November 13, 2019

McClatchy reported a series of financial reverses Wednesday so severe that it may not be able to meet its obligations in 2020. Specifically it has a $120 million pension funding payment due in the spring.

That “greatly exceeds the company’s anticipated cash balances and cash flow” it said in a press release. An appeal to federal pension guaranty authorities for relief may not be successful.

Given that possibility, the company has retained financial and legal advisers to explore options. Typically that is a first step toward a company exploring the possibility of a sale.

The publicly traded McClatchy newspaper chain, with 30 outlets including the Miami Herald and Kansas City Star, still gives the McClatchy family voting control. Those directors, to date, have fiercely resisted seeking bankruptcy protection or selling.

However, as I reported 14 months ago, Chatham Asset Management, a hedge fund, is both McClatchy’s biggest lender and biggest stockholder. Thus Chatham is well positioned to acquire the company or influence a choice of other refinancing options.

Chatham is no stranger to operating newspaper companies, with a controlling interest in a large Canadian chain and the parent company of the National Enquirer.

The alert on severe “liquidity pressures” came as McClatchy reported third quarter financial results. Its revenue losses continue to be worst among publicly traded news companies — 12.4% overall compared to the same period a year ago, and 19.3% in total digital and print advertising.

The company posted a $304 million loss for the quarter — though that figure is misleading. All but $9.5 million of that was from a markdown of assets, as accounting regulations require periodically.

The reevaluation reflects the plummeting value of McClatchy’s papers but does not require any outlay of cash.

In a conference call with analysts, chief financial officer Elaine Lintecum said the company is “early in these negotiations” and therefore declined to comment beyond the press release.

CEO Craig Forman said the goal is to restructure outstanding debt, including the pension payment, but “we cannot assure you these efforts will be successful.”

McClatchy has had several rounds of layoffs and buyouts this year, and this fall eliminated Saturday print editions in 12 of its markets. It plans to do the same in the other 18 in 2020.

As announced earlier, Lintecum is retiring in June. Another top executive, Mark Zieman, will leave the company at the end of the year and will not be replaced.

The company did have some good news to report. Paid digital-only subscriptions rose to 199,200, a 45.4% increase compared to the same quarter in 2018. Expenses are falling due to cost controls and the use of less newsprint.

With a grant from Google, McClatchy is launching three new digital-only outlets — the first of them in Youngstown, Ohio.

McClatchy’s shares were down 15.7% to $2.20 in noontime trading.

Rick Edmonds is Poynter’s media business analyst. He can be reached at

Correction: An earlier version of this story said that Youngstown lost its daily newspaper.  In fact, the Tribune Chronicle in nearby Warren bought the subscriber list and nameplate of The Vindicator of Youngstown and continues to publish daily under that name. We regret the error.

More from Poynter: Five cliffhangers as the Gannett-GateHouse merger vote nears

Support high-integrity, independent journalism that serves democracy. Make a gift to Poynter today. The Poynter Institute is a nonpartisan, nonprofit organization, and your gift helps us make good journalism better.
Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

More News

Back to News