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The McClatchy Company Message Board

  • longtimefollower longtimefollower Oct 24, 2013 3:53 PM Flag

    It's pretty clear that, eventually, MNI is going to need a financial restructuring.

    They can't afford these kind of continual declines in overall advertising revenue, while costs continue to shrink at a much lower rate. They're trying to offset that by raising circulation revenues...but over the long run, that's just going to cannibalize the company.

    It may still be a few years out, but the writing is increasingly on the wall. This company needs a financial restructuring that cuts its debt roughly in half. Otherwise, management is going to continue to be in a position where they DAMAGE the asset values, for the sake of maximizing near term cash flows, for the sake of the equity holders....who are likely to be wiped out in the long run anyway.

    I think a prepackaged deal that cuts the debt in half, and allows equityholders to retain maybe 20% of the remaining company would be an interesting compromise in this situation. But since the company is still well within its covenants, i suspect the cannibalization with continue...with meager/modest debt reduction going forward, that, unfortunately, is more than offset by declines in revenues and cash flows.

    In short, equityholders are going to LOSE the game of "chicken" here.

    Sentiment: Sell

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    • gee, if my family owned a company for 150 years and it was profitable i certainly would not think of destroying the shareholders........and the mcclatchy family will not either. the bad news is that they only repaid ten million this quarter. the good news is they repaid ten million this quarter.
      no restructuring..........just time.......

    • So, Tim, are you still holding or did you sell everything prior to today? I bought a few K shares a few months ago and expected the share price to pop to $5.25, short term. In the long run, Pruitt's decision to buy KRI and load this company up with a stupendous amount of debt was always going to be the final straw. I have felt that way for years and basically just traded this one since 2009, knowing that the end would eventually come.

      The biggest problem with the new Impress Local program is it is 4-5 years too late. Building big elaborate websites in this day and age of 65% mobile searches makes no sense. As for SEM programs, MNI is now a broker, selling $1000 worth of online advertising and keeping 20%, at most, gross. Thats why Google is trading at over $1,000 and MNI is at $3. Most media companies doing any internet sales end up buying Google, yahoo, and Bing for their clients, and only keeping a small amount of the revenue. It's a shell game. and Google holds all the cards.

      Trust me on this, been doing it for years. It's smoke and mirrors for any media company talking about how well their internet sales are going, all we are doing is making Google, yahoo and Bing A LOT of money.

      I am holding MNI for now, but glad to be a proud owner of GOOGLE stock for more than 7 years.

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