McClatchy says Seattle Times stake worth zero
By ANDREA JAMES
The McClatchy Co., which owns 49.5 percent of The Seattle Times Co., has again cut the value of its share of the Seattle newspaper company -- this time to nothing.
Because of The Seattle Times Co's. "comprehensive loss related to its retirement plan liabilities" in 2008, McClatchy's investment was zero as of Dec. 28, McClatchy said in its most recent filing with the Securities and Exchange Commission.
McClatchy, based in Sacramento, Calif., shares ownership of The Times Co. with the Blethen family of the Seattle area.
McClatchy said that it would not record income or losses from The Seattle Times on its books until The Seattle Times makes some profit in the future. McClatchy adds, "Accordingly, no significant income or losses are expected to be recorded from this investment in 2009."
Meanwhile, The Seattle Times is trying to cut costs wherever it can. The newspaper has asked its unions to cut wages and benefits by 12 percent over the next two years to stave off having to file for Chapter 11 bankruptcy protection, according to the Pacific Northwest Newspaper Guild.
In keeping with the falling value of newspapers nationwide, McClatchy's estimated value of its share of The Times has been eroding steadily. McClatchy acquired the Times share when it bought Knight Ridder in June 2006. In 2006, McClatchy valued its Times investment at $102.2 million. At the end of 2007, the value had fallen to $19.3 million.
McClatchy's zero valuation does not mean that nearly half of the The Seattle Times Co. could be bought for nothing -- carrying value usually refers to the estimated worth of an asset, which is hard to assess precisely. Market value is the price at which it would sell.
McClatchy has always said that it is open to selling its stake in The Times Co.
The Hearst Corp., based in New York, owns the rival Seattle P-I and has put the paper up for sale. Hearst has promised to shut down the P-I or turn it into an online-only operation if a buyer is not found. Hearst has said it is not interested in buying the Seattle Times.
The two daily Seattle papers publish under a joint operating agreement, under which The Times Co. handles business and circulation functions and the companies maintain separate and competing newsrooms and Web sites.
Seattle Times owner Frank Blethen has said that the demise of a printed P-I would enhance the Times' financial position and help it to survive long-term.
P-I reporter Andrea James can be reached at 206-448-8124 or firstname.lastname@example.org.