Mediaite in an email.

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