The second-largest newspaper publisher in the United States, McClatchy, which owns the likes of the Miami Herald and Sacramento Bee, filed for Chapter 11 bankruptcy protection on Thursday.
The 163-year-old firm also owns the Kansas City Star, the Fort Worth Star-Telegram, the Charlotte Observer, and about two-dozen other publications around the United States.
According to a statement published on McClatchy’s website, the bankruptcy filing allows McClatchy to restructure its debts and shed its pension obligations. “Under a plan outlined in its filing to a federal bankruptcy court, about 60 percent of its debt would be eliminated as the news organization tries to reposition for a digital future,” according to the website.
The plan would be led by hedge fund Chatham Asset Management LLC if the court accepts the filing.
“While this is obviously a sad milestone after 163 years of family control, McClatchy remains a strong operating company and committed to essential local news and information,” said Kevin McClatchy, chairman of the company, in a statement. “While we tried hard to avoid this step, there’s no question that the scale of our 75-year-old pension plan—with 10 pensioners for every single active employee—is a reflection of another economic era.”
The company began with a small newspaper based in Sacramento, California, amid the Gold Rush. That publication later became the Sacramento Bee.
“When local media suffers in the face of industry challenges, communities suffer: polarization grows, civic connections fray and borrowing costs rise for local governments,” said CEO Craig Forman in a statement. “We are moving with speed and focus to benefit all our stakeholders and our communities.”
The filing, meanwhile, will allow for a “stronger capital structure” that the firm can use to “pursue our strategy of digital transformation and continue to produce strong local journalism essential to the communities we serve,” Foreman said.
The firm said it will also pull its listing from the New York Stock Exchange and will become a privately owned firm.
Last year, New York Times Executive Editor Dean Baquet made a dire prediction that a number of local newspapers will die in the “next five years.”
“The greatest crisis in American journalism is the death of local news,” Baquet said at the International News Media Association World Congress at the time. “I don’t know what the answer is.”
“Their economic model is gone. I think most local newspapers in America are going to die in the next five years, except for the ones that have been bought by a local billionaire,” Baquet added.