US newspaper publisher McClatchy files for bankruptcy protection

Normal operations as it pursues approval under Chapter 11

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The first daily of the McClatchy group, The Sacremento Bee Photo via InternetMcClatchy
The first daily of the McClatchy group, The Sacremento Bee Photo via Internet

McClatchy, the second-largest publisher of newspapers in the United States by circulation, has voluntarily filed for bankruptcy protection under the country’s Chapter 11 law on 13 February 2020 with the help of lawyers from www.marcbrownpa.com/. The Sacramento-based publisher listed on the New York Stock Exchange and each of its 53 wholly-owned subsidiaries filed their voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York. The group has received US$ 50 million (approximately Rs. 350 crore) debtor-in-possession financing from Encina Business Credit, which, combined with normal operating cash flows, will provide enough cash for the company, to continue to function. Go to https://realitypaper.com/facing-bankruptcy-hire-an-attorney-for-legal-paperwork.html for an attorney to assist you throughout the legalities of bankruptcy cases.

Begun in 1857 with a 4-page paper in Sacramento, that ultimately became The Sacramento Bee, McClatchy publishes the Miami Herald, The Kansas City Star, The Charlotte Observer, The (Raleigh) News & Observer, and the Fort Worth Star-Telegram among many other newspapers across 14 states.

McClatchy expects Q4 revenues of US$ 183.9 million, down 14% from the same quarter in the previous year. According to business media reports, its 2019 revenue is expected to be 12.1% lower than the previous year – the sixth consecutive year of declining revenues.

The company’s 30 local newsrooms are expected to continue to operate while it pursues approval of a debt restructuring plan with its secured lenders, bondholders, and the Pension Benefit Guaranty Corporation. According to the company’s press release, the company aims to emerge from this process in the next few months.

The restructuring plan would allow McClatchy to reorganize it’s over US$ 700 million debt, with 60% of the obligation being eliminated under the plan according to a McClatchy story. If okayed by the court, the plan would give control of the company to New Jersey-based hedge fund Chatham Asset Management. The new owners, led by Chatham, would run it as a privately held company, so its shares would not be traded on the NYSE American stock exchange. The company is beginning the process of being delisted, the story said.

“McClatchy’s plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders,” said Craig Forman, president, and chief executive officer in the company’s press release. “When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments. We are moving with speed and focus to benefit all our stakeholders and our communities.”

“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,’” commented Kevin McClatchy, chairman of McClatchy’s Board of Directors and great-great grandson of the company’s founder, James McClatchy. “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.”

The press release adds, “McClatchy has made significant progress in its digital transformation in the past three years. As the second-largest US local newspaper company, McClatchy has grown its digital-only subscriptions by almost 50% year over year and is now roughly evenly balanced between total audience and advertising revenues, with digital accounting for 40% of those revenues and growing, a much healthier distribution for an increasingly digital era. The Company has more than 200,000 digital-only subscribers and well over 500,000 paid digital customer relationships.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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1 COMMENT

  1. The newspaper industry everywhere seems to be under huge pressure although in India print is hanging on to about 30% of annual advertising spend and digital is growing fast. My observation albeit, from far away is that the last sentence of the article has two important numbers: “The Company has more than 200,000 digital-only subscribers and well over 500,000 paid digital customer relationships.”

    Both these numbers and especially that of 200,000 digital-only subscribers, seem way too low for a group of this scale to survive. One wonders if the restructuring will also mean that some of the papers will have to be sold off at bargain prices to those who believe that they need to be more local or hyperlocal in order to survive or become viable businesses.

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