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Thunderstorms, some with heavy rain this evening followed by occasional showers overnight. Gusty winds and small hail are possible. Low 58F. Winds NNE at 5 to 10 mph. Chance of rain 90%..
Tonight
Thunderstorms, some with heavy rain this evening followed by occasional showers overnight. Gusty winds and small hail are possible. Low 58F. Winds NNE at 5 to 10 mph. Chance of rain 90%.
The McClatchy Co., owner of The (Raleigh) News & Observer, the (Durham) Herald-Sun and The Charlotte Observer, has filed for bankruptcy protection.
McClatchy’s 30 newsrooms, which also include the Miami Herald, The Kansas City Star, The Star-Telegram in Fort Worth and its flagship paper, The Sacramento (Calif.) Bee, will continue to operate as usual as the publisher reorganizes under Chapter 11.
The newspaper industry has been devastated by changing technology that has sent the vast majority of people online for news. McClatchy and others — such as Gannett, owner of the Times-News — have pushed digital operations aggressively, but advertising dollars flow toward internet giants like Facebook and Google.
McClatchy’s origins date to 1857 when it began publishing a four-page newspaper in Sacramento after the California Gold Rush. That paper became the Bee. The company is still based in Sacramento.
McClatchy has received $50 million from Encina Business Credit to maintain current operations.
“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. “We are moving with speed and focus to benefit all our stakeholders and our communities.”
McClatchy expects fourth-quarter revenues of $183.9 million — down 14 percent from a year earlier. Its 2019 revenue is anticipated to be down 12.1 percent from the previous year. That would mean that the publisher’s revenue will have slid for six consecutive years.
The company expects to pull its listing from the New York Stock Exchange and go private.
McClatchy filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Its restructuring plan needs approval from secured lenders, bondholders and the Pension Benefit Guaranty Corp.
McClatchy’s digital-only subscriptions have increased by almost 50 percent year over year, the company said. McClatchy has more than 200,000 digital-only subscribers and more than 500,000 paid digital customer relationships.
Yet the migration to digital publications has not offset the loss of advertising. Advertisers once relied on newspapers.
The estimated total U.S. daily newspaper circulation, including both print and digital in 2018, fell 8 percent from the prior year to 28.6 million weekdays. Sunday circulation fell 9 percent to 30.8 million, according to the Pew Research Center for Journalism and Media.
Last year, New York Times Executive Editor Dean Baquet bleakly predicted the demise of “most local newspapers in America” within five years, except for those bought by billionaires. The Washington Post and Los Angeles Times, both national publications, are thriving after being bought by billionaires. The Boston Globe, Minneapolis Star-Tribune and Las Vegas Review-Journal are among other major American newspapers that appear to have steadied themselves after being sold to local wealthy individuals.
But even the arrival of moneyed interests can prove fleeting.
Two weeks ago, billionaire Warren Buffett said he was selling all of Berkshire Hathaway’s publications—including the Greensboro News & Record and Winston-Salem Journal. Altogether, 31 daily newspapers in 10 states as well as 49 paid weekly publications with digital sites.
Buffett is a lifelong booster of newspapers but he has said for several years that he expects most of them to continue on their declining trajectory, save for a handful of national papers.
“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,’’ said Kevin McClatchy, chairman and great-great grandson of company founder James McClatchy.
The company has also worked on its financials, trimming operating expenses by $186.9 million for the three-year period ended in December. It paid off about $153.5 million in debt in the same period.
McClatchy doesn’t anticipate any adverse impact on qualified pension benefits for substantially all of the plan’s participants and beneficiaries, Forman said.
Omaha, Neb., reporter Josh Funk contributed to this report.
