Chatham Hedge Fund Wins Auction for McClatchy’s Newspapers

James McClatchy helped launch The Daily Bee in Sacramento in 1857,
and he and his family led the company for 163 years

Hedge-fund manager Chatham Asset Management LLC emerged as the winner in a bankruptcy auction for McClatchy Co., ending 163 years of family ownership for the newspaper chain and increasing financial investors’ control of the American publishing industry.

The Wall Street Journal reports the sale, announced by McClatchy on Sunday, must be approved by the judge overseeing its bankruptcy. McClatchy publishes some 30 daily papers, including the Miami Herald, the Sacramento Bee and the Kansas City Star.

The sale price for McClatchy’s assets couldn’t immediately be learned. A purchase agreement should be filed in the U.S. Bankruptcy Court in Manhattan in coming days, McClatchy said.

For years, the U.S. newspaper industry has struggled to cope with the collapse of print advertising as readership has moved online and the digital ad market became dominated by tech platforms like Alphabet Inc.’s Google and Facebook Inc. McClatchy filed for chapter 11 protection in February before the outbreak of coronavirus, which has further destabilized the industry, causing widespread layoffs and cost cuts.

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A sale to Chatham would mean roughly one-third of all newspapers sold in the U.S. each day are published by companies controlled by financial institutions. Fortress Investment Group LLC manages Gannett Co., the country’s largest newspaper chain, with Apollo Global Management Inc. as the primary lender. Alden Global Capital LLC owns MediaNews Group, which publishes some 60 dailies, including the Denver Post, San Jose Mercury News and the St. Paul Pioneer Press.

Chatham said in a statement, “As longstanding supportive investors in McClatchy, we are pleased with the outcome of the auction. Chatham is committed to preserving newsroom jobs and independent journalism that serve and inform local communities during this important time.”

Chatham, a New Jersey-based hedge fund, is no stranger to media, also backing tabloid publisher American Media LLC, owner of the National Enquirer. The fund manager also holds a large stake in Postmedia Network Canada Corp., a publisher of dozens of newspapers in Canada, and several big newspaper and magazine distribution companies.

Chatham had become McClatchy’s largest creditor in recent years and a significant shareholder.