Major Print Media Company McClatchy Files For Bankruptcy

Major Print Media Company McClatchy Files For Bankruptcy

In yet another news company downturn, the 163-year-old McClatchy publication company owns the Sacramento Bee, Miami Herald, and 28 other news publication sources have filed for chapter 11 bankruptcy. McClatchy began during the California gold rush and will now be run by the New York Hedge fund known as Chatham Asset Management. This is just one of several recent bankruptcies that resulted in Wall Street investors buying up waning publications.

Serving as one the most significant news publishers in the U.S., McClatchy filed it’s chapter 11 bankruptcy in New York. The company hopes to address its pension plan as well as nearly 700 million in debt. During the bankruptcy proceedings, McClatchy said it’s newsroom operations spanning 14 states would continue as usual. Furthermore, the bankruptcy plan would transition McClatchy into a privately held company. McClatchy originally went public in 1988. This transition also wouldn’t be an unfamiliar one since the takeover would be given to Chatham, a current lender and significant shareholder of McClatchy. If this bankruptcy is granted in New York court, this will represent the third major wall street takeover of a large publishing company. It is thus rendering most of the U.S. publishing industry to be held in private investment firms.

However, this recent news comes as no surprise since publications’ dismal fate in the current climate. McClatchy has been suffering from considerable debt for over a decade as the publishing industry has dramatically shifted. McClatchy’s death note was signed back in 2006 when they acquired the Knight-Ridder newspaper chain for $4.5 billion. At the time, the Knight-Ridder was the second-largest newspaper chain in the United States. Shortly after, in 2008, an unprecedented recession hit that wiped out wealth for most of the country. Along with this massive decline in the stock market and pause on consumer spending, publications were hard hit. It’s important to note this decline in print media was already apparent as soon as 2004.

Since that year, 25% of all printed news sources have shut their doors due to the changing climate. In conjunction with the recession in 2008, McClatchy would face massive drops in profit in conjunction with a shift in news digestion platforms. As of 2020, 50% of all newspaper jobs in the United States have disappeared. However, after the recovery of the 2008 recession, print media would see it’s the biggest blow yet. By this point in time (around 2009), most consumers began consuming their news via the internet rather than newspapers. This likely took off so strongly because of new offerings in the smartphone industry. Back in 2004, even with declining newspaper sales, most of the population still had few means to consume news. So, the initial decline in print media was rather slow, and for many, not noticeable. The decline was largely due in part to increased television sales rather than computer sales. Computers at that time still were not nearly as portable or accessible as they are today.

Then, in June of 2007, Apple released the iPhone. A revolutionary smartphone with a touch screen that all phones nowadays have. This “pocket computer” made it very easy for individuals to consume media via the internet without needing a bulky computer. Furthermore, smartphones were much better at sharing news than newspapers as well. Smartphones and the internet could update information virtually just as fast as the news happened. Smartphones could also access news from any place in the world (with the internet). This meant newspapers were physically inferior and couldn’t keep up with the news cycle as fast as the new iPhone.

A few years later, other companies began producing similar smartphones, and computers quickly became more portable. With consumers concerned with single gram increases in weight, it was clear that consumer electronics were now highly portable and easy to use. This further solidified the death of newspapers. This trend mostly caught most of the print media off guard. However, some publications like the New York Times, Chicago Tribune, and others were able to keep up with the digital changes. Traditional print media outlets like those previously mentioned quickly added online options to news consumption. This meant the company could continue to exist digitally, but at a price.

Since digital media is generally free to consume, it was initially very difficult to profit from free-to-read news articles. Companies could still collect revenue from ad placements, but digital ads proved to be far less lucrative and much cheaper than print media ads. Furthermore, internet users could easily share news information even if there was a paywall. This mainly meant news publication (even today) has a great deal of difficulty with collecting on subscriptions.

This is why it’s important to seek out professionals who understand how to collect subscriptions and payments the right way. A collection agency could be the solution to collecting those payments and avoiding bankruptcy. Even better, collection agencies generally only charge a fee if the money is successfully collected. Otherwise, the company pays nothing. The recovered money then gets sent back to the client while a small collection fee goes to the collection agency.