Major Newspaper Chain McClatchy Files For Bankruptcy
In a letter on the company’s website, CEO Craig Forman announced McClatchy was filing for Chapter 11 protection to address the company’s debt and pension obligations, in order for it to “continue our digital transformation.”
The publisher operates 30 newsrooms in 14 states, including The Sacramento Bee in California, the Fort-Worth Star-Telegram in Texas and the Miami Herald in Florida. It said its local news outlets would “operate as usual throughout this process.”
“We will maintain the same unwavering commitment to delivering the strong, independent journalism that is essential to our local communities,” Forman wrote.
McClatchy’s financial troubles are a reflection of the struggles of local news to survive in the U.S. in recent years, amid dramatic shifts in the way people consume news.
If the court approves the company’s bankruptcy plan, ownership would move from longtime family control to a hedge fund, Chatham Asset Management LLC.
The company has been pursuing a “digital transformation” over several years, with about 40% of its subscriber and advertising revenues now coming from online editions, per a news release Thursday. As part of this effort, the company said in November that throughout 2020 its papers would begin to release only digital editions on Saturdays.
In November, the company reported significant signs of financial distress, revealing that its $120 million pension fund payment due in 2020 “greatly exceeds the company’s anticipated cash balances and cash flow.”
“When local media suffers in the face of industry challenges, communities suffer,” Forman warned in a November press release. “Polarization grows, civic connections fray.”
FOOTNOTE: This article originally appeared on HuffPost.