McClatchy (MNI) has just ended its investor conference call for the third quarter results. In the discussion of paying down debt, there was talk of selling land in Miami and a tax refund on the sale of one of its papers. The company also forecast its debt level through the end of 2008.

According to the share price, the market was buying none of it. The stock fell almost 2% to $18.50, a new 52-week low. The company’s 52-week high was $44.95. The stock has fallen almost 55% over the last year, while shares in Gannett (GCI) are off 22% for that period, and the New York Times (NYT) is down 18%.

The company said that "debt at the end of the third quarter was $2.58 billion, down approximately $98 million in the quarter and down $697.4 million since the end of 2006. We expect debt to be approximately $2.5 billion at the end of 2007, and we expect our debt balance at the end of 2008 to be approximately $2.0 billion." So, debt repayment will be modest in Q4.

Asset sales and tax refunds can only go so far.

When talking about future guidance, MNI commented "Accordingly, we expect the advertising revenue decline in the fourth quarter to be similar to that in the second and third quarters. We do not know when this downturn will end, and do not have visibility beyond the fourth quarter." So, the company sees debt dropping but without having a clear picture of how next year will go.

The third quarter was tough. Revenue fell from $595 million in the quarter a year ago to $540 million this year. Net income fell from $52 million to just over $23 million. Under the circumstances, there are clearly still concerns about debt service.

And, the company cannot make the case that it should have a share price performance that mirrors most of its peers.

Douglas A. McIntyre

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