McClatchy Co. may look feeble now, but its chief executive believes the newspaper publisher will emerge from the recession in better shape than most investors believe.
"I like to think of the McClatchy of the future as an athlete: fit and trim, yet muscular where we need to be," Gary Pruitt told the handful of shareholders who showed up Wednesday for the Sacramento-based company's annual meeting. McClatchy directors and executives outnumbered shareholders.
Like many other newspaper publishers, McClatchy has been struggling with a sharp drop in its main source of revenue — advertising.
To cope, the publisher of The Miami Herald, The Sacramento Bee and 28 other daily newspapers has trimmed its work force by one-third, or more than 4,000 jobs, in the past year while shedding other expenses, including the dividend that it had been paying shareholders.
Despite the cuts, analysts have been questioning whether the 152-year-old company will survive. Those doubts have left its stock less expensive than an edition of The Sacramento Bee, on sale for 75 cents in a vending machine a block away from the annual meeting. McClatchy shares dipped a penny to 63 cents Wednesday.
With its shares trading below $1 for the past four months, McClatchy is in danger of losing its listing on the New York Stock Exchange.
McClatchy is being dogged by worries that it might not be able to live up to its financial commitments to lenders — a scenario that could prompt the company to seek bankruptcy protection. That route has been pursued by seven other newspaper publishers since December.
McClatchy has about $2 billion in debt, mostly stemming from its 2006 acquisition of Knight Ridder. Already last fall McClatchy had to negotiate with its lenders for more flexibility, which came at the price of higher interest rates and requirements for more collateral.
Pruitt, though, has steadfastly maintained McClatchy will remain in compliance with the lending requirements, enabling the company to rebound once the economy does. He predicted the company will have a "long and prosperous" future and no one challenged that assertion Wednesday. When offered an opportunity, no shareholders asked Pruitt any questions.
How about some numbers, Gary? No word that Pruitt offered any evidence to base his outlook on. The people who actually study the evidence say MNI's stock value is essentially worthless.