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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital 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.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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– 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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