Completing merger, ‘McClatchy Media’ forms with lifestyle brands and greater reach
McClatchy completed its merger with a major magazine publisher and distribution business on Thursday, forming a new company with greater reach and a diversified portfolio that McClatchy executives say will provide resiliency amid strong headwinds in the media business, including legacy newspapers and magazines.
The deal is one of the largest of its kind in local news in years, taking place as U.S. media companies throughout the industry – from broadcasting to publishing – are looking to restructure, merge or acquire new assets.
The new entity, called the McClatchy Media Company, now boasts a collective audience of more than 100 million unique visitors a month, fusing a local news chain that has won more than 50 Pulitzer Prizes with a line of lifestyle and entertainment magazines.
McClatchy operates 30 newsrooms nationwide, including The Kansas City Star, Miami Herald, The Sacramento Bee, Fort Worth Star-Telegram, Idaho Statesman, The Charlotte Observer and The News & Observer in Raleigh.
Magazine titles joining the new company include Us Weekly, In Touch Weekly, Life & Style, Woman’s World, Closer, First for Women and Soap Opera Digest, as well as other periodicals, such as DREW and Fit over 50, and several special interest publications.
In forming the new company, the magazine and distribution business – previously known as accelerate360 – shed its name and sold its tabloid titles that previously had burdened it with a series of scandals. Company executives would not say who purchased the tabloids, which included the National Enquirer and the Globe.
McClatchy’s magazines will be part of a new lifestyle and entertainment division of the company, operating alongside the news division, company executives said. A third division will focus on the distribution business.
In an interview, McClatchy Chairman and CEO Tony Hunter, who will continue at the helm of the new company, said the merger puts McClatchy Media on a more solid financial footing and will “create meaningful free cash flow” for growth – a transformation he characterized as “dramatic and significant” for the company’s brands.
“We have a mission that has been at the core of our focus, our north star, of getting to a digitally driven, sustainable business model in order to sustain and invest in local journalism,” Hunter said. “That is unchanged. And to do that, we need to be a diversified media company.”
Hunter said McClatchy already had an “active” pipeline of other potential targets for mergers and acquisitions but that the vetting work has “accelerated and intensified” since the new company was conceived.
In June, McClatchy acquired Trend Hunter, a company that uses artificial intelligence to glean insights into consumer trends.
“We’re going to focus on more digital revenue, more content and our audience, and we’re also looking for things that could just extend and expand our capabilities,” Hunter said. “So, you know, we have a very specific set of criteria, but we’re active.”
Chatham Asset Management, a New Jersey-based hedge fund with other assets in journalism and communications, is the majority owner of the new McClatchy Media Company, or MMC. Prior to the merger, both accelerate360 and McClatchy were already owned by Chatham, all but guaranteeing the deal would go through after it was first announced in August.
“We are pleased to complete this strategic merger of two highly complementary organizations and excited to have a terrific team of seasoned operating executives leading the newly formed McClatchy Media Company,” Chatham said in a news release.
The news comes amid increased restructuring throughout the industry.
After filing for bankruptcy, Audacy, which owns hundreds of radio stations around the country, completed a financial restructuring in September. On Thursday, Warner Bros. Discovery announced plans to create a new corporate structure.
Hunter declined to provide details of the private company’s debt situation, but he did say he is excited about the future and the balance sheet is strong.
SOME JOB CUTS EXPECTED
Incorporating accelerate360 more than doubles McClatchy’s size, from roughly 1,150 to around 3,000 people. Approximately half of the new McClatchy Media’s 3,000 employees work on the distribution side of the business.
McClatchy leadership has been working to identify “redundancies” between the two merging companies that could lead to cost reductions, including job cuts.
The goal, Hunter said, is to “create a sustainable business model in a tough operating environment,” while preserving jobs that create the original content core to the company’s mission.
So far, Hunter said the company has identified savings opportunities “with vendors and partners, back-office functions and what I would call redundancy of media operating roles.”
“Clearly, there are synergies by combining the companies,” Hunter said. “What we’ll continue to do is to maintain, enhance, invest in customer-facing roles in the organization.”
Hunter called content the “engine of our company” and said it is not his intention to cut content creator positions. He said his focus is on the new company’s long-term outlook, adding that he is “excited” about the union between McClatchy and accelerate360.
“I think it helps us create sustainability so that we can continue to invest in journalism, and do our mission of local news and lifestyle and entertainment.”
ENDING TABLOID PRACTICES
Hunter said he was glad the tabloids are gone from the company, noting the only ties that remain are back-office functions that are customary in a transition service agreement.
When plans for the deal emerged over the summer, questions loomed whether some of the magazines carrying over to the new company would maintain a well-worn practice in the entertainment news industry of paying for scoops. At least one magazine in that group, In Touch, had been doing so as recently as August, according to its website.
McClatchy Chief Content Officer Robyn Tomlin, who is remaining in her role in the new company, confirmed that “none of our titles will pay for news tips” and that the company’s entertainment division will abide by the same ethics policies as its news division.
“We have assembled a team that has started comparing the details of our policies and practices,” Tomlin said. “All of our journalists are committed to doing quality, credible work, and we’re working to understand where there have been differences so that we can maintain a cohesive policy going forward.”
Tomlin said she expected “minimal overlap” between reporters working in the news and entertainment divisions, but said consumers will likely see new product packages available in coming weeks and months.
“All McClatchy subscribers are already receiving relevant stories from various a360 brands in print and digital editions via syndication agreements that have existed for a while,” Tomlin said. “We are also testing bundled subscription offers for a variety of titles.”
Five of the six members of Hunter’s new leadership team are continuing the roles they held with McClatchy. The sixth member is accelerate360’s Chuck Howell, who will become president and chief operating officer of the distribution unit, renamed McClatchy Retail Network.
This story was originally published December 13, 2024 at 1:32 PM with the headline "Completing merger, ‘McClatchy Media’ forms with lifestyle brands and greater reach."
