Save the Miami Herald and el Nuevo Herald!
McClatchy management suggests Chatham Asset Management could be a benevolent new owner. Chatham’s track record + the history of hedge funds gutting local newspapers suggests the opposite.
What is Chatham Asset Management?
Chatham is a New Jersey hedge fund with roughly $4.3 billion of assets. When McClatchy filed for Chapter 11 bankruptcy in February, Chatham owned about 23% of McClatchy Class A stock.
What is Chatham’s track record?
Chatham owns an 80% stake in American Media Inc., the publisher of The National Enquirer. The National Enquirer is known for unethical reporting, including “catch and kill” — obtaining the rights to scandalous stories about Donald Trump, then killing them.
According to the Associated Press, Chatham “has both a history of Republican political donations and ties to the administration of former New Jersey Gov. Chris Christie, which awarded it hundreds of millions of dollars in state retirement funds to manage.”
Chatham also owns 66% of shares of Postmedia Network, which owns five of the top 10 newspapers in Canada. NewsGuild units report that since Chatham bought in, job cuts have increased and benefits have been reduced. On April 28, Postmedia announced it was laying off about 80 employees and permanently closing 15 community newspapers.
Chatham may have fraudulently swapped McClatchy debt
The judge in McClatchy’s Chapter 11 case has allowed discovery into allegations that Chatham fraudulently swapped $275 million of McClatchy debt to get a leg up in restructuring.
What would Chatham ownership mean for us?
If Chatham assumes control of McClatchy, it will impose a “private equity model.” Generally speaking, private equity models mean leveraging funds from institutions like newspapers and then liquidating those funds in short periods of time, usually no more than 10 years, according to the Harvard Business Review. The results have been devastating for local news. This model is exemplified by Digital First Media, whose newspapers — such as the Denver Post, San Jose Mercury and St. Paul Pioneer Press — are shells of their former selves.
Do we have other options?
Yes! The bankruptcy judge is allowing potential buyers to express interest in purchasing individual McClatchy newspapers, including the Herald. In Sacramento, the mayor is urging the judge to ensure that The Sacramento Bee’s new owners will prioritize the public interest.
The Miami Herald and el Nuevo Herald produce news to inform the public and hold power to account. We are not a financial asset!