Like practically every chain, McClatchy is struggling with a media revolution. Its newspapers, where it still makes most of its money, are losing ground to the Internet, though its combined newspaper-online readership is growing. But because of the insanely competitive nature of the Web, McClatchy’s own Web sites can’t grow their revenues quickly enough to make up the difference, even as their audiences grow.
To make matter worse, McClatchy is deeply in debt due to its $4 billion takeover of Knight Ridder Inc. in 2006, a deal that (McClatchy CEO Gary) Pruitt now describes in much more sobering terms than before.
In an interview last week, Pruitt said it’s "too early to tell" whether McClatchy made the right move in buying Knight Ridder. He believes the acquisition will eventually work out, but said the debt load - now $2.1 billion - has put McClatchy in an uncomfortable spot. Investors are nervous. McClatchy’s stock has fallen almost 90 percent since the purchase was completed.
"It’s hard to claim it’s a good deal when you see the stock performance," Pruitt said.
When McClatchy bought The Macon Telegraph, I knew they wouldn't be a white knight riding in to solve our problems. But I did hope that, with a little luck, they might help us restore some of the significant staff cuts The Telegraph has taken in my 8 years here, when Knight Ridder owned the paper.
Instead, things have gotten worse. That was inconceivable in the final days of Knight Ridder.
CORRECTION: Inconceivable is a bit strong. Let's just say that fear, if I had it at all, was waaaay back in the back of my mind. I wish I had been more clear at the time on the fact that our economy was run like some of my college friends ran their credit cards.