The Kansas City Star

The Kansas City Star Headquarters Location

Kansas City

About The Kansas City Star
It's not a coffee klatch, but if there were such a thing as a newspaper klatch (a gathering of newspapers) then The McClatchy Company would be a good example. The #3 newspaper business in the US (behind USA TODAY publisher Gannett and Tribune Company) McClatchy has 30 daily papers with a combined circulation of about 2.3 million. Its portfolio includes The Kansas City Star, The Miami Herald, The Sacramento Bee (California), and the Star-Telegram (Fort Worth, Texas). In addition, it has a 49% stake in The Seattle Times Company, publishes more than 40 non-daily newspapers in eight states, operates online news sites in conjunction with many of its papers, and has stakes in other digital media companies.

Operations

In addition to its core newspaper portfolio, McClatchy's has stakes in a number of premium digital assets, including 15% of CareerBuilder, the largest online job site in the US; 25.6% of Classified Ventures, a newspaper industry partnership that offers two of the nation's premier classified websites: the auto website Cars.com and the rental site Apartments.com; and 33.3% of HomeFinder, which operates the real estate website HomeFinder.com.

To address the structural shift to digital media, the company's newspapers provide editorial content on a wide variety of platforms and formats from its daily newspaper to leading local websites; on social network sites such as Facebook and Twitter; on smartphones and on e-readers; on blogs and in niche publications and websites; in e-mail newsletters and RSS feeds. In addition, its websites offer leading digital classified products such as CareerBuilder.com, Cars.com and Apartments.com and retail and national advertising on Find n Save portals. The company also operates dealsaver,  its proprietary daily deals service, in all of its markets.

Geographic Reach

McClatchy has two operating segments that it aggregates into a single reportable segment. One operating segment consists primarily of the company's newspaper operations in California, the Northwest, and Texas, while the other consists primarily of newspaper operations in the Southeast, the Gulf Coast, and the Midwest.

Financial Analysis

In 2011 the company's revenues decreased by 8% in 2011. The decline, part of a multi-year trend, was due to advertising revenues dropping 9%, and circulation revenues dipping 4% because of a slow economic recovery and the industry shift to digital advertising.

However, McClatchy's net income increased by 50% in 2011, thanks to a decrease in operating expenses, compensation expenses, and interest expensed due to the expiration of certain statutes of limitation and the settlement of tax audits that resulted in the reversal of accrued interest. This was offset by an increase in newsprint, supplement, and printing expenses.

Strategy

Smaller in stature than some of its rivals, McClatchy is also one of the few big newspaper companies that has not diversified wholesale into other forms of media. Both Gannett and Tribune, for example, own several television stations, while Advance Publications and The Washington Post Company have diversified into magazines and education publishing, respectively. Reliant on newspaper advertising and subscriptions for the bulk of its sales, McClatchy offers a portrait of the industry's downward spiral caused by readers migrating away from print publications for their news.

The company has tried to manage that decline primarily through cost cuts to make up for lost revenue, and a large part of that effort has included layoffs that reduced McClatchy's workforce. Early in 2010 it announced staff cuts at The Kansas City Star and Sacramento Bee. Late in 2010, the company was forced to eliminate 40 total positions from the staffs of The News & Observer and the Charlotte Observer. At the same time that it is working to reduce expenses, McClatchy is focused on paying down its mountain of debt accumulated as a result of acquisitions. The company refinanced part of that debt early in 2010 through a debt tender.

While downsizing and refinancing have helped keep creditors at bay, McClatchy is still working to boost revenue by transforming itself into a mixed-media news business. It continues to invest in Internet publishing operations to reach readers online and build new followings for its mastheads.

Ownership

The McClatchy family, led by Kevin McClatchy with an 18% share, controls the company.

Number of Employees in The Kansas City Star

2 to 10

The Kansas City Star Revenue

less than $1M (USD)