The New York Times Company
McClatchy, the publisher that operates The Miami Herald, The Sacramento Bee and other newspapers, filed for bankruptcy protection on Thursday, another sign of a collapsing local news industry.
In a Chapter 11 filing in New York, the company, one of the largest news publishers in the United States, said it planned to restructure its pension obligations and the more than $700 million in debt it has struggled with for years as it tried to strengthen its digital business. It said its 30 newsrooms in 14 states would continue operating as usual during the case.
The hedge fund Chatham Asset Management, its longtime creditor, would operate McClatchy, a 163-year-old family-controlled business, as a private company, under the plan laid out in the filing.
If the plan is approved by the court, McClatchy would become the latest in a string of local news brands propped up by hedge funds, an unlikely relationship that has become the norm as the finance industry swoops in to wring profits from an ailing industry. Journalists and industry groups have expressed grave concerns about the future of news and jobs in the hands of private equity, but there are few solutions for the growing crisis in the industry.
Craig Forman, the president and chief executive of McClatchy, said in a statement that the company’s reorganization plan would allow it to continue to “produce strong local journalism essential to the communities we serve.”
“When local media suffers in the face of industry challenges, communities suffer: Polarization grows, civic connections fray and borrowing costs rise for local governments,” he said.
McClatchy has struggled with debt for more than a decade, after it acquired a rival newspaper chain, Knight-Ridder, for $4.5 billion in 2006. Then came the recession, declining print advertising revenue and the rise of digital media, a combination that weakened the newspaper industry and continues to disrupt it.
Late last year, McClatchy disclosed that it did not believe it would have the cash flow required to make a mandatory contribution to its pension plan, and later said that it was denied a request for a waiver.
The company said it expected its fourth quarter revenue for 2019 to be $183.9 million, down 14% from a year earlier. It said that over the past three years, it had reduced operating expenses by $186.9 million.