By CCT STAFF
Newspaper publisher McClatchy, which owns the San Luis Obispo Tribune, announced Thursday it has filed for Chapter 11 bankruptcy, a move due in large part to the company’s overburdened pension system.
McClatchy publishes 30 newspapers in 14 states, including five in California: The Tribune, The Sacramento Bee, The Fresno Bee, The Modesto Bee and Merced Sun-Star. Other McClatchy publications include the Miami Herald, The Kansas City Star, Charlotte Observer and the Fort Worth Star-Telegram.
Having already seen its revenue decline for five consecutive years, McClatchy’s 2019 revenue is expected to decrease 12.1 percent from its 2018 earnings.
Following the third quarter of last year, McClatchy reported a net loss of $304.7 million, prompting a 65 percent drop in its stock price. At the time, McClatchy had approximately $700 million in debt and was unable to pay $120 million in pension obligations.
Company Chairman Kevin McClatchy reports McClatchy has a ratio of 10 retirees collecting pensions for every 1 active worker.
“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 said.
Kevin McClatchy is the great grandson of company founder James McClatchy. The bankruptcy process is expected to end McClatchy family control of the company, which has existed since the company’s founding in 1857.
“While this is obviously a sad milestone after 163 years of family control, McClatchy remains a strong operating company committed to essential local news and information,” Kevin McClatchy said.
The likely new owners of the company would be led by the hedge fund Chatham Asset Management.
For more than a decade, McClatchy’s stock has been in decline. On Thursday, McClatchy stock closed at 75 cents a share.
Five years ago, McClatchy stock was listed at about $25. Fifteen years ago, the company’s stock price was more than $700.
Last September, the New York Stock Exchange placed the company on notice that if it did not reverse its declining stock price, it would be delisted.
Amid the company’s financial troubles, the Tribune has downsized its operations and moved to a smaller office. The Tribune also stopped printing a Saturday newspaper.
McClatchy says it has obtained $50 million in debtor-in-possession financing, and there will be no changes to compensation of current employees as a result of the bankruptcy filing. The company aims to emerge from bankruptcy in a few months.