Will McClatchy (MNI) Miss Debt Payments?

Sooner or later (probably sooner), a major newspaper company is going to default on its debt.  Doug McIntyre at 24/7 Wall Street thinks McClatchy is a prime candidate:

Just a year ago, it would have been unthinkable that a major newspaper chain could miss its debt payments, But, that has now become a possibility at two of the larger public companies in the industry, McClatchy (MNI) and Journal Register (JRC). A third troubled company, The Tribune (TRB), may be private by the time it faces the same problem.

In the recent past, extending debt or getting better terms often worked. Debt-laden companies like Level 3 (LVLT) and Charter (CHTR) did a good job of it. But, with the credit markets feeling impoverished, refinancing is easier said than done.

McClatchy (MNI) took on a lot of debt to buy rival Knight-Ridder. It did sell off some properties to cut that debt, In its last 10-Q, the company listed almost $2.7 billion in long-term debt. On revenue of $580 million, MNI had operating income of $117 million. Interest expense was just shy of $50.

All of that does not sound so bad. But, in August, the company said that advertising revenue fell 9.2% and total revenue was down 8.4%. To make matters worse, online  revenue fell…   (Continue reading…)

See Also: McClatchy: August a Horrendous Month