Anchorage Daily News parent company takes massive write down

The McClatchy Company could sell ADN and layoffs could be coming

The McClatchy Company has taken a $1.3 billion write down while it tries to deal with severely declining newspaper revenues as advertisers are moving to online news sources.

The company's total net loss, including the results of discontinued operations, for the first nine months of 2007 was $1.30 billion, or $15.89 per share.

From Editor & Publisher:

The McClatchy Co. disclosed in a filing that it has taken an after-tax write down of $1.3 billion due to "continuing challenging business conditions and the resulting weakness in the company's stock price," according to the company.

Before taxes, the McClatchy recorded impairment charges of $1.18 billion to goodwill, $250.4 million to newspaper mastheads, and $84.6 million to investments in unconsolidated subsidiaries and other items.

Moody's Investors Service said on Friday it may cut its ratings on McClatchy Co. deeper into junk territory, citing pressure on the newspaper publisher's cash flow due to declining advertising revenue.

In a statement, McClatchy CEO and Chairman Gary Pruitt said "As I said last month when we released our preliminary earnings, we recognize that newspaper revenues have declined industry-wide and that values have dropped. We have been more affected than most by the real estate downturn because of our operations in California and Florida, the epicenters of the sub-print lending practices."

Pruitt added that the company does not know when the downturn will end and that they have "no visibility" beyond the end of this year.

"Nonetheless, we believe that cyclical factors represent a significant portion of the current advertising downturn," he said.

"We are well positioned in markets with growth prospects better than the nation as a whole, and while that clearly doesn't make us immune to national economic events, we believe it will serve us well when the economy begins to recover from the real-estate led slowdown. Looking long-term, we like the prospects for all of our growth markets."

© By Dennis Zaki - AlaskaReport News