NEW YORK — Hedge fund Chatham Asset Management plans to buy newspaper publisher McClatchy, ending 163 years of family control.
The companies did not put a price on the deal in an announcement on Sunday. The deal still needs to be approved by a bankruptcy judge; a hearing is scheduled for July 24.
McClatchy is one of the largest newspaper companies in the United States. It owns 30 newspapers, including the Kansas City Star, Belleville News-Democrat, Miami Herald, Charlotte Observer and Sacramento Bee. He filed for bankruptcy due to heavy debt stemming from his $4.5 billion purchase of the Knight-Ridder newspaper chain in 2006, just as the newspaper industry was in steep decline. .
Chatham was McClatchy’s largest shareholder and debt holder. It beat an offer from Alden Global Capital, another hedge fund that has played a prominent role in the US newspaper industry.
Chatham’s other media holdings include Canadian newspaper chain Postmedia and National Enquirer publisher American Media Inc. But industry expert Ken Doctor noted that it doesn’t make financial sense to combine those. with McClatchy to cut costs, as newspaper negotiators like to do. . And the emergence of Alden Global Capital as a bidder has given rise to speculation that Chatham will try to combine McClatchy with Alden’s holdings or with another major news firm, such as Gannett.
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As national newspapers such as The Wall Street Journal and The New York Times add digital subscribers that help them deal with advertising declines, many local outlets have fallen on hard times. This has contributed to a series of bankruptcies and consolidations, largely involving investment firms, heightening concerns about declining quality as newsrooms shrink and newspapers close.
The coronavirus pandemic has exacerbated declining advertising revenue and prompted furloughs, pay cuts, layoffs and more newspaper closures.
Several mayors of towns where McClatchy has a paper have written to bankruptcy court, asking the judge to consider the civic value of the paper.
“We want our newspaper to emerge from this bankruptcy with owners who are willing to invest in our community and provide us with the best in journalism,” Lexington, Ky. Mayor Linda Gorton said of the Lexington Herald-Leader. .
McClatchy’s origins date back to 1857, when he began publishing a four-page article in Sacramento, California, following the California Gold Rush. The company remains based in Sacramento.