The oft lamented decline of the newspaper business is back in the headlines this week. In the past two decades we’ve seen the sale or bankruptcies of the Gannet, Tribune, Journal Register, Sun Times Media Group, Philadelphia Newspapers, and Knight Ridder companies, not to mention thousands of others.
The McClatchy Company can now be added to that list.
The second largest publisher in the US, owner of papers such as The Miami Herald and Sacramento Bee, filed for Chapter 11 bankruptcy this week. The plan submitted to the court is familiar. Recognizable to anyone who’s followed the slow transformation of the industry. Restructuring (looting) pension funds, and a transfer of ownership.
But, before we get to the new boss it’s important to take a look at the old boss. The original owners and their successors are more than a tidy encapsulation of the 21st century newspaper business. They’re representative of a broader shift in the economy as a whole, going back decades.
The original owners of McClatchy were, well, the McClatchys. A family dynasty dating back to the 1850’s when William McClatchy joined on as partner and editor of the Daily Bee, now the Sacramento Bee. His son bought out their partner’s interest and started the company that would eventually become the focus of this piece.
Successive generations of McClatchy newspaper men ran and expanded the business from a single paper to the nationwide conglomerate we see today. In the process they got rich. Extremely rich. Owning the Pittsburgh Pirates (until Kevin McClatchy sold in 2007) rich.
A well worn example of the humble ancestor starting a private enterprise that became enormous generational wealth and power. Then, in the 1970’s, the same shift which reached its culmination this week, began. They took the company public, and set out on a string of acquisitions that coincided with the broader consolidation of the industry. Corporatization and financialisation had begun to shift how the economy functioned.
But the McClatchys still controlled the business, and a member of the eponymous family continued to head the company through the following decades. Until now.
Ever since the financial meltdown that triggered the Great Recession McClatchy has been struggling. Declining ad revenue and a variety of bad decisions led the company to taking on enormous amounts of debt. Debt gladly provided by private financial interests.
Interests like the company that will soon be taking over McClatchy, Chatham Asset Management. A privately owned hedge fund that holds a majority of McClatchy’s outstanding debt. A company that, incidentally, also owns publisher American Media Inc., formerly publisher of The National Enquirer. Which Managing partner and alleged friend of Rudy Giuliani, Anthony Melchiorre, sold after institutional investors CalPERS and a New Jersey state pension fund rightly objected to owning the tabloid implicated in Trump’s Stormy Daniels scandal. Not to worry, though, Chatham may soon reacquire the enquirer by taking over the Hudson News, the very business they sold it to.
Chatham and its partners, like so many hedge funds and similarly opaque financial outfits, have been accused of the usual malfeasance associated with their industry. Malfeasance like insider trading, and other convoluted financial crimes. It’s my opinion they’re greedy, amoral, and will do to McClatchy what every other finance vulture has done when they get their hands on a media company.
Mass layoffs of staff to be replaced by poorly paid freelancers ineligible for benefits. Legally stealing from the pension funds and their beneficiaries. Company assets sold off for parts. Massive management fees paid to themselves. Enormous bonuses paid to themselves. The further deprofessionalisation of journalists. Ever more consolidation and homogenization of perspective to the benefit of the already wealthy and powerful.
The question of who owns McClatchy gives us the American economic narrative of the past 100+ years. You begin with an entrepreneur who starts a dynasty, passing down generational wealth and power used to the benefit of that dynasty. The dynasty responds to the gradual financialization of the economy by taking the company public, and beginning to acquire further properties growing their wealth and power even more. Their greed and myopia leads to a crisis, and rather than sacrifice any of their own wealth to resolve it, they leverage to stay afloat. An opportunistic financial firm uses that leverage to take control. Once in control, they punish the working people, close local papers, and make millions.
It’s been estimated nearly 30% of newspapers in the US are now owned by hedge funds. Regardless their health or profitability, the formula is always the same.
Whether or not you have any sympathy for journalists or publishers is immaterial. Beyond the issues stemming from media consolidation, of which there are many, this is the same process that killed Toys R Us and took down Sears, robbing the workers before eliminating their jobs.
So the final answer to who owns McClatchey? Parasites. That’s who. The new boss isn’t the same as the old boss. They’re worse.
Jean Krill is is the co-editor and co-founder of Zero Balance. His writing navigates the many disparate visions of a radically better future.