Revenue shrinks and asset values decline for McClatchy.
McClatchy (NYSE: MNI, Bullboard) is the third largest publisher of newspapers in the US and it's in trouble. It borrowed money to buy rival chain Knight-Ridder and now has almost $2.5 billion on its balance sheet. As the value of the assets it bought has dropped it has posted two large write-offs.
Two or three years ago, it would not have been conceivable that a large newspaper chain could become insolvent, but this year that is what happened to MNI peer Journal Register which was pushed from a listing on the NYSE to the bulletin boards.

In the last quarter, MNI's revenue took a sharp drop from $477 million last year to $404 million in Q1, 2008. The company had interest expense of over $45 million. Operating income dropped from $87 million to $57 million and that drop is likely to continue.
The company's revenue is still shrinking at 10% or so year-over-previous year, so it is not hard to imagine that it could have problems with debt service over the next few quarters.
The stock is down to $9.50 from a 52-week high of over $30. But, it still may be one of the great shorts available.