• Home
  • About me: Jim Fitzpatrick
  • Contact

JimmyCsays: At the juncture of journalism and daily life in KC

Feeds:
Posts
Comments
« Stanley McChrystal, Michael Hastings and the Rolling Stone article they will never forget
A “big story” built on a shaky foundation »

McClatchy: Fair value estimate = $0

June 26, 2010 by jimmycsays

The latest edition of Morningstar StockInvestor, a monthly publication of the renowned independent investment and research firm, contains a very grim forecast for the McClatchy Co., owner of The Star and several other newspapers.

McClatchy stock , which traded at about $50 a share when the company bought out Knight Ridder in 2006, closed Friday at $4.28 a share.

Morningstar StockInvestor, which is available by subscription only, opened its review of McClatchy this way:

“Since its poorly timed acquisition of Knight Ridder in 2006, McClatchy has struggled under the multiple weights of declining revenues, high debt, large exposure to troubled housing markets, and the continuing shift of readers and advertisers from print to online. Given the persistence and severity of these conditions, we think equity shareholders are at risk of losing the entire value of their investment.”

Gulp. Those two sentences should make everyone working at The Star and other McClatchy papers, like the Sacramento Bee and the Miami Herald, not only cringe but start looking for new jobs.

While McClatchy and other newspaper chains have tried to paint a rosier-than-real picture of the industry by saying, essentially, “the losses are lessening,” Morningstar throws the tinted glasses aside.

“Our fair value estimate on McClatchy’s shares is $0.”

That’s right, Morningstar analyst John Ayling, who wrote the piece, thinks that the balance eventually will tip from stockholders’  interests to creditors’ interests and that stockholders will be left empty handed.

“McClatchy’s $4.6 billion purchase of Knight Ridder was a bold bet on the future of print journalism,” Ayling wrote. “The acquisition added more than $2.5 billion in debt to McClatchy’s balance sheet. It more than doubled both the company’s portfolio of daily mastheads and its annual revenues. However, in 2007, it took a noncash impairment charge of $3 billion — evidence that McClatchy overpaid for the Knight Ridder acquisition.”

Ayling sees newspaper industry weakness continuing. “During the next five years, we think that advertisers and readers will continue to gravitate away from newspapers and toward the ease and flexibility of the Internet. Internet-based classified ad sites allow advertisers to target readers with specific interests at lower cost than print classifieds.”

I want you to know that as I sit here and write this, I don’t feel good about it at all. One reason is that I bought a significant chunk of McClatchy stock (at about $50 a share) just before I retired in June 2006. Like McClatchy, I wanted to make my own bet on the future of print journalism. I also wanted to demonstrate my confidence in the new owners of The Star.

I remember clearly when McClatchy CEO Gary Pruitt came into the newsroom shortly before the deal closed and talked about how he believed things would go well for McClatchy and us, the employees. When I asked him, in front of the newsroom audience, if he was planning any employee buyouts, he said, no, that McClatchy believed in adding people, not subtracting.

At that point, having been thinking about retiring after nearly 37 years with the paper, I knew that I had to make my own arrangements; there wasn’t going to be any golden parachute. A couple of months later, I retired, and the paper paid for a send-off pizza party in the Independence bureau, where I was an assistant metro editor.

I might have been the last person to get a company-paid going-away party.

The memories of that party, which marked a happy culmination of my career, help ease the pain of the subsequent stock-market loss I endured. For McClatchy stock, along with that of other newspaper companies, soon began a steep, steady decline.

In 2008, I sold out at $8 a share.

Share this:

  • Twitter
  • Facebook

Like this:

Like Loading...

Related

Posted in journalism, Uncategorized | Tagged Kansas City Star, McClatchy, newspaper industry | 2 Comments

2 Responses

  1. on June 26, 2010 at 9:41 am laura hockaday

    Interesting column, Jim, but sad, scary prognosis for McClatchy and The Kansas City Star. I hope and pray for the best for our colleagues still there.


  2. on June 26, 2010 at 5:19 pm jfitzpatr

    Laura, as unofficial chairwoman of the Former KC Star Employees Support Group, you get a gold star for empathy and loyalty.



Comments are closed.

  • Pages

    • About me: Jim Fitzpatrick
    • Contact
  • Archives

    • April 2023
    • February 2023
    • January 2023
    • December 2022
    • November 2022
    • October 2022
    • September 2022
    • August 2022
    • July 2022
    • June 2022
    • May 2022
    • April 2022
    • March 2022
    • February 2022
    • January 2022
    • December 2021
    • November 2021
    • October 2021
    • September 2021
    • August 2021
    • July 2021
    • June 2021
    • May 2021
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • January 2018
    • December 2017
    • November 2017
    • October 2017
    • September 2017
    • August 2017
    • July 2017
    • June 2017
    • May 2017
    • April 2017
    • March 2017
    • February 2017
    • January 2017
    • December 2016
    • November 2016
    • October 2016
    • September 2016
    • August 2016
    • July 2016
    • June 2016
    • May 2016
    • April 2016
    • March 2016
    • February 2016
    • January 2016
    • December 2015
    • November 2015
    • October 2015
    • September 2015
    • August 2015
    • July 2015
    • June 2015
    • May 2015
    • April 2015
    • March 2015
    • February 2015
    • January 2015
    • December 2014
    • November 2014
    • October 2014
    • September 2014
    • August 2014
    • July 2014
    • June 2014
    • May 2014
    • April 2014
    • March 2014
    • February 2014
    • January 2014
    • December 2013
    • November 2013
    • October 2013
    • September 2013
    • August 2013
    • July 2013
    • June 2013
    • May 2013
    • April 2013
    • March 2013
    • February 2013
    • January 2013
    • December 2012
    • November 2012
    • May 2012
    • April 2012
    • March 2012
    • February 2012
    • January 2012
    • December 2011
    • November 2011
    • October 2011
    • September 2011
    • August 2011
    • July 2011
    • June 2011
    • May 2011
    • April 2011
    • March 2011
    • February 2011
    • January 2011
    • December 2010
    • November 2010
    • October 2010
    • September 2010
    • August 2010
    • July 2010
    • June 2010
    • May 2010
    • April 2010
    • March 2010
  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 567 other subscribers

Blog at WordPress.com.

WPThemes.


  • Follow Following
    • JimmyCsays: At the juncture of journalism and daily life in KC
    • Join 567 other followers
    • Already have a WordPress.com account? Log in now.
    • JimmyCsays: At the juncture of journalism and daily life in KC
    • Customize
    • Follow Following
    • Sign up
    • Log in
    • Copy shortlink
    • Report this content
    • View post in Reader
    • Manage subscriptions
    • Collapse this bar
%d bloggers like this: