Don't look for The McClatchy Co. to make any blockbuster deals soon -- or to sell off papers, Chairman, President and CEO Gary Pruitt said Tuesday in a video sent to employees.
The morale-building video from Pruitt, famously a rock 'n' roll-loving surfer, ends with an upbeat tune and a downbeat theme: The Rolling Stones' "You Can't Always Get What You Want."
It was a theme Pruitt alludes to frequently in the video, which emphasizes the need for McClatchy to pare expenses and pay down debt.
"Paying down debt is simply the best way to keep our company safe in these times," he said. "And don't worry -- McClatchy is decidedly not going bankrupt."
Since surfer dude Pruitt quoted the Stones in the video, the lyrics from another Stones song came to my mind. Given McClatchy shares are down more than 70 percent over the past year, I think the line from Shattered might be more fitting: "Look at me -- I'm in tatters!"
Pruitt noted that McClatchy paid down $800 million in debt in 2007, and intends to draw it down another $500 million this year, ending 2008 $2 billion in debt.
While sounding optimistic notes for the future, Pruitt portrayed a perilous present in which revenue is declining "at a disappointing double-digit clip," and cash flow eroding "at an accelerating" pace.
"None of us has worked through such a period of transformation in our history," he said.
He said McClatchy had achieved great things in 2007, including winning two Pulitzer Prizes and two Polk awards. The online audience grew above the industry average by 25%, and the percentage of minorities who are journalists or managers also outpaced other papers.
"Now, I know that's a little like saying, 'except for that Mrs. Lincoln, how did you like the play?'" Pruitt said.
Pruitt again defended the Knight Ridder purchase, which many say is where McClatchy's financial problems began.
"You see, we'd be in this downturn whether we did that deal or not," he said. "In fact, our ad revenue and operating cash flow performance would be worse if we hadn't acquired Knight Ridder."
Pruitt said the company may not have reached bottom. "At this point we simply can't tell when this decline will end," he said. "We must continue to cut costs. It's no fun, but we have no choice. We will continue to do this in the McClatchy way -- sensibly, humanely, and with an eye to the future."
Investors on Tuesday weren't impressed with Pruitt's morale-building video; McClatchy shares were down nearly nine percent on the day as of 3:00 pm Eastern.
hat tip: Gannett blog
