SocraticGadfly: What's going to happen to McClatchy?

July 01, 2020

What's going to happen to McClatchy?

McClatchy is about the largest newspaper chain in America not either in the hands of vulture capitalists nor race-to-the-bottom grifters like Craphouse. (That's my name for Gatehouse, which is the tail that wags the dog in its merger with Gannett in what is publicly called the "new Gannett.")

That said, it had to file Chapter 11 earlier this year, and as part of that, today is the deadline for bids on what is currently much more than a "carcass."

Yesterday, Ken Doctor offered his take on what might happen. He listed four categories of potential buyers, either for the entire body or for individual newspapers. 
Let’s categorize the likeliest bidders:
  • The Insider 
  • The Savior 
  • The Financial Engineer 
  • The Roller-Upper
He then takes a look at each.

"Insider" is Chatham Asset Management, the vulture capitalist who owns a slice, but no more than a slice. (Alden, owner of Dead Fucking Media/Media Snooze, would be another.)

Update, July 6: Those are two of the three bidders, Doctor reports, and also says the third is a non-starter. So, vulture capitalists 1, knights in shining armor 0.

Update 2, July 9: More ugh. McClatchy reports Alden is very interested — interested enough to challenge Chatham's bid and get the auction delayed. Update 3, early July 10: Judge did review the challenge, and has now rejected it. Sale is back on.

Update, July 12: Chatham won the auction and is buying the whole schmeer. It could still part it out, of course.

Update, July 17: This all said, Chatham's post-2016 actions as owner of Postmedia make it look potentially like little more than lesser evilism vs Alden.

"Savior" would be primarily nonprofit ownership. Ken says he's heard rumors that interested buyers would be interested in applying the nonprofit model to the entire beast. I'm skeptical, and will get to that more in a minute.

"Financial Engineer" is a vulture capitalist, but Ken says it's likely NOT one of the companies already bigfooting the newspaper landscape.

"Roller-Upper"? Either CrapHouse or vulture capitalist Alden and head boy Heath Freeman.

Here's a string of Tweets I had on all of this.
That's the lead-in to all of this, of course. And it WOULD be nice. McC has had solid reporting, has a good DC bureau, and there, it often thinks slightly outside the bipartisan foreign policy establishment box.

OK, next?
And related:
That's why, contra Ken's sources, (Jon Allsop of CJR also discusses the issue) I really don't see a single buyer for the whole company as a nonprofit organization shop. (I'm not sure I see a single buyer for the whole schmeer, or at least a single non-flipping buyer, but that's another story.)

What I do see as a possible, part 1:
And part 2:
So, there you go.

On the whole group of Cal papers, it's possible that maybe a nonprofit reaches a deal with Alden, as it via Dead Fucking Media is now the owner of Monterey and San Jose. It could be another current newspaper group which could then try making the Cal papers a nonprofit org as a subsidiary of some sort.

We shall see. And, we have now seen.

If Ken's sources are right about Chatham's relative reservoir of goodwill, it's possible they try some sort of spinoff of at least part of the properties. Maybe what I said about the California group going together as a nonprofit org happens. Per the Knight Foundation seriously considering, then deciding not to be, the white knight, and being in Miami, maybe it bites on just taking the Herald.

That said, per Ken, the old Knight-Ridder execs' pension lawsuit could slow everything down a bit. Update: Federal judge has delayed ruling on whether their suit can proceed until he sees the bids. That story, reflecting typically good and honest internal self-reporting, notes that a winner is supposed to be unveiled July 15, IF the company crossed a July 14 threshold allowing a "distressed termination" of its pension plans, not just limited to the old KR execs' pensions.

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