Old Media News: From Bad to Worse

It's official: McClatchy's acquisition of Knight-Ridder was a disaster.

Until about 20 months ago, the name Knight-Ridder represented one of the most respected brands in the history of American journalism. It owned and operated the second largest newspaper chain in the U.S. (after Gannett) and was widely considered to maintain higher quality standards than any of its competitors.

But in June 2006 Knight-Ridder was bought by McClatchy Co., which became the third-largest newspaper chain in the U.S., with 30 daily papers.

Before the purchase, McClatchy's stock traded in the low $70's. Yesterday, after the company reported that it lost a staggering $1.43 billion in the fourth quarter last year, the stock closed at just under ten dollars ($9.84 per share.)

For the entire year, McClatchy lost $2.74 billion -- roughly a fifteen-fold increase over the previous year. In retrospect, Knight-Ridder's management appears to have exited this failing market just in time to avoid the fate now tormenting its buyer.

All across the print newspaper industry, circulation and advertising revenues continue their steep decline. So companies like McClatchy, that failed to foresee the approach of this financial tsunami, are being left holding the (empty) newspaper bag.