Steinberg to judge: ‘Significant funding’ can support The Bee as it emerges from bankruptcy
Sacramento Mayor Darrell Steinberg pledged this week to hold a virtual conference in the coming month aimed at raising “significant funding to help underwrite local journalism” in Sacramento.
Steinberg made the statement in a letter to the judge presiding over bankruptcy proceedings for the McClatchy Company, which owns The Sacramento Bee and 29 other news organizations across the U.S.
In an appeal urging the judge to consider the “fate” of those publications as the bankruptcy process concludes in either a sale or restructuring of the nation’s second-largest news organization, Steinberg wrote that local funding “can be combined with donations from large statewide and national philanthropies” to support The Bee and others.
“These newsrooms employ a fraction of the journalists they once did, but they are far from irrelevant,” Steinberg wrote in a two-page statement of position addressed to Judge Michael E. Wiles, filed Wednesday in the U.S. Bankruptcy Court for the Southern District of New York. “... I will personally commit to helping rally community support by convening a (virtual) funders’ conference in the next month,” Steinberg wrote.
McClatchy entered Chapter 11 bankruptcy in February. The process has been delayed in part due to complications related to the coronavirus pandemic that have slowed restructuring negotiations.
There are currently two tracks for McClatchy: an auction process that puts the company up for sale or a restructuring that would give controlling interest of the company to its creditors, of which hedge fund Chatham Asset Management is the largest lender.
Steinberg in early March told The Bee he was working to facilitate the establishment of an ownership group that could potentially purchase the news organization, which would separate it from McClatchy and its sister publications nationwide. It is not known if any group has expressed interest in the auction process.
“Deciding the fate of a newspaper company in Chapter 11 is about so much more than creditors and shareholders; it’s about readers,” Steinberg wrote in Wednesday’s statement to Wiles. “As the mayor of a McClatchy city, I would urge you to choose a steward for this company that would build on the journalistic traditions of two of the most storied names in the business — McClatchy and Knight-Ridder — rather than degrade them.”
Steinberg also wrote to the judge in May that the publication “needs to be bolstered and rebuilt, not milked for whatever profit it can still produce.”
“We seek to ensure that The Bee and McClatchy’s other California papers emerge from this process with California owners motivated primarily by a desire to serve the public interest, not the bottom line,” he wrote last month.
The mayor’s recent comments come as the bankruptcy process approaches a critical juncture. Binding bids for a potential sale are due July 1, with an auction scheduled for July 8. Wiles is set to approve the bidder July 24.
Events earlier in McClatchy’s bankruptcy prompted Steinberg to initiate his plan to search for a more locally-focused ownership group for his city’s publication. On Feb. 26, the company announced it would terminate its lease with the city for space at 401 I St., the home to McClatchy’s New Ventures Lab.
The decision to end the lease opened the door for the city to seek a spot on the seven-member unsecured creditor committee in bankruptcy court. With the city holding the lease for the New Ventures Lab, Steinberg dispatched city officials to a hearing in New York to seek a seat on the seven-member committee.
The request was denied, and Steinberg said he was concerned by that decision because he felt the community did not have a voice regarding the fate of the “community asset.”
“Young journalists are still joining these McClatchy newsrooms in significant numbers,” the mayor wrote Wednesday. “They are certainly not motivated by money, as wages at local papers are no higher and in some cases lower than 30 years ago; they are motivated by their desire to tell the story of America with all of its imperfections.
“The reporter assigned to City Hall in Sacramento has covered two five-hour council and commission meetings this week that ran late into the night — and it’s only Wednesday.”
This story was originally published June 19, 2020 at 6:21 AM with the headline "Steinberg to judge: ‘Significant funding’ can support The Bee as it emerges from bankruptcy."
