So says Douglas A. McIntyre for 24/7 Wall St. The company’s basic problem as compared to other newspaper companies is that its balance sheet is a mess:
In the second quarter of this year, McClatchy’s revenue fell to $292 million from $302 million in the same period last year. Operating income fell to $27 million from $30 million. The figures would seem fine, if McClatchy did not have a debt load that made it pay $33 million in interest expense. McClatchy’s long-term debt is $1.5 billion. The grimness of its problems is reflected in its market capitalization, which is only $294 million, and its stock price, which is down 49% over the past six months.
Which gets us to:
McClatchy needs to outrun its interest expenses, in terms of its operating profit. As revenue, and probably with that operating profit, continue to erode, the chances of that become less and less likely.
So its entirely possible that the Charlotte Observer and other McClatchy papers may be for sale sooner rather than later.
H/t: JH
