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CDT Publisher McClatchy Files for Bankruptcy Protection

by on February 14, 2020 4:01 PM

McClatchy Co., the publisher of the Centre Daily Times and 29 other newspapers, announced on Thursday that it was filing for bankruptcy protection as it looks to restructure more than $700 million in debt.

The nation's second largest local newspaper company says the Chapter 11 filing will allow its newsrooms — which also include papers such as the Miami Herald and Sacramento Bee — to continue operating normally while it seeks bankruptcy court approval to eliminate 55 percent of its debt and address its underfunded pension obligations. McClatchy received $50 million in financing from Encina Business Credit, which the company says, along with normal cash flow, will sustain it during bankruptcy.

"The CDT will continue to operate as usual throughout this process – with the same unwavering commitment to producing strong, independent journalism essential to our community," CDT publisher and president Janet Santostefano said in an email. "Our subscribers and readers will experience no disruption to their typical access to news."

If approved, McClatchy would become a privately held company led by its largest creditor, hedge fund Chatham Asset Management.  

“As a supportive investor in McClatchy since 2009, Chatham is committed to preserving independent journalism and newsroom jobs. We look forward to working with the company in the best interests of all stakeholders,” a Chatham spokesperson told the Washington Post

Chatham is also the majority owner of American Media Inc., which, publishes the National Enquirer, among other publications. American Media announced it was selling the tabloid last year but the sale has not been completed.

McClatchy is asking to terminate its pension plan and have the federal Pension Benefit Guaranty Corporation take it over after the company announced in November it was unable to make a required $124 million payment.

The CDT was among the newspapers acquired by McClatchy when it purchased Knight Ridder for $6.5 billion in 2006. The acquisition came at a time of growth for McClatchy but was almost immediately followed by a digital media boom and a cratering of print advertising. The challenge of shifting from legacy print to digital was exacerbated in the mid-2010s as Google and Facebook began to corner the market on digital advertising.

McClatchy says the bankruptcy filing and debt restructuring will speed its transformation to a digital-focused media company.

Locally, the news comes amidst a wave of recent changes for the CDT's print product, similar to those encountered by other legacy print media across the country.

In 2019, the newspaper eliminated its Saturday print edition, and last month, McClatchy announced it was moving the CDT's local print and packaging operations to Harrisburg. Santostefano said at the time the move was a business decision made because of aging equipment and a challenge filling skilled production positions.

"The transition to printing the CDT in Harrisburg has gone smoothly and morning delivery to our subscribers has continued as expected," she said on Friday.

Santostefano also said that 13 local employees lost their jobs when print operations were outsourced.  

On Feb. 3, in a column explaining why the Monday morning print edition did not have the score from the previous night's Super Bowl, executive editor Jessica McAllister explained that McClatchy's publishing center "recently made staffing changes that necessitated an earlier deadline."  

The earlier deadline, she wrote, "means our print edition will no longer includes late breaking news and sports results. Other traditional print elements such as lotto numbers are also no longer available in print," adding that late sports and news continue to be available through online platforms.

Santostefano said the CDT currently employs 25 people and collaborates with other McClatchy offices such as publishing centers, digital services and advertising support.



Geoff Rushton is managing editor for StateCollege.com. Contact him at [email protected] or find him on Twitter at @geoffrushton.
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