Amid the secular and cyclical slowdown in print advertising, McClatchy Company (MNI), the third largest newspaper company in the U.S. and the publisher of 30 daily newspapers including the Miami Herald and Sacramento Bee, reported third-quarter 2009 results. McClatchy is facing the same dramatic decline in advertising revenue, as the rest of the newspaper industry. Total advertising revenue fell 28.1% year-on-year to $266.1 million. However, circulation revenue stabilized, up 6.7% to $69 million due to increase in circulation prices. As a result, total revenue slipped 23.1% to $347.4 million. To combat the downturn, management undertook cost-cutting initiatives, focused on building Internet operations and reduced debt load. McClatchy had lowered its headcounts, and cut executive pay. The company was able to lower its cash expenses by 29.4% and total operating expenses by 30.2%. McClatchy’s quarterly earnings remained flat at 13 cents a share compared to ...

Amid the secular and cyclical slowdown in print advertising, McClatchy Company (MNI), the third largest newspaper company in the U.S. and the publisher of 80 newspapers including the Miami Herald and Sacramento Bee, reported second quarter 2009 results.  The company is facing the same dramatic decline in advertising revenue, as the rest of the newspaper industry, reflecting the deepening economic recession. To combat the downturn, management undertook cost-cutting initiatives, focused on building internet operations and reduced debt load. McClatchy lowered its headcounts by 15%, or 1,600 employees, cut executive pay, suspended 401K matching contribution and dividend. The company was able to lower its cash expenses by 29.3% and operating expenses by 28.1%.  Consequently, EPS increased 42.9% year over year to $0.30. On a reported basis, EPS more than doubled to $0.50. Total revenue, however, plummeted 25.4% to $365.3 million, as the fall in total advertising revenue ...

Standard & Poor's Upgrades McClatchy's Corporate Rating

On Tuesday June 30, 2009, Standard & Poor's raised its corporate credit rating for newspaper publisher McClatchy (MNI) to "CC" (highly vulnerable) from "SD," (selective default). The rating agency still holds a negative view on the company on account of its possible restructuring.

Last Friday, June 26, both Standard & Poor's and Moody's Investor Services had lowered their corporate ratings on the company following the debt exchange offer announced by McClatchy. Moody's lowered its corporate rating to "Caa2" from "Caa1", whereas Standard & Poor's lowered its credit rating to "SD" from "CC." McClatchy offered to pay $60 million in cash and issue $175 million in new notes, with a 15.75% coupon rate due 2014, to replace $1.15 billion in debt owed to its bondholders.

The reason behind downgrading was the company's dubious ability to repay debt and high default risk. On the announcement of

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Miami Land Sale Delayed by Six More MonthsMiami land sale deal between McClatchy (MNI - the seller) and Citisquare Group (the buyer) was extended for the second time after the latter failed to exercise its option to buy the 10 acres of land adjacent to the Miami Herald.The deal was supposed to be completed on Tuesday, June 30, 2009. The date of closing the deal is now extended to December 31, 2009. Citisquare Group is required to increase the termination fee payable to McClatchy due to the extension of the agreement.Earlier, on December 30, 2008, McClatchy announced the extension of the closing date of the agreement (previously December 31, 2008) to sell the 10 acres in order to gain some time to arrange financing in this troubled credit environment, as falling real ...

On Friday June 26, 2009, McClatchy (MNI) announced the expiration of its private exchange offer, which commenced on May 21, 2009. The company offered to exchange the Old Securities for up to $60 million in cash and up to $175 million of newly issued 15.75% Senior Notes due 2014.

The coupon rate has substantially increased from the range of 4.625%-7.150%. With the increase in coupon rate, the company's interest coverage ratio which stood at 2.8x (EBITDA/Interest expense) will decline, and may fall below the covenanted minimum interest coverage ratio of 2.25x. The company's leverage ratio (Debt/TTM EBITDA) was 5.9x at the end of 1Q09 up from 5.1x at the end of 2008, approaching recently-amended bank covenants of 6.25x.

After the expiration of the offer, according to Global Bondholder Services Corporation, the depositary for the Exchange Offer, $102.9 million in debt had been tendered. McClatchy received tenders from

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Real Media Losers: Not DIS

Morningstar had an interesting article on The Next Game Changers this morning. It presented a number of intriguing points, but missed the boat on several others.

For example, in the “game changing” event that is the shift away from traditional media companies, the article claims that the losers will be media companies themselves - which to a point we agree with. Unfortunately, they picked the wrong two examples of losers: The Walt Disney Co (NYSE: DIS) and General Electric (NYSE: GE). We’ve already touched on the fact that GE is closer to a mutual fund, but the author seems not to get that Disney isn’t a typical media company.

Disney is a different kind of content creator. Unlike a pure news outlet that relies on advertising as its revenue source, content creators that provide entertainment should do just fine. And

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Conventional wisdom has it this morning that stocks are at the start of a rebound.  And for all I know, that’s true; technician types say the market is way oversold.

But minefields abound.  For starters, the derivatives exposure of the biggest banks exploded during the last quarter of 2008.

“Citibank (NYSE:C), Bank of America (NYSE:BAC), HSBC Bank USA (NYSE:HBC), Wells Fargo Bank (NYSE:WFC) and J.P. Morgan Chase (NYSE:JPM) reported that their ‘current’ net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31,” according to McClatchy Newspapers. “Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.”

Oh, and those numbers don’t yet account for the derivatives risk that BofA took on by acquiring Merrill Lynch, because that deal closed January

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Alex’s Notes: yes we post alot of articles that may be considered doom and gloom, and even downright depressing, but I want to take a moment and remind you dear reader, that there ARE solutions. There is always two sides to every trade.

My colleagues actually produced a movie about what is going on almost a decade ago, that accurately predicts everything we are currently seeing in the economy right now.

There are two kinds of people in todays markets:

1. Scared to death because they have no idea what the hell is going on

2. Cool as ice, because not only did they predict this, they also were positioned to benefit from it as it unfolded.

Its not too late. Gold and silver are the only way in the unfolding crisis to protect the wealth you have left.

Got gold?

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