One of the biggest newspaper publishers in the United States, McClatchy, filed for bankruptcy protection on Thursday, another harbinger of America’s deepening local-news crisis.
McClatchy will be allowed to keep its 30 newspapers as Chapter 11 allows that.
According to the Washington Post, the publisher of the Miami Herald, Kansas City Star, and other regional dailies has been saddled with debt since its $4.5 billion takeovers of a much bigger rival, Knight Ridder, in 2006. The combination coincided with a digital boom that disrupted the business model and transformed the way news is consumed.
Penny Abernathy, the Knight chair of journalism and digital media economics at the University of North Carolina said:
‘’In 2010, the total revenue for print ads fell below 1950 levels, and it has continued to decrease. Everyone assumed if you could just make the transition over to digital that things would be okay. But the problem is that as of 2015, Google and Facebook make up about 75 percent of the digital ad dollar in U.S. markets. That is not enough to sustain the newsroom McClatchy inherited from Knight Ridder.’’
At the start of 2020, the newspaper publisher from Sacramento suspended several pension payments and issued a statement in which they said that they hired a bankruptcy administrator to help it secure a government takeover of the retirement plan.
Craig Forman, the president of McClatchy and chief executive said in a news release:
“McClatchy’s plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders. When local media suffers in the face of industry challenges, communities suffer: Polarization grows, civic connections fray and borrowing costs rise for local governments. We are moving with speed and focus to benefit all our stakeholders and our communities.’’