The McClatchy newspaper chain, parent of the Miami Herald, Sacramento Bee and a host of other major metropolitan and regional newspapers, filed for bankruptcy protection Thursday.
The Chapter 11 filing allows the company to stay in business and its 30 newspapers to stay operational while it sorts out finances with creditors, the chain said in a statement, fueled by $50 million in financing from Encina Business Credit, combined with the company's routine cash flows.
"During the case, McClatchy and its 30 local newsrooms are operating as usual," the chain said, adding that it "aims to emerge from this process in the next few months."
The chain's other papers include The Kansas City Star, The Charlotte Observer, The News & Observer in Raleigh, N.C.; the Fort Worth Star-Telegram in Texas and the Anchorage Daily News in Alaska.
The move takes the company private, the Associated Press noted, and "will end family control of America's second-largest local news company and hand it to creditors who have expressed support for independent journalism," McClatchy's Washington bureau reported in a story about the filing.
McClatchy has been struggling with debt since it acquired Knight-Ridder in 2006, cutting staff as revenue fell and losses mounted, as CNN reported. In the past five years its staff has dropped by half – from more than 7,000 employees in 2013 to 3,500 full- and part-time employees in 2018, CNN said, citing company filings.
This despite its newspaper chain's reputation for quality, with Pulitzer-prize-winning coverage of stories such as the Jeffrey Epstein scandal, as CNN noted. Company officers said that commitment would not change.
The ultimate goal is to reduce pension and debt obligations while it retools to focus more on digital operations, the company said.
"McClatchy's plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders," president and CEO Craig Forman said in the company's statement. "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."
Company revenue has declined six years in a row, AP reported, and it is anticipating fourth-quarter revenues of $183.9 million, down 14% from a year earlier. It's predicting 2019 revenue to be down 12.1% from the previous year, AP said.
Kevin McClatchy insisted that the company would come out of the process fortified, no longer hobbled by debt, and ready to move forward.
"McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family," Kevin McClatchy told the chain's Washington bureau. "This restructuring is a necessary and positive step forward for the business, and the entire board of directors has made great efforts to ensure the company is able to operate as usual throughout this process."