Chatham new owner of McClatchy papers
Hedge fund wins bankruptcy auction
NEW YORK: After years of declines in revenue and print circulation, the McClatchy Co, one of the largest and most respected news publishers in the United States, announced on Sunday that it expected to be bought by Chatham Asset Management, a New Jersey hedge fund, at the conclusion of a bankruptcy auction.
The announcement, which signals an end to 163 years of family ownership, underlines the growing influence of the finance industry on US newspapers. And it means that a news company known for winning top journalism prizes is likely to become the property of a firm that owns The National Enquirer and other supermarket tabloids.
McClatchy, publisher of The Miami Herald, The Kansas City Star, The Charlotte Observer and its flagship publication, The Sacramento Bee, filed for Chapter 11 bankruptcy protection in February.
Chatham, an investor in the company since 2009, is its largest creditor. In recent months it put together the bid that has been declared the winner in a US Bankruptcy Court auction, a McClatchy spokeswoman said on Sunday.
Chatham, which manages about $4 billion in assets on behalf of its clients, “is expected to become the majority owner in the third quarter of the year,’’ McClatchy said, and the publiclytraded newspaper would go private.
It will not be split up, according to McClatchy, its 30 news outlets remaining intact.
In a statement, a Chatham spokesman said the company was “pleased with the outcome of the auction,” adding, it “is committed to preserving newsroom jobs and independent journalism that serve and inform local communities during this important time.”
McClatchy did not disclose terms. In April, the company said it had received a Chatham-led bid worth more than $300 million.
That offer included the debt assumed by the hedge fund and its partners. Another McClatchy creditor, New York hedge fund Brigade Capital Management, was named in a public filing as a partner of Chatham in the April bid.
The court and regulators must approve the deal. A bankruptcy court hearing on the matter is scheduled for July 24.
Hedge funds and private equity firms have had a growing presence in the news industry, to the chagrin of press advocates who argue that financial firms do not make civic-minded stewards of a business built largely on holding the powerful to account.
“I’m always for local ownership whenever possible, and local support,” said Sree Sreenivasan, professor of digital innovation at Stony Brook University’s School of Journalism, sounding a note of caution regarding financeindustry ownership.
John Longo, a professor at Rutgers Business School, said such ownership did not necessarily mean a disregard for journalism.
“Hedge funds are certainly profitoriented,” he said. “If the business is not profitable, they’ll do what they need to to right-size it.”
Longo added: “If they look at the assets they are buying, part of their core purpose is to serve their community. If they don’t do a good job serving their community, the profits won’t follow.”
In a statement, Craig Forman, the McClatchy CEO, said Chatham would allow the company to continue providing strong news coverage.
“Local journalism has never been more vital,” he said, “and we remain steadfast in our commitment to delivering on our mission and continuing to serve our communities.”
Marian Needham, executive vice president of the NewsGuild, the union that represents employees at some McClatchy newspapers, said in a statement that McClatchy needed to adopt existing collective bargaining agreements.
“We are deeply concerned that this venerable newspaper chain — which has won 54 Pulitzer Prizes — will now transfer to the ownership of a hedge fund more known for its drive to maximise profits than for its commitment to producing quality journalism,” she said.