“While this is obviously a sad milestone after 163 years of family control, McClatchy remains a strong operating company and committed to essential local news and information. While we tried hard to avoid this step, there’s no question that the scale of our 75-year-old pension plan – with 10 pensioners for every single active employee – is a reflection of another economic era.”-Kevin McClatchy,
McClatchy Co. filed for bankruptcy Thursday, a move that will end family control of America’s second largest local news company and hand it to creditors who have expressed support for independent journalism.
The filing has no immediate impact on McClatchy’s employees or its 30 newsrooms in 14 states, including the Kansas City Star, the Miami Herald, the Charlotte Observer, the Fort Worth Star-Telegram and the Sacramento Bee. The company said it has secured $50 million in new financing from Encina Business Credit to ensure it can continue to operate while in bankruptcy and hopes to emerge with its balance sheet equipped for the future.
McClatchy executives fought for months to avoid Thursday’s filing; the company pursued multiple regulatory and legislative avenues to address its pension and debt obligations before turning to the bankruptcy process.
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McClatchy plans to transfer ownership to Chatham Asset Management, owner of the scandal-plagued tabloid National Enquirer.
The company’s story began with Eleanor’s grandfather, James McClatchy, an Irish immigrant who arrived in New York in 1841 at 16. He found work at the New York Tribune and later heeded his boss Horace Greeley’s legendary advice: “Go West, young man.”
McClatchy moved to California during the first year of the Gold Rush, in 1849, as a correspondent for the Tribune but soon went to work for two competing Sacramento papers, the Placer Times and the Transcript.
The company later expanded and eventually, acquired Knight Ridder in 2006, which turned McClatchy into the nation’s second-largest newspaper chain, up from No. 10, and nearly tripled its revenue.
The deal cost $4.4 billion in a mixture of cash and stock. McClatchy also assumed $2 billion in Knight Ridder debt. Even after McClatchy spun off a dozen of the Knight Ridder papers to reduce the financial strain of the purchase, the Sacramento company still owed lenders $3 billion.