McClatchy takes $1.47 billion write-down

This story appeared appeared in BUSINESS section, Page D1, of the Sacramento Bee

By Dale Kasler / Sacramento Bee
The McClatchy Co. announced another big write-down of its assets Thursday, this one totaling nearly $1.5 billion, a sign of a difficult business climate and the drop in McClatchy's stock price.

The $1.47 billion post-tax write-down was an accounting charge and won't actually cost Sacramento-based McClatchy any cash. But it's a reflection of the state of the newspaper industry and the troubles McClatchy has encountered since buying fellow publisher Knight Ridder Inc. in 2006.

Although The Bee's owner said it remains optimistic about its long-term future, the write-down signals a diminished value of the company's assets, especially the 20 papers acquired in the Knight Ridder deal.

The entire industry is suffering because of the real estate slump, a weakening economy and the migration of advertising and circulation to the Internet. McClatchy is particularly vulnerable because it gets one-third of its revenue from California and Florida, where the housing market is especially soft.

The write-down "reflects the downturn in advertising that has hit us, particularly in California and Florida," said McClatchy Treasurer Elaine Lintecum.

McClatchy absorbed a $1.37 billion non-cash write-down in November, mainly because of worsening business conditions.

The latest write-down became necessary almost entirely because of the decline in McClatchy's stock price.

Since the end of the third quarter of 2007, McClatchy shares have fallen roughly in half, and under accounting rules the company had to take another write-down.

The stock closed Thursday at $9.84, down 28 cents, on the New York Stock Exchange.

The write-down also reflects a dip in the market value of McClatchy's publicly traded bonds, plus the economy's "recessionary outlook," Chairman and Chief Executive Gary Pruitt said in a press release.