MIAMI (CBSMiami/AP/CNN) — In another sign of the growing financial crisis in print journalism, McClatchy, the owner of 30 US newspapers, including CBS4 News Partner The Miami Herald, has filed for bankruptcy protection.
The company, which also owns The Kansas City Star, The Sacramento Bee, The Charlotte Observer, The News & Observer in Raleigh, North Carolina, and the Fort Worth Star-Telegram in Texas, says its newsrooms will continue to operate as usual and plans to emerge from bankruptcy in the next few months.
McClatchy is the nation’s second largest publisher of local newspapers behind only Gannett, the publisher of USA Today and hundreds of local newspapers. Gannett has had its own problems and was recently acquired by New Media Investment Group.
It recently won two Pulitzer Prizes and many other awards, most recently for the Miami Herald’s coverage of the Jeffrey Epstein scandal.
Despite that reputation for quality, it has been cutting staff in response to falling revenue and mounting losses. Company filings show McClatchy had 3,500 full-time and part-time employees as of December 31, 2018, the most recent figure available. Five years earlier it reported just over twice as many employees. The company’s press release said it has reduced its operating expenses by $186.9 million, or 23.3%, in the last three years alone, but it wasn’t enough.
The company reported a net loss of $364 million in the first nine months of 2019, up from a loss of $52 million in the year-earlier period. Revenue in the first three quarters of 2019 fell by 11%, or nearly $68 million, with a decline in revenue from both advertisers and readers.
The publisher’s origins date to 1857 when it first began publishing a four-page paper in Sacramento, California, following the California Gold Rush. That paper became The Sacramento Bee.
The company expects to pull its listing from the New York Stock Exchange as a publicly traded company, and go private.
McClatchy filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Its restructuring plan needs approval from its secured lenders, bondholders and the Pension Benefit Guaranty Corp.
McClatchy has suffered as readers give up traditional subscriptions and get news online and like other publishers, it’s tried to follow them there.
Digital-only subscriptions have increased by almost 50% year over year, McClatchy said, and subscriptions are now roughly evenly balanced between total audience and advertising revenues, with digital accounting for 40% of those revenues and growing. The company has more than 200,000 digital-only subscribers and over 500,000 paid digital customer relationships.
Independent newspapers and chains alike are struggling. The estimated total U.S. daily newspaper circulation including both print and digital in 2018 fell 8% from the prior year to 28.6 million for weekday. Sunday circulation fell 9% to 30.8 million, according to the Pew Research Center for Journalism and Media.
Last year, New York Times executive editor Dean Baquet bleakly predicted the demise of “most local newspapers in America” within five years, except for ones bought by billionaires. The Washington Post and Los Angeles Times, both national publications, are thriving after being bought by billionaires. The Boston Globe, Minneapolis Star-Tribune and Las Vegas Review-Journal are among other major American newspapers that appear to have steadied themselves after being sold to local wealthy individuals.
“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,” said Chairman Kevin McClatchy, the great-great grandson of the company founder, James McClatchy.
The company has also worked on its financials, trimming operating expenses by $186.9 million for the three-year period ended in December. It’s also paid off about $153.5 million in debt in the same period.
Forman said McClatchy doesn’t anticipate any adverse impact on qualified pension benefits for substantially all of the plan’s participants and beneficiaries.
(© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. The Associated Press and CNN contributed to this report.)