The McClatchy Company filed for Chapter 11 bankruptcy Wednesday in New York. The media company owns 30 local newspapers, including the Idaho Statesman, which McClatchy acquired in 2006 when it bought the Knight Ridder newspaper chain.
Rick Edmonds, a media business analyst for the Poynter Institute, said that purchase ultimately saddled the company with massive debt.
“They incurred a 6.5 billion dollar debt for that. They've been working to make interest payments and pay that down, but I think the clock kind of ran out on their ability to do that,” he said.
If the bankruptcy plan is approved, the hedge fund Chatham Asset Management would take control of the public company and turn it private. Edmonds points out this bankruptcy is a restructuring not a liquidation.
“All of its papers will most likely remain pretty much as they are. And once the plan's complete, they'll be under new ownership and can go from there,” Edmonds explained.
As local legacy print publications continue to lose subscribers, many are scrambling to cut costs and create new revenue models. Earlier this month the Statesman stopped printing a Saturday paper and last fall the Salt Lake Tribune became a nonprofit.
Seth Ashley is a journalism professor at Boise State University. He says unlike many news markets, Boise still has two daily publications. But those newsrooms have decreased in size and those declines can hurt communities.
“We need a strong institutional press if we want to have a viable democratic society. And that's just where we're really hurting in that area, especially at the local level,” Ashley said.
In a press release, Kevin McClatchy, chairman of the company’s Board of Directors said:
"McClatchy remains a strong operating company with an enduring commitment to independent journalism that spans five generations of my family.”
For now, McClatchy has not announced any layoffs.
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