McClatchy Chief Looks Ahead -- But What About Yahoo?

By: Jennifer Saba During an uncertain economic period that is offering no relief to newspapers hammered by declining home sales, department store woes, and a slowdown in hiring, McClatchy plans to focus on the Internet to push the company through a turbulent 2008.

On a conference call with analysts and investors this afternoon, McClatchy's Chairman and CEO Gary Pruitt assured listeners that "growing online revenue is a significant priority for this company."

That success depends partly on McClatchy's stake in CareerBuilder and its partnership with Yahoo -- the latter, casting a shadow of doubt as the Internet giant deals with what the financial community is dubbing a "bear hug" takeover offer from Microsoft.

Pruitt said that as far as the Yahoo newspaper alliance is concerned, Yahoo has reassured McClatchy that it is proceeding as planned with the consortium.

"[Yahoo] gave us assurances it was a high priority for them," Pruitt said adding that members of the consortium were meeting with Yahoo this week.

McClatchy is banking on some significant lift from the Yahoo deal, which will be realized late this year and into 2009, Pruitt said. "We think it will have a significant impact to our online revenue. We think most importantly picking up the Yahoo inventory will give us vast new avails. The split revenue should work well for both of us," he said.

Pruitt said that McClatchy and its partners in CareerBuilder have no plans to take the online recruitment site public or put it up for sale. "We would be open to that long term but we have no plans at this time," Pruitt said after noting that CareerBuilder and other related Internet-assets like Cars.com were among the important pieces to the Knight Ridder acquisition.

McClatchy executives also addressed the plunging stock price warning that McClatchy expects to take another write-down due to the decline in the company's shares in a 10-K filing later this month. In November, McClatchy took a non-cash impairment charge of $1.5 billion.

In response to a question asking insight into the McClatchy family's thoughts about the company, Pruitt said: "The McClatchy family is extremely disappointed and frustrated by the stock price ... but hopeful it can recover. The family remains committed to keeping the company independent."

As for why the company is not making huge stock buybacks, Pruitt explained that the first priority was to pay down debt. "We want to be conservative and make sure we are more comfortable on the debt-side and then turn our attention to a balanced attack of buying back stock and paying down debt."