May 29, 2020

McClatchy, a Major U.S. Newspaper Chain, Files for Bankruptcy

The private equity giant Fortress Investment Group is the manager of the nation’s largest newspaper chain, Gannett. Like McClatchy, Gannett thrived in the last century as a family-run enterprise.

Gannett reached its current size in November when it merged with GateHouse Media. Before the deal went through, Fortress — which is owned by SoftBank, the Japanese conglomerate founded by Masayoshi Son — controlled New Media Investment Group, the parent of GateHouse. Although GateHouse was the larger of the two companies, the supersize version of the two took the Gannett name.

Another major news publisher, MediaNewsGroup, is owned by Alden Global Capital, a New York hedge fund. Newspapers under Alden control, including The Denver Post and The San Jose Mercury News, have laid off significant numbers of employees. In 2018, the Post newsroom revolted, publishing a special opinion section that called its owners “vulture capitalists,” adding, “If Alden isn’t willing to do good journalism here, it should sell The Post to owners who will.”

Alden’s role in the news industry has only expanded since then. Last fall, the hedge fund revealed that it had become the largest shareholder in the Tribune Company, the publisher of The Chicago Tribune, New York Daily News and The Baltimore Sun, among other dailies. Journalists in Chicago and Baltimore have made pleas to benefactors to buy their newspapers.

Ken Doctor, a news media analyst, said Chatham Asset Management’s role in a post-bankruptcy McClatchy represented a significant shift in the American news business.

“It ratifies the almost complete financialization of the American newspaper industry,” he said. “If Chatham takes control of McClatchy, you now have financial players from Alden to Fortress to Chatham controlling almost a majority of the nation’s daily press.”

Private equity companies gained a strong foothold by setting themselves up as lenders of last resort to the troubled industry, a position that enabled them to become major investors, Mr. Doctor added.

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