9 votes

McClatchy, second-largest local news company in the US, files for bankruptcy due to drop in print-based circulation and revenue along with massive pension obligations

6 comments

  1. [5]
    vord
    Link
    Pardon my language....but this is fucked up. Shedding unpaid pension debt translates directly into 'we're destroying a critical aspect of your retirement plan (which was likely a major reason you...

    legacy companies carry large pension obligations that eat into cash flow and profits

    Pardon my language....but this is fucked up. Shedding unpaid pension debt translates directly into 'we're destroying a critical aspect of your retirement plan (which was likely a major reason you stayed with the company) because it's a burden on our profits.'

    9 votes
    1. [4]
      Deimos
      (edited )
      Link Parent
      Agreed, but the next sentence is: They're paying almost 10x as many pensions as active salaries, which is insane. There are so many large US companies whose pension systems are unsustainable...

      Agreed, but the next sentence is:

      McClatchy’s qualified pension covers more than 24,500 current and future retirees — many retired blue-collar workers who manned printing presses or loaded newspapers onto delivery trucks — supported by fewer than 2,800 active employees.

      They're paying almost 10x as many pensions as active salaries, which is insane. There are so many large US companies whose pension systems are unsustainable houses of cards, and I think we're going to see more and more of them collapsing like this when it becomes obvious they'll never be able to maintain them.

      McClatchy had outstanding debt of more than $703 million at the time of filing, and its unfunded pension obligations — the proximate cause of the filing -- were estimated to be valued above $805 million last July.

      They're approaching a billion dollars in pensions they can't actually afford to pay any more because their business stopped working the way it used to.

      7 votes
      1. [3]
        vord
        Link Parent
        It's unquestionably a sizable debt, but the pensioner debt is by far the single most important one to pay off, even if it means shuddering the company or creating FDIC-levels of protection for...

        It's unquestionably a sizable debt, but the pensioner debt is by far the single most important one to pay off, even if it means shuddering the company or creating FDIC-levels of protection for those with pensions.

        While this definitely is a bit more tragic for the industries that experienced swift downfalls, it's not like this is the first time it has happened, and not just in dying industries.

        I'm reminded of the adage: If you can't afford to pay your employees a living wage, you don't deserve to remain in business. Pensions were definitely a major factor in the 'living wage' equation for those that had access to them.

        The fact the controlling stake is now owned by a $4.3 billion dollar hedge fund definitely also sends up giant red flags. I see it as a sign there are people thinking 'we can make a decent profit on this if we can just manage to shed those pesky pension obligations.'

        9 votes
        1. [2]
          envy
          Link Parent
          They pushed pretty hard to not shed the pension obligations. Also, shouldn't the pensions be covered by PBGC?

          They pushed pretty hard to not shed the pension obligations.

          It sought what was ultimately granted to about a dozen companies: 30 years to meet its pension funding requirements instead of the current seven years

          Also, shouldn't the pensions be covered by PBGC?

          2 votes
          1. vord
            Link Parent
            That does mitigate some of my concerns. As someone who who never had access to a pension, but knows several older folks who did, the existence of the PBGC does provide substantial comfort.

            Also, shouldn't the pensions be covered by PBGC?

            That does mitigate some of my concerns. As someone who who never had access to a pension, but knows several older folks who did, the existence of the PBGC does provide substantial comfort.

            1 vote
  2. Keegan
    Link
    Ah there's the saucy comments about leftist propaganda and the fires of hell.

    Ah there's the saucy comments about leftist propaganda and the fires of hell.