Filed under: Bad news, Management, Industry, Employees
McClatchy (NYSE: MNI), the third largest newspaper chain in the US, cut 10% of its work force as its Might advertising fell about 16%. According to The Wall Street Journal, “McClatchy, which owns the Miami Herald, the Sacramento Bee and 28 other dailies across the U.S., expects to save about $70 million annually from the job cuts.”
McClatchy made the mistake of buying competing chain Knight-Ridder two years ago, just as the business was falling apart.
The fact that newspapers are in trouble is old news. What’s not is the terrible rate at which newspaper revenue is falling now. Based on the current rate of advertising attrition, papers could loss 40% to 50% of their major sales base in three years. Revenue from on the web versions of the papers isn’t growing almost fast enough to replace that.
Many of the public newspaper chains still pay big dividends. With share prices down as much as 70% in the last year, they sport yields which their cash flow can’t support. Dividend cuts are likely to cause more investors moving out of the stocks.
McClatchy now has $2.4 billion in debt, most of its from the Knight-Ridder deal. That plan, put together by CEO Gary Pruitt, has almost ruined the company.
Odd that he is not one of the 1,400 people leaving.
Douglas A. McIntyre is an editor at 247wallst.com.
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