First, here's what Berkshire hathaway (Warren Buffet's Company) thinks of the future of newspapers - Buffett, a fan of newspapers since he was a boy, has lamented the decline of the industry as it suffered plummeting readership, ad competition from the web and newsroom cutbacks. He said last year that most newspapers are “toast.” “They’re all going to die,” Munger said Wednesday. “It’s a sad thing.” He named some exceptions, saying the New York Times and Wall Street Journal are likely to survive.
Here's the article about McClatchy - most newspapers just haven't been successful with their digital media arms.
The move is expected to put an end to the McClatchy family’s 163-yearlong control over the publisher, and turn the hedge fund behind the current owner of the National Enquirer into its top shareholder.
McClatchy, the publisher of the Miami Herald, Sacramento Bee, Kansas City Star and other well-known newspapers, has struggled under a heavy debt load since its ill-timed $4.5 billion acquisition of Knight Ridder in 2006—a stretch during which its stock price plunged from $496 to 75 cents.
McClatchy on Thursday said it initiated a chapter 11 restructuring in the U.S. Bankruptcy Court in New York. If a tentative agreement with creditors is approved by the court, the McClatchy family would lose control of the business it founded in 1857, while its main debtholder, Chatham Asset Management LLC, would become its primary shareholder.
A Chatham representative said the hedge fund “is committed to preserving independent journalism and newsroom jobs.”
********************
Chatham, a New Jersey-based hedge fund, is also the primary stakeholder in tabloid publisher American Media LLC, which is in the process of selling the scandal-scarred National Enquirer. The fund also holds a large piece of Postmedia Network Canada Corp., a publisher of dozens of newspapers in Canada, and several big newspaper and magazine distribution companies.
McClatchy’s existing share structure will be canceled and it will likely emerge from bankruptcy as a closely held concern, the company said.
The News Guild, which represents 150 McClatchy employees at six of its publications, warned that the growth of hedge-fund and private-equity control of American newspapers would do little to save them.
“Continued financialization of local news will destroy our democracy,” said guild president Jon Schleuss. “It’s time for communities across America to stand up and fight to save local news.”
Yeah right. Dream on. How can the hedge fund make any money on this mess?
Comments