McClatchy: Our 49.5 percent stake in the Seattle Times Co. is now worthless

Newspaper giant McClatchy, which owns 49.5 percent of the voting stock in the Seattle Times Co., is now valuing that position as worthless. In the latest 10K filing with the Securities and Exchange Commission, McClatchy says the Seattle Times Co. in 2008 "recorded a comprehensive loss related to its retirement plan liabilities."

As a result, says McClatchy, "the Company’s investment in STC at December 28, 2008 is zero, and no future income or losses from STC will be recorded until the Company’s carrying value is restored through future earnings by STC. Accordingly, no significant income or losses are expected to be recorded from this investment in 2009."

This, of course, doesn't mean the other, controlling 50.5 percent of the Seattle Times Co. is worth nothing. But it's a further indication of awfully bad health.

While Seattle Times joint operating agreement partner the Seattle Post-Intelligencer, owned by Hearst, is expected to cease inked publication within weeks, the privately held Seattle Times Co. itself is thought to be teetering on the brink of bankruptcy, and it has asked its unions for concessions to reduce employee costs by 12 percent. The Newspaper Guild will be allowed to examine the books sometime this month.

Relevant excerpts from the McClatchy 10K filing:

Other Operations

... The Company owns 49.5% of the voting stock and 70.6% of the nonvoting stock of The Seattle Times Company. The Seattle Times Company owns The Seattle Times newspaper, and weekly newspapers in Puget Sound and daily newspapers located in Walla Walla and Yakima, Washington and in Portland, Maine. ...

Recent Events and Trends
Equity Investments

... At the end of 2008, The Seattle Times Company (STC) recorded a comprehensive loss related to its retirement plan liabilities. The Company recorded its share of the comprehensive loss in the Company’s comprehensive income (loss) in stockholders’ equity to the extent that it had a carrying value in its investment in STC. As result the Company’s investment in STC at December 28, 2008 is zero, and no future income or losses from STC will be recorded until the Company’s carrying value is restored through future earnings by STC. Accordingly, no significant income or losses are expected to be recorded from this investment in 2009. ...

NOTE 4. INVESTMENTS IN UNCONSOLIDATED COMPANIES AND LAND HELD FOR SALE

The following is the Company’s ownership interest and investment in unconsolidated companies and joint ventures as of December 28, 2008 and December 30, 2007 (dollars in thousands): ...

	% ownership interest	Dec. 28, 2008	Dec. 30, 2007
Seattle Times Company (C-Corporation)	49.5	—	$19,310

Controlled by the local Blethen family, the Seattle Times Co. owns The Seattle Times, the Yakima Herald-Republic, the Walla Walla Union-Bulletin, and, in Maine, the Portland Press Herald and Maine Sunday Telegram, the Kennebec Journal in Augusta, the Morning Sentinel in Waterville — plus three weeklies, Web sites NWsource.com and MaineToday.com, real estate, and Rotary Offset Press in Kent, Wash.