Hedge Funds: Chatham Asset Management Wins Bid for McClatchy Newspapers

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One of the nation’s leading news publishers, the McClatchy Company, will be purchased by Chatham Asset Management.  This is following many years of revenue decline for the publishing company.  The McClatchy Company has had 163 successful years of family ownership.  It will now be sold in a bankruptcy auction to the New Jersey-based hedge fund.

McClatchy’s Future

The McClatchy Company is a publisher of the Miami Herald, The Kansas City Star, The Sacramento Bee, and The Charlotte Observer.  Chatham Asset Management has been an investor in the publisher since 2009.  According to McClatchy, Chatham will be the majority owner in the later part of 2020.  McClatchy will also become a private company after years of being publicly traded.

Fortunately, the newspaper company will remain in business thanks to Chatham.  The company will no longer have to close.  According to a Chatham spokesperson, they are “pleased with the outcome of the auction…Chatham is committed to preserving newsroom jobs and independent journalism that serve and inform local communities during this important time.”  In order for the bankruptcy deal to complete, a court hearing will take place on July 24.  Court regulators still have to approve the deal, which includes Brigade Capital Management — a partner of Chatham.  

Hedge Funds & PE Firms Spark Publishing Industry Change

Private equity firms and hedge funds have had a growing influence on the news industry.  Sree Sreenivasan, professor at Stony Brook’s School of Journalism expressed concerns about this influence stating ““I’m always for local ownership whenever possible, and local support.”  Conversely, John Longo of Rutgers Business School stated “If they look at the assets they are buying, part of their core purpose is to serve their community. If they don’t do a good job serving their community, the profits won’t follow.”  Evidently, some have faith that the hedge fund industry can change the news industry for the better.  

The End of McClatchy

McClatchy began showing signs of decline in 2006 when it acquired $2 billion in debt following a merger with Knight Ridder.  This led to an employee cut of nearly 13,000 full-time workers.  Chief Executive of the company Craig Forman believes that Chatham will continue to provide solid news coverage.  

More About Chatham

Chatham Asset Management currently has around $4 billion in assets under management.  The hedge fund is also the owner of American Media Inc., The Montreal Gazette, The Ottawa Citizen, and is a major investor in Postmedia.  

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