OVERVIEW: Hardly anything has gone right during the past few years for the owner of The Miami Herald and 29 other daily newspapers. The hard-luck theme is unlikely to change in the Sacramento-based company's second-quarter earnings report.
With the newspaper advertising market in ruins, another loss seems certain.
As the losses mount, the chances of a bankruptcy filing rises. That's because McClatchy is saddled with $2 billion in outstanding debt with a steadily shrinking cash flow to cover its future obligations and adhere to the financial requirements — known as covenants — set by its secured lenders.
BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect McClatchy to lose 8 cents per share on revenue of $369 million. The company earned 24 cents per share on revenue of $490 million at the same time last year.
ANALYST TAKE: Fitch Ratings analyst Michael Simonton is among the camp that believes McClatchy will wind up in bankruptcy court at some point. "Default is imminent or inevitable," Simonton predicted after McClatchy's debt exchange flopped.
WHAT'S AHEAD: Unless the advertising market rebounds soon, McClatchy may have to lower its expenses even more to pay its bills and remain in good graces with its bankers. That could mean even more layoffs at a company that already jettisoned about one-third of its work force in the past year.
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Update: The AP has updated their initial report to include this correction:
This version CORRECTS analyst estimate for quarter loss to 8 cents per share, instead of $6.45 per share.