McClatchy (MNI) shares closed at 50 cents a share Monday. One year ago, MNI was trading at $7.00 a share -- a drop of 93%.Update: Title of post originally said the stock was worth "two bits" -- a reader pointed out the expression "two bits" means 25 cents. I stand corrected. (Wikipedia entry on two bits here.)
Update #2: A reader says McClatchy raised the single copy price of the Beaufort Gazette today, without any announcement. (Several McClatchy papers raised prices in the past several months without announcing the increase.)
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13 comments:
Hate to correct you, but 50 cents is FOUR bits, not two. A dollar was once said to be worth eight bits:
http://en.wikipedia.org/wiki/Spanish_dollar#United_States
It is cheaper be an owner of the company than it is to read what they print. I call that a fantastic business model for a company that is headed toward bankruptcy. Great leadership McClatchy management!
clayj -- thanks, post corrected.
Guess the guy that said the value was 50 cents last Friday was right.
Thank you Gary Pruitt.
If any other company out there needs leadership failure, vision problems, retarded speeches with songs then Gary is your man! I'm quite sure he comes with a guarantee . Will also throw in a retarded family too that have wasted the founders millions.
Fifty cents.
Quite ironic that today in South Carolina, McClatchey without notice raised the box price of their local fish wrap (the Beaufort Gazette) the few folks that buy their paper at a rack were amazed and refused to pay the new rate. It wasn't worth a quarter and certainly the bird can make do with other cage liners.
McClatchy DOWNGRADED again!
http://www.forbes.com/feeds/ap/2009/06/29/ap6600146.html
Moody's lowered McClatchy's corporate family rating to "Caa2" from "Caa1" and upgraded its possibility of default rating upon the company's completion of the exchange offer, which would exchange the existing senior unsecured notes for new 15.75 percent senior unsecured guaranteed notes due July 2014.
Moody's said the offer constitutes a distressed exchange and a default. S&P also expressed concern about the exchange at a discount to par value, saying it is tantamount to a default and lowered its corporate credit rating to "SD" from "CC".
So. let's discuss what's going to happen with McClatchy. Bankruptcy, likely, no? Break up the company and sell the papers that are doing relatively well (for now, until their cities' economies tank even more)? In many of the smaller markets, I'm sure someone would step in to save the local paper.
this must be why they announced furloughs in charlotte today..on top of wage cuts and layoffs...
Break up the company and sell the papers that are doing relatively well (for now, until their cities' economies tank even more)?
Not going to happen. A) The company cannot sell, spin off, or divest in any of their holdings without expressed permission of their lenders. AKA The Bank...and B) The company has already stated that it is their intention to remain entrenched until forced through bankruptcy to become managed by the courts. C) Liquidation will come only at the whim of the courts, to serve the pleasure of the debt holders, via Chapter 7.
7:50 PM
I know that is wishful thinking that the "healthy" local newspapers will be saved by local civic minded wealthy leaders.
That is what a lot of local newspaper employees keep telling themselves.
"Our local paper is profitable. It is all of the others that are pulling us down."
I think 100% of the newspapers are likely spinning that same tale at the water cooler.
It won't happen because the banks control the decisions right now. 100% of the assets, including your "healthy" newspaper, are pledged to the secured line of credit. So the banks are calling the shots. They won't allow any sale of assets unless the funds are used to pay down the line of credit.
If McClatchy sells their only "profitable" newspapers for cash, then what does that leave the McClatchy owners of the super voting preferred stock? It leaves them with a bunch of money losing assets that are guaranteed to file bankruptcy and wipe out the stock.
So that is why your so called "healthy" newspaper will not be sold to local wealthy people. McClatchy cannot risk letting go of the assets that are actually cash flow positive.
Your newspaper is going down in bankruptcy with the rest of them. Then the bankruptcy court will likely sell off the assets either via liquidation or auction.
Then we will see the true value. If your newspaper has value as a stand alone business, it will be auctioned. If the value of the land and buildings is more than the value of the business, that will determine the course of action.
I expect that most of the newspaper will be shut down. In most cases it will make more sense to sell the building and land.
Valid points, 8:01 p.m.
I, for one, being a former MNI employee wish my former co-workers the best of luck... but their fate (that is, being unemployed) will come sooner or later. Yes, maybe some papers will survive as online only, but with the barest of staffs. Key newsroom beats that draw traffic online (crime, weather, some business...). Sales people (because they actually make the money). But revenue like the good old days of $3,000 full-color, full-page ads ... gone. And $100 a month badge ads will not save the surviving news organization.
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