The owner of the Kansas City Star, McClatchy Newspapers of Sacramento California, has been warned for at least the second time that they are in danger of being delisted by the New York Stock exchange (NYSE). McClatchy is the nation’s fourth largest publishers of daily newspapers. The NYSE warns companies of potential delisting when their stock price plummets below $1.00 per share.
The Kansas City Star has just asked for and been granted a fifteen year extension to the ten year tax abatement granted on their iconic, glass, downtown, press building. The new abatement saves the Star $700,000 in each of the next two years and more and a million dollars annually afterwards.
In its most recent earnings statement, McClatchy reported it that lost $296 million in the second quarter of 2015 compared with a $90 million profit for the same period in 2014. Stock price has declined by 77 percent from a year earlier as reported on Wednesday by UBS.
The difficulties experienced by McClatchy are endemic to the newspaper industry. Total annual revenue (as reported by the National Newspaper Association) during the period 2005 to 2013 declined by around 50 percent (from $49 Billion to less than $22 Billion).
McClatchy’s stock price has faltered as the company continues to struggle with a long-standing decline in print advertising and the transition to a digital-first strategy. The company was notified Monday its shares don’t comply with the New York exchange’s “continued listing standard.” That requires that the average closing price remain above $1 over 30 consecutive trading days. Another possible step to avoid delisting could be a reverse stock split strategy.
The company has six months to regain compliance with NYSE requirement, and McClatchy said it “intends to cure the price deficiency.” McClatchy will continue to trade on the New York exchange in the meantime, and the company said the warning letter doesn’t affect its business operations or agreements with its lenders.
Delisting wouldn’t remove McClatchy from public stock ownership but would force the company to get its shares listed on a different exchange. McClatchy was threatened with delisting for several months in 2009 but got back in compliance with New York exchange requirements. In 2009, McClatchy reacted to the delisting warning by cutting 1600 jobs, and slashing the payroll company wide.
McClatchy is owner to significant newspapers throughout the United States including the Sacramento Bee, The Miami Herald, The Charlotte Observer, Olympia (WA) Olympian, and the Wichita Eagle and about 25 others.