The publisher of the Miami Herald, The Kansas City Star and dozens of other newspapers across the country has filed for bankruptcy protection.
The newspaper industry has been devastated by changing technology that has sent the vast majority of people online in search of news. While McClatchy and others have pushed digital operations aggressively, advertising dollars have continued to flow toward internet giants like Facebook and Google.
McClatchy Co.’s 30 newsrooms, including The Charlotte Observer, The News & Observer in Raleigh, and The Star-Telegram in Fort Worth, will continue to operate as usual as the publisher reorganizes under Chapter 11 bankruptcy protection.
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.
McClatchy has received $50 million in financing from Encina Business Credit that will enable it to maintain current operations for the company, which is still based in Sacramento.
“When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments,” said CEO Craig Forman. “We are moving with speed and focus to benefit all our stakeholders and our communities.”
McClatchy expects fourth-quarter revenues of $183.9 million, down 14% from a year earlier. Its 2019 revenue is anticipated to be down 12.1% from the previous year. That would mean that the publisher’s revenue will have slid for six consecutive years.
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. The company has more than 200,000 digital-only subscribers and over 500,000 paid digital customer relationships.
Yet the migration to digital publications has not offset the loss of advertisers that once relied on newspapers.
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.