After sell-off of the Times Co.'s Maine papers, a look at McClatchy

Two years ago, after McClatchy Co. swallowed up Knight Ridder, the Sacramento-based newspaper chain exuded an awesome sense of publishing power in the Pacific Northwest. McClatchy owned four Washington newspapers outright and held a 49.5% interest in the Seattle Times Co., which owns additional daily papers in Yakima, Walla Walla and, of course, Seattle. McClatchy also owned Idaho’s major daily, the Idaho Statesman, and the largest paper in Alaska, the Anchorage Daily News. The Seattle Times two years ago calculated that McClatchy had an ownership interest in almost half the newspapers published in Washington every day.

But that was then. These days, McClatchy’s fortunes are in a screaming nosedive. The chain reported a $1.43 billion fourth-quarter goodwill writedown last month, following a similar $1.3 billion third-quarter goodwill charge in November. In accounting parlance, “goodwill” means what’s left after you take away the value of hard assets like presses, delivery trucks and buildings. It is the value of the “newspaper’ as opposed to the value of its machinery and buildings. Goodwill is a non-cash item on a balance sheet, but it reflects McClatchy’s shrinking market value. The company’s stock price, which was bumping up against $50 a share two years ago, closed at $10.75 a share yesterday.

Here in Seattle, McClatchy wrote down the worth of its Seattle Times stake last year from $102.3 million to $19.3 million. And what about those other Northwest holdings? McClatchy doesn’t break out writedowns for its individual papers, but here’s a chart showing the revenue results for each of the chain’s Northwest papers:

Revenue by newspaper, in millions of dollars

Anyone see a pattern here? Print circulation also fell at each Northwest paper last year, with the biggest drop at the Tacoma News Tribune, which had an average of 6,109 fewer daily print sales in 2007 than in 2006. Overall, McClatchy’s Northwest papers — leaving out its Seattle Times Co. share — saw a total circulation loss of 13,083. Conventional wisdom these days says those print sales are not coming back.

David Zeeck, the News Tribune’s executive editor and senior vice president for news, said he was not in a position to say whether the paper’s print readers would be returning. But Zeeck noted that the paper’s online readership climbed by 11.7% during the first two months of this year, to 819,000 from 733,300 during the same period in 2007.

What all this means for McClatchy’s scattered readers in this region probably won’t become clear for a while. But it is a pretty good bet that at McClatchy headquarters the suits are rethinking the laissez faire position outlined to the Seattle Times two years ago by Robert Weil, the company’s vice president for Northwest operations. Weil called local autonomy for its newspaper properties a McClatchy “hallmark” and pointed out that the California chain intended to be a “passive minority investor” at the Seattle Times Co., where it owns just a half percentage point less than half of the Seattle company. Knight Ridder, which held McClatchy’s seats on the Times board until 2006, tried a more activist approach, only to be ignored.

A McClatchy spokeswoman declined to comment on whether the company had played any role in the Times Co.’s decision to dump its costly investment in its Maine papers last week.

Update: The Newspaper Association of America, a newspaper-industry trade group, released figures Friday showing print advertising for the industry as a whole fell 9.4% in 2007 compared to 2006, the worst showing in 50 years. The industry's online ad revenue grew by 18.8% last year. In 2006 and 2005 online ad growth was up more than 30% per year, the NAA said.

• Bill Richards is a former Wall Street Journal and Washington Post reporter who covered the Seattle newspapers' joint operating agreement for The Seattle Times under a three-year contract that ended in 2005. He also worked for the Seattle Post-Intelligencer in 1990-91. You can e-mail him in care of editor@crosscut.com.