Newspaper chain McClatchy, owner of publications such as The Miami Herald and Kansas City Star, filed for Chapter 11 bankruptcy protection Thursday after grappling with a pension crisis and the news industry’s financial challenges.
The Sacramento, California-based company, whose 30 newsrooms also include the Fort Worth Star-Telegram and The Charlotte Observer, has arranged a deal to transfer ownership to “new owners” who would be “led by” one of its lenders and its largest shareholder, hedge fund Chatham Asset Management, McClatchy reported Thursday.
As part of the deal, the McClatchy family is expected to give up control of the company after more than 160 years.
“McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family,” Kevin McClatchy, chairman of McClatchy’s Board of Directors and great-great grandson of the company’s founder, James McClatchy, said in a statement.
“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.”
The newspaper chain also said it expects to transfer management of its $1.4 billion pension plan to the U.S. government’s Pension Benefit Guaranty Corp. The costs of the company’s pension plan, a legacy of an era in which the newspaper industry was rich with profits, weighed it down in recent years.
Although bankruptcies can result in pensioners receiving less than they were due, McClatchy said Thursday that it believes its plan “would not have an adverse impact on qualified pension benefits for substantially all plan participants.”
In a court filing, McClatchy listed the PBGC as its largest unsecured creditor with a claim of $530 million. The PBGC and a federal judge would have to sign off on the company’s pension plan and sale.
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Bankruptcies often come with the risk of closures, asset sales and layoffs, if not outright liquidation.
McClatchy spokesperson Jeanne Segal said in an email that there would be “no layoffs associated with this filing. Our newsrooms are operating as usual providing strong independent local journalism essential to the communities we serve.”
Chatham said in a statement that it’s “committed to preserving independent journalism and newsroom jobs. We look forward to working with the company in the best interests of all stakeholders
McClatchy has slashed costs and paid off debt in recent years in a bid to halt its downward spiral. But the news industry has faced plummeting print revenue and has struggled to replace it with digital dollars.
Competitors, including USA TODAY owner Gannett, have faced similar hurdles. In 2019, Gannett agreed to a sale to GateHouse-owner New Media Investment Group in a deal that created the largest U.S. news company by print circulation and one of the largest by digital audience.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.