Nation's second-largest newspaper chain sold to biggest debtor
OLYMPIA –– A bankruptcy court judge issued a decision in a New York court late Friday that McClatchy, the 163-year-old news media company that owns more than two dozen newspapers nationwide, including The Olympian, would be sold to one of the two major hedge funds that owns most of the company’s debt. The sale price is $312 million.
With the Chapter 11 bankruptcy-fueled sale underway of The McClatchy Company, the Olympian’s parent company, many people in the community wonder about the future of the newspaper of record for the Olympia metropolitan area, spurred by the outcome of a highly-anticipated sale months in the making.
“I sure hope the new owners have a sense for journalism, because that’s sure been lost at The Olympian,” said local man Charlie Kirry, who used to work in The Olympian’s mailroom. “The pros retired when they were working on the echo chamber of a building on East 4th [Street].”
It’s unclear if anyone who works at The Olympian is worried about the future of their jobs, although any fears of the newsroom’s seven-person staff wouldn’t be unfounded. Today, the 163-year-old news media company that owns The Olympian, The Sacramento Bee, the Miami Herald and more than two dozen other major metro dailies will be auctioned off to a hedge fund –– Chatham Asset Management, who together with Brigade Capital Management, owns most of the company’s debt.
According to an April press release from McClatchy, Chatham and Brigade, two of McClatchy’s biggest debt holders, offered more than $300 million in a credit bid that would allow the two firms to utilize the McClatchy debt they own towards the price of purchasing the company. Alden Global Capital, by all accounts a latecomer in making a deal to buy McClatchy, swooped in earlier this month to file an emergency motion in a New York bankruptcy court seeking to stop any purchase of McClatchy through a credit bid.
However, with the July 12 recommendation from the McClatchy board to presiding judge Michael E. Wiles to award the bid to Chatham, the last-ditch attempt by Tribune Publishing majority shareholder Alden was likely to fail, although it was ultimately up to the judge to make the decision.
The lead-up to the decision over who will control one of the oldest family-owned newspaper chains in the United States has not been without its drama, according to one Nieman Lab columnist who has watched the unfolding of the McClatchy ordeal. Nonprofit journalism leader Knight Foundation briefly, and quietly, considered throwing its hat into the auction ring last week, although ultimately didn’t make a bid.
The decision about who gets to own the newspaper chain follows years of gutting at McClatchy newspapers, resulting in a skeleton staff at many papers that are the primary, if not only, source of local news for communities across the country. McClatchy’s financial troubles began not long after a buyout of Knight Ridder, a newspaper chain twice the size of McClatchy, in 2006 for $4.5 billion in cash and stock, according to The New York Times.
The Great Recession soon followed, compounded by industry-wide shifts in readership from print to digital and the loss of profitable print advertising and classifieds to the internet. McClatchy was not immune to these overhauls, a fact of 21st century journalistic life the company acknowledged in a press release in which it credited “technological advances, consumer-behavior shifts and business model challenges,” as disruptive to the company’s operations. It also nodded to the fact that pension obligations, also a relic of the company’s past, created a drain on the company coffers.
“This restructuring process allows us to continue our digital transformation and operate without the limitations of our capital structure and pension payment obligations from another era,” wrote company officials. “Once completed, this process will provide certainty to qualified pension plan participants and to the wider group of employees and stakeholders who benefit from a restructured McClatchy.”
The deal, notably, does leave McClatchy in one piece, according to the press release.
Despite assurances, the company’s buyout from a New York-area hedge fund has many on edge about what happens next for The Olympian. Additions to the reporting staff earlier this year ramped up efforts to report on local news after years of criticism from locals that The Olympian had, ironically, ignored covering Olympia in favor of positioning itself as a source of state political news, national reporting and international coverage.
“I don’t think the situation could get much worse –– there’s hardly any local news coverage now,” said Dick Pust, a longtime local broadcaster and Olympian reader. “Local news coverage of Olympia seems to have gone to a bare minimum.”
The lack of local news coverage, some longtime Olympian readers understand, is a sign of the times. With more readers going online to get their information and print readership going continuously down, maintaining staffing at traditional print establishments is an ever-tighter squeeze.
“It’s a sign of the times what with the internet, so the quality of local news coverage has gone down,” said Dick Nichols, a former Thurston County Commissioner and longtime Olympian reader. “Smaller papers are getting smaller, but I’m hoping whatever happens, we’ll still have a daily paper. I like having my newspaper, and I’m hoping we’ll still have it.”
While what happens next to the 160-year-old paper is a matter of speculation, only time will tell what the future holds for the newspaper that still remains a staple of civic life in the greater Olympia area.
“There are reporters at The Olympian who do their best,” Pust told The JOLT. “We certainly wish the Olympian the best.”
Calls to newsroom staff at The Olympian weren’t returned as of Friday morning.
This story was originally published on TheJOLT.com. To read the original story, click here. Photo by Danny Stusser.
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