I’m not smarter than Gary Pruitt, CEO of The McClatchy Co.
I say this even though Pruitt has presided over the loss of nearly 95 percent of his company’s value in recent years, with the stock price plunging from about $72 in late 2004 to around $4.50 today.
Even though Pruitt picked the absolute worst time to buy the Knight-Ridder newspaper chain, loading McClatchy with billions in debt just as the newspaper industry went over a cliff.
And even though Pruitt’s ill-advised empire building resulted in a desperate need for cash that led him to sell off his company’s biggest property, the Star Tribune, to a bunch of Wall Street sharks who drove it into bankruptcy.
No, I’m not smarter than Pruitt. But I’m smart enough to know that, contrary to what he told Wall Street analysts last week, newspaper classified ad sales aren’t coming back.
Pruitt made several interesting points in his presentation, reported by the Poynter Institute’s Rick Edmonds. And what they come down to is this: It’s true that McClatchy may be seeing some modest improvements in its overall classified revenue. But when you’ve lost nearly 75 percent of a once-thriving category in the last decade, modest improvements could be nothing more than a dead-cat bounce.
And those improvements aren’t coming from newspaper classifieds. They’re coming from outside digital businesses that McClatchy was smart enough to invest in over the last 15 years — like Cars.com, Apartments.com and Career Builder. (See — I told you Pruitt was smarter than me. Those investments were a sharp move.)
It may be that The McClatchy Co. will thrive in the future with classified revenue from its national digital properties. But I don’t think that their local newspapers are going to bring in their fair share of classified revenue.
Craigslist has become the default for selling just about anything. McClatchy’s local newspapers aren’t going to get back their once-lucrative business for private sales of bikes, snowblowers and other household items.
And although I see Cars.com and Career Builder as very strong national brands, they don’t do anything to build franchises in McClatchy’s local markets, even though they do lend themselves to local tie-ins.
Pruitt has managed to stay at the McClatchy helm during its worst performance in history. I doubt he’d keep an ad salesman who lost 95 percent of his sales book, yet Pruitt has lost 95 percent of his company’s market cap and still occupies the corner suite.
And you know what? I can’t really blame the McClatchy board for keeping him. None of Pruitt’s fellow CEOs in traditional media saw the meltdown coming, either. His performance isn’t any worse than the people running Gannett, the New York Times or any number of other traditional media companies.
But if he’s expecting to ride back to growth on the wings of newspaper classified advertising, he’d better pack for a long ride.