McClatchy: "Give Us a Second Look"

Last Updated Jul 21, 2009 1:46 PM EDT

It's been a rough ride for McClatchy Co. (MNI), the nation's third-largest newspaper company, and a proud name in journalism for over a century and a half. Started in Sacramento in the decade following the Gold Rush, McClatchy has spent most of its history operating newspapers in two of California's richest agricultural valleys â€" the Sacramento and the San Joaquin.

But, starting in the '90s, the company started acquiring newspapers outside of the state, first elsewhere on the west coast, then across the country, culminating in its 2006 purchase of its larger rival newspaper chain, Knight-Ridder for about $4 billion in cash and another $2 billion in assumed debt.

One way to measure what has happened to McClatchy since that takeover is to chart its stock price over the past three years. Its stock was trading in the $80 range then but has long since fallen to well under a dollar per share.

It was with a degree of anticipation, therefore, that industry analysts noted MNI's stock creeping up before today's earnings announcement, and as is often the case, the Street got it right.

In its 8-K filed today, McClatchy reports "net income from continuing operations in the second quarter of 2009 of $42.0 million, or 50 cents per share â€" more than double the earnings per share in the second quarter of 2008."

It also reports sharply reduced costs and a slight reduction in its overall debt load. I won't get into the financial minutiae of the report here, except to note that the company has an improved operating cash flow margin and improved cash flow leverage ratio (as well as interest coverage ratio) on its remaining ~$1 billion in debt.

In comments filed along with the numbers, CEO Gary Pruitt employed the usual hopeful rhetoric his job demands, but he also had this to say: "Those who think of McClatchy as just a newspaper company need to take a fresh look. We are quickly becoming a 24-7 news and advertising company that can deliver in print, online, and to handheld devices."
Thanks in part to investments in CareerBuilder, Cars.com, and Apartments.com, McClatchy has indeed become a leader in digital media among the old, traditional newspaper outfits. As I've noted before, this seems to be a very well-run organization, hardly one with its head buried in the proverbial sand.

I'm still not sure how many newspaper companies will survive the transition to a new media business model, but I'm guessing McClatchy will be one of them.

Examples of previous coverage of MNI here at Bnet:

  • David Weir

    David Weir is a veteran journalist who has worked at Rolling Stone, California, Mother Jones, Business 2.0, SunDance, the Stanford Social Innovation Review, MyWire, 7x7, and the Center for Investigative Reporting, which he cofounded in 1977. He’s also been a content executive at KQED, Wired Digital, Salon.com, and Excite@Home. David has published hundreds of articles and three books,including "Raising Hell: How the Center for Investigative Reporting Gets Its Story," and has been teaching journalism for more than 20 years at U.C. Berkeley, San Francisco State University, and Stanford.