Is McClatchy circling the wagons?

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The McClatchy Co., the embattled parent of The State, The Myrtle Beach Sun News, The Charlotte Observer, The Raleigh News & Observer, The Rock Hill Herald, The Hilton Head Island Packet and The Beaufort Gazette, said yesterday it would suspend shareholder dividends after April 1.

The newspaper company said it’s making the move “for the foreseeable future in order to preserve cash for debt repayment,” according to The Sacramento Bee.

McClatchy cut the dividend in half last fall, to 9 cents a share. Then, pressed by declining revenue, it renegotiated its bank loans. Under the new agreement, the Sacramento-based chain was forbidden from paying dividends if its “leverage ratio” exceeded a certain threshold, the Bee reported.

The third-largest U.S. newspaper publisher is struggling to pay off $2 billion in debt related to its purchase of defunct newspaper chain Knight Ridder Inc., according to Reuters.

In recent months, McClatchy and other newspaper companies have explored selling real estate or other assets in a bid to pay off money they borrowed as advertising revenue, long their primary source of income, declines, Reuters reported.

McClatchy is trading at less than a dollar a share.

McClatchy’s press release regarding the announcement can be found here, while a copy of McClatchy’s 2007 Annual Report, ironically titled “Blueprint for Success,” can be found here.

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3 thoughts on “Is McClatchy circling the wagons?

  1. Gary Pruitt, CEO AND Chairman of the Board, should be terminated immediately. His decision to buy Knight Ridder has crippled this company, the large amount of total overhanging debt has strangled all future prospects of a rebound in equity price.

    • Anyone who manages to make Tony Ridder look competent deserves to be canned, although to be fair to Pruitt, a good bit of the difficulty that McClatchy finds itself in now as far as competing with new technology is the result of Knight Ridder’s short-sightedness. It’s not really clear at this point how McClatchy can weather this storm, which is probably why it’s stock is trading at 85 cents a share.

  2. Why is anyone listening to Jay Fredrickson. The guy secretly ‘recorded’ the conversations of his employees, was a ‘confirmed bigot’ and was ultimately fired…I mean laid off. He (Fredrickson) was one of the most unsuccessful Retail Advertising Managers in the history of The News Tribune and yet he continues to rant about Gary Pruitt. Wow?

    If you think this is a joke, just call 253-552-7000, hit 0 and ask for any person in the advertising dept that was there when Jay was around. The guy needs to look in the mirror and let it go.

    Dude you were fired because you were bad, deceptive and a bully.

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