Publisher McClatchy Files for Bankruptcy

The parent company of the Kansas City Star has filed for Chapter 11 bankruptcy protection

The parent company of the Kansas City Star has filed for Chapter 11 bankruptcy protection

What they're saying: "While we tried hard to avoid this step, there's no question that the scale of our 75-year-old pension plan - with 10 pensioners for every single active employee - is a reflection of another economic era", Kevin McClatchy, the company's chairman, said in a statement. The company has more than 200,000 digital-only subscribers and over 500,000 paid digital customer relationships.

Yet whatever the reasons for the failure of a company that publishes numerous biggest titles in American journalism, including the Miami Herald, Fort Worth Star Telegram, Charlotte Observer and its hometown Sacramento Bee, there is no doubting the cost: truth and knowledge in an era of rampant fake news and misinformation. At the time, McClatchy had approximately $700 million in debt and was unable to pay $120 million in pension obligations.

If the court accepts the plan, hedge fund Chatham Asset Management would lead a group of new owners and operate McClatchy as a privately held company.

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 McClatchy reorganization plan would need court approval, and the company acknowledged it was still in discussions with its creditors including the Pension Benefit Guarantee Corporation, the government's insurer for pension funds.

One media buyer Adweek spoke with said the filing won't have much impact on clients in the short term, since the bankruptcy allows the company to restructure its debts and clean up its pension obligations.

McClatchy's bankruptcy filing "rings an alarm bell for local news", Poynter media business analyst Rick Edmonds said. "We are moving forward with speed and focus to benefit all our stakeholders and our communities".

Having already seen its revenue decline for five consecutive years, McClatchy's 2019 revenue is expected to decrease 12.1 percent from its 2018 earnings.

Last year, New York Times executive editor Dean Baquet bleakly predicted the demise of "most local newspapers in America" within five years, except for ones bought by billionaires.

McClatchy's origins date to 1857, when it began publishing a four-page paper in Sacramento, California, following the California Gold Rush. During the case, McClatchy and its 30 local newsrooms are expected to operate as usual, the company says.

The McClatchy papers have won numerous awards but the company has been saddled in debt, which has increased with its 2006 acquisition of rival Knight-Ridder for $4.5 billion.

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