The auction that will determine the fate of McClatchy Co., the nation’s second-largest local news company and owner of The Longmont Leader, has been delayed to Friday.
A federal bankruptcy judge on Thursday rejected a last-minute attempt by Alden Global Capital to weaken a rival bid, clearing the way for a pair of hedge funds to battle for ownership of the company.
Judge Michael E. Wiles’ decision set up what could be a complex sale process that is scheduled to culminate July 24, when he will approve the winning bidder or award the company to a backup bidder.
An auction, which has been delayed twice, is now scheduled for 10 a.m. ET Friday. The bidders will be two hedge funds with other media holdings, Alden and Chatham Asset Management, which is McClatchy’s largest creditor.
Mandy Jenkins, publisher of The Longmont Leader, said she does not expect the sale of McClatchy to affect the publication's daily operations. The Leader is part of The Compass Experiment, an initiative co-founded by McClatchy and Google to explore sustainable business models for local news. The Leader was founded with startup funding from Google as part of its Local Experiments Project within the Google News Initiative.
"Because The Compass Experiment operates somewhat independently within McClatchy and is funded separately through the Google News Initiative, we expect to be able to carry on business as usual at our local sites," Jenkins said.
Alden, which owns the MediaNews Group chain of newspapers (including the Longmont Times-Call), and a third of the Tribune Co., had filed a last-minute challenge late Wednesday in an effort to weaken Chatham’s bid, which plans to convert some of McClatchy’s debt into a credit to use toward purchase of the company.
Alden’s filing made public what had only been rumored, that it wants to buy McClatchy, a local news company that has been family-controlled since its founding 163 years ago in Sacramento, Calif. The company declared bankruptcy in February.
McClatchy said it expects to notify the federal bankruptcy court of the winning bid by July 15. Wiles is scheduled to approve the sale at a July 24 hearing.
If a bidder with other media holdings emerges as the buyer, a Justice Department review of monopoly concerns might follow before a sale is final.
McClatchy owns 30 media titles in 14 states and Washington, D.C., including the Miami Herald, the Kansas City Star, the Sacramento Bee, the Charlotte Observer, the (Raleigh) News & Observer and the Fort Worth Star-Telegram.
Kevin G. Hall is chief economics correspondent for McClatchy. This story has been updated to confirm Alden as a bidder and to reflect the changed timeline.
