Sacramento Bee publisher files for bankruptcy
McClatchy, the publisher that operates the Miami Herald, the Sacramento Bee and other newspapers, filed for bankruptcy protection on Thursday, another sign of a collapsing 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 plans to restructure its pension obligations and the more than $700 million in debt it has struggled with for years as it tries to strengthen its digital business. It said its 30 newsrooms in 14 states would continue operating as usual during the case.
Hedge fund Chatham Asset Management, its longtime creditor, would operate McClatchy, a 163yearold familycontrolled business, as a private company, under the plan laid out in the filing.
If the plan is approved by the court, McClatchy would become the latest in a string of local news brands propped up by hedge funds, an unlikely relationship that has become the norm as the finance industry swoops in to wring profits from an ailing industry. Journalists and industry groups have expressed grave concerns about the future of news and jobs in the hands of private equity, but there are few solutions for the growing crisis in the industry. A 2019 report from PEN America warned that the shuttering of hundreds of local newspapers would damage 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 took the name Gannett, is managed by a private equity firm, Fortress Investment Group, and owns roughly one in five U.S. dailies.
Alden Global Capital owns MediaNews Group, which has witnessed extensive newsroom cuts across its properties, which include the Denver Post and the San Jose Mercury News. It has a 25% stake in Tribune Co., the publisher of The Chicago Tribune, New York Daily News and The Baltimore Sun, among others.
McClatchy has struggled with debt for more than a decade, after it acquired a rival newspaper chain, KnightRidder, for $4.5 billion in 2006. Then came the recession, declining print advertising revenue and the rise of digital media, a combination that weakened the newspaper industry and continues to disrupt it.
McClatchy announced in November that it planned to end its Saturday print editions by the end of 2020. Late last year, it disclosed that it did not believe it would have the cash flow required to make a mandatory contribution to its pension plan, and later said that it was denied a request for a waiver.