Dan Walters describes working for the Sacramento Bee several decades ago as “like living in Sweden.”
The newspaper had a bustling office in California’s capital replete with a cafeteria, a gas station, a credit union, and a medical clinic, where staff could get their vaccinations and seek care for typing-related hand injuries, recalls the longtime columnist, who worked for the newspaper some 33 years.
But the last two decades have been filled with challenges for McClatchy, whose chain of newspapers across the Central Valley and beyond was once known for its energetic journalism and independent streak.
Last week, McClatchy newsrooms were cut severely, leaving fewer journalists than ever to cover the fast-growing hubs of the Central Valley.
News organizations large and small are being squeezed like never before. Print editions are losing readers fast. But digital has become a huge challenge, too. Changes in Google’s search results have brought big drops in visitors to many news sites. The rise of AI and social video platforms is squeezing them further.
Assembly Bill 2222 would create refundable tax credits for California local news organizations based on the number of journalists they employ. It passed through both houses. Gov. Gavin Newsomis weighing whether to sign the bill, which backers say would deliver a lifeline to California news organizations big and small.
The bill is supported by the California News Publishers Assn., of which the Los Angeles Times is a member. But passage is far from assured. The bill is opposed by some groups who question why the state should help the news industry. And Newsom typically spurns laws that make changes to the state budget after those fiscal discussions conclude in the first half of the calendar year.
The decline of McClatchy, with its roots in California’s Gold Rush era, speaks to the larger challenges facing the news industry — and the reason AB 2222 was written.
In 2009, the Sacramento company still held the title of third-largest newspaper publisher in the country, by circulation, after Gannett Co. and Tribune Co., then-owner of the Los Angeles Times. McClatchy had just purchased another California-based media powerhouse more than double its size, Knight-Ridder, in what Tony Daley, an economist who examines news business models in his newsletter Daley Insights, said was an ultimately unwieldy and ill-fated investment as print began to decline.
Efforts to pay down the millions in debt it took on to finance the purchase consumed McClatchy, and caused the company to severely whittle down head count in subsequent years from its peak of 16,800 employees in 2006 to 3,500 by the end of 2018.
In 2020, McClatchy went to court to restructure its finances, arguing it couldn’t meet its debt payments and pension obligations. Chatham Asset Management won the bidding in the bankruptcy auction that year, and much of the company’s debt was eliminated in the acquisition. But ownership shifted from a family-controlled outfit to a hedge fund-controlled one.
The Sacramento Bee and other papers have seen cuts since the sale.
The Bee’s expansive headquarters was recently demolished. In 2024, police say a man broke into the abandoned building and stole the paper’s two Pulitzer Prize gold medals.
The latest blow to McClatchy’s newsrooms came last week when Chatham sent layoff notices to more than 90 unionized journalists and media workers at 17 publications in California and elsewhere across the country. The cuts account for about 30% of the company’s workers unionized with The NewsGuild-CWA, a North American labor union of journalists and communications workers.
Flagship publication the Sacramento Bee nixed six of 39 union journalists, a 15% cut that eliminated the sports desk, including a long-serving, beloved high school sports reporter. The paper’s opinion desk was also wiped out.
Meanwhile, the smaller Modesto Bee cut three of its 12 journalists, or 25% of the newsroom. The Fresno Bee’s staff was slashed by 41%, with seven of 17 journalists cut, including the last remaining employee of Vida en el Valle, its Spanish-language publication.
Juan Esparza Loera, formerly a longtime editor of Vida en el Valle, said the collapse of the publication leaves a void, with only one Spanish-language outlet left in the area: Pique, a digital newsletter of mostly photos and short blurbs that publishes monthly. And Univision Fresno provoked the Valley’s Latino community last year when it canceled a Spanish-language morning show featuring beloved anchor Lupita Lomeli.
“That’s going to be a big hole,” Esparza said.
Melissa Montalvo, an accountability reporter at the Fresno Bee whose work has shed light on a rash of worker deaths at a poultry processing plant and was among those laid off, said the whole community will “feel the loss” of dwindling time and resources for painstaking investigations.
There are reports the newsroom at the San Luis Obispo Tribune was cut too, but the company did not respond to requests for comment.
Last year, the company decimated the staff of the Merced Sun-Star, leaving it with one journalist funded through a university grant. The company has 30 newsrooms overall across the United States.
Greg Farmer, the chain’s executive vice president of local news, wrote in an email to staff that McClatchy had kept level its investment in local news for the last five years, but that revenue in that period plummeted 41%, forcing the company to make “a different choice.”
He said the company would instead invest in journalism that “is differentiated, consequential and difficult to replicate; reporting rooted in our communities and strengthened by sources, investigation, verification, context and judgment.”
Like many newspapers, McClatchy has pursued AI tools in its newsrooms as it struggles to turn its business around.
“The nature of these layoffs are so bleak that it seems as though our executives don’t see a way forward,” said Ariane Lange, an investigative reporter at the Sacramento Bee.
After the company rolled out a tool seeking to game search-engine optimizations by summarizing and repackaging reporters’ articles into new versions and republishing under their names, Sacramento Bee journalists in March announced they would withhold their bylines from the new tool.
California has lost more than 12,000 of its local journalists since 2002, according to nonprofit advocacy group Rebuild Local News. And almost 40% of all local U.S. newspapers have vanished, according to an annual report on the state of local news put out by Northwestern University’s Medill journalism school.
And the Bee is far from alone in both experiencing cuts and struggling with how to transform the business.
Backers of Assembly Bill 2222 say it could be part of any solution.
Publishers, journalists and their unions have long argued that online search and social media platforms are harming the journalism business by eating up advertising revenue while publishing content they don’t pay for.
Assemblymember Christopher M. Ward (D-San Diego) said the bill would “strengthen democracy” and “keep the lights on” in newsrooms. It would benefit traditional newspapers as well as other sources of local news, including the growing number of independent nonprofit newsrooms popping up in communities around the state.
The California Taxpayers Assn. and groups representing business interests such as the California Chamber of Commerce oppose the bill because it raises taxes on employers.
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