McClatchy Co., owner of Lexington Herald-Leader, files for bankruptcy protection

Marco Green
February 14, 2020

McClatchy applied to the Pension Benefit Guaranty Corporation to take over its pension plan, which continued to make payments to most of its pensioners. But McClatchy weathered early storms better than most: By the end of 2004, the company had notched 20 consecutive years of circulation growth, and its stock was the industry's top gainer for 10 years in a row.

The Sacramento-based company operates 29 newspapers including the Miami Herald, The Charlotte Observer, and The Kansas City Star. At the time, McClatchy had approximately $700 million in debt and was unable to pay $120 million in pension obligations.

On Thursday, as news broke about the McClatchy's bankruptcy, our reporters were covering the funeral of a slain Florida Highway Patrol trooper, a proposal by State College of Florida that promises to bring big changes to Parrish and a story about why this weekend's Cortez Fishing Festival is such an important event.

The company, which oversees 30 local newsrooms, will continue to operate as usual while the company restructures under Chapter 11 bankruptcy protection, the Associated Press reported. But the agency asked the court to investigate a complex 2018 transaction between McClatchy and Chatham, a hedge fund, before it begins evaluating McClatchy's reorganization plan.

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.

As you may have read, McClatchy, parent company of the Bradenton Herald, has announced a voluntary restructuring under Chapter 11 of the U.S. Bankruptcy Code.

"[But] when a large chain says we're going to emerge from bankruptcy stronger and more digital, these are red flags".

"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. Chatham said it has been "a supportive investor" in McClatchy since 2009.

Last year, New York Times Executive Editor Dean Baquet made a dire prediction that a number of local newspapers will die in the "next five years".

In an ominous sign for the print newspaper industry, Warren Buffet's Berkshire Hathaway recently unloaded its 31 newspapers to Lee Enterprises for $130 million. That, combined with its operating cash flow, should provide enough cash for the company to function, McClatchy said.

McClatchy was founded in Sacramento in 1857 during the California gold rush and the namesake McClatchy family has had a continuous ownership role since then.

"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.

Other reports by Click Lancashire

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