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.
In the short-term, the bankruptcy filing should have no immediate effect on McClatchy's newspapers, which will continue to operate as the Chapter 11 proceeding proceeds.
One media buyer Adweek spoke with said the filing won't have much impact on clients in the short term, since the bankruptcy allows the company to restructure its debts and clean up its pension obligations. "We are moving with speed and focus to benefit all our stakeholders and our communities", CEO Craig Forman told the Associated Press today. "McClatchy remains a strong operating company and committed to essential local news and information", said Chairman Kevin McClatchy. While there is still more work to be done, we are pleased with the progress to date, and are appreciative of our ongoing dialog with our lenders and the PBGC.More news: Lewis Hamilton's scary message ahead of 2020 Formula One season
The so-called "managed bankruptcy", Franklin said, gives McClatchy a chance to keep the lights on and significantly reduce its debt load brought on by pension payments promised in the days of yore, as newspapers are left competing for digital ad dollars primarily soaked up by social and search. It's unclear how Chatham plans to make money from taking over McClatchy's 30 newspapers. It also paid off about $153.5 million in debt in the same period.
The company started out of Sacramento in 1857 following the Gold Rush, creating a paper called the Sacramento Bee.
The McClatchy papers have won numerous awards but the company has been saddled in debt, which has increased with its 2006 acquisition of rival Knight-Ridder for $4.5 billion. The company's qualified pension plan covers more than 24,500 current and future retirees and is supported by fewer than 2,800 employees. The company has obtained $50 million in financing from Encina Business Credit to maintain operations while it undergoes bankruptcy proceedings.More news: Ofcom set to police 'corrosive and abhorrent' harms on social media
The company will, however, be removed from the New York Stock Exchange and will transition to a private holding instead of a public one.
The McClatchy reorganization plan would need court approval, and the company acknowledged it was still in discussions with its creditors including the Pension Benefit Guarantee Corporation, the government's insurer for pension funds.
Last year, McClatchy announced it was cutting Saturday newspapers at its properties. At the Charlotte Observer, that process begins March 7; the paper said it will have "enhanced" Friday and Sunday print editions and instead offer an online-only version on Saturdays. Its 2019 revenue is anticipated to slide 12.1% from the previous year.More news: Sam Smith Calls Billie Eilish's 'No Time To Die' "So Beautiful"