McClatchy, the publisher that runs The Miami Herald, The Sacramento Bee and other newspapers, filed for bankruptcy protection on Thursday, another sign of a collapse in the local news industry.
In a Chapter 11 filing in New York, the company, one of the largest news publishers in the United States, said it was restructuring its pension obligations and the more than $ 700 million in debt it had been struggling with for years tried to strengthen his digital business. The 30 newsrooms in 14 states would continue to work as usual during the process.
Chatham Asset Management, its long-standing creditor, would operate McClatchy, a 163-year-old family-run company, as a private company under the plan set out in the notification.
If the plan is approved by the court, McClatchy will be the latest in a series of local news brands backed by hedge funds. This is an unlikely relationship that has become the norm when the financial industry takes profits from a troubled industry. Journalists and industry associations have raised serious concerns about the future of news and jobs in the hands of private equity, but there are few solutions to the growing crisis in the industry. A 2019 PEN America report warned that closing hundreds of local newspapers would harm democracy.
In August, two publishers of hundreds of daily newspapers, Gannett and GateHouse Media, merged to become the largest newspaper company in America. The new company, which was named Gannett, is managed by a private equity firm, the Fortress Investment Group, and owns approximately one in five US newspapers.
The hedge fund Alden Global Capital owns the MediaNews Group chain, which has seen substantial cuts in its property newsroom, including The Denver Post and The San Jose Mercury News. The company has a 25 percent stake in Tribune Company, the publisher of The Chicago Tribune, New York Daily News and The Baltimore Sun, among others.
Craig Forman, President and CEO of McClatchy, said in a statement that the company's restructuring plan would allow him to continue to produce "strong local journalism that is essential to the communities we serve".
"When the local media suffers from the challenges of the industry, the communities suffer: polarization increases, civic ties diverge, and borrowing costs for local governments increase," he said
McClatchy has been struggling with debt for over a decade after acquiring a rival newspaper chain, Knight-Ridder. In 2006 there was a recession, declining revenue from print advertising and the rise of digital media, a combination that weakened the newspaper industry and continued to disrupt it.
McClatchy announced in November that it plans to end printing on Saturday by the end of 2020. At the end of last year, it announced that it did not believe it had the cash flow required to make a mandatory contribution to its pension plan, and later said that an application for waiver was denied.
The company expects sales of $ 183.9 million in the fourth quarter of 2019, a 14 percent decrease from the previous year. Operating costs have dropped $ 186.9 million in the past three years.
Marc Tracy contributed to the reporting.