Like the Washington Post’s newspaper business (WPO) and other major newspaper companies, McClatchy (MNI) is in trouble. The company’s revenue dropped 10% in October, a slight acceleration from almost equally devastating drops in prior months. Release
Yes, there is some cyclical weakness here, but McClatchy’s not just going through a “rough patch.” And online revenue gains aren’t even beginning to offset the lost print revenue: Bizarrely, at McClatchy, they’re declining, too…
As analyst Doug McIntyre at 24/7 Wall St observes, McClatchy is carrying a $2.6 billion debt load that requires $48 million in quarterly interest payments, and in Q3, the company generated only $90 million in operating income.
October’s revenue dropped $24 million year over year: extrapolate that drop over a full quarter, and McClatchy’s after-interest profit will quickly be wiped out. Extrapolate it over two quarters, and the company’s operations will be burning cash. Time to start selling assets and restructuring. Or worse.
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