10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

	[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended:  April 1, 2007
	or
	[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________
Commission file number:  1-9824
(Exact name of registrant as specified in its charter)

Delaware	52-2080478
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2100 "Q" Street, Sacramento, CA	95816
(Address of principal executive offices)	(Zip Code)

916-321-1846

Registrant's telephone number, including area code

Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   

 [X] Yes      [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

                Large accelerated filer [X] Accelerated filer [  ] Non-accelerated filer [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act).

[  ]  Yes [X]  No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  May 8, 2007:

                                                                                                                      Class A Common Stock  56,828,428

                                                                                                                       Class B Common Stock  25,196,397

THE MCCLATCHY COMPANY

INDEX TO FORM 10-Q

Part I - FINANCIAL INFORMATION		Page
Item 1 - Financial Statements (unaudited):
	Consolidated Balance Sheet - April 1, 2007 and December 31, 2006	1
	Consolidated Statement of Income for the Three Months ended April 1, 2007 and March 26, 2006	3
	Consolidated Statement of Cash Flows for the Three Months ended April 1, 2007 and March 26, 2006	4
	Consolidated Statement of Stockholders' Equity for the period December 31, 2006 to April 1, 2007	5
	Notes to Consolidated Financial Statements	6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		28
Item 4 - Controls and Procedures		28
Part II - OTHER INFORMATION
Item 1 - Legal Proceedings		29
Item 1A - Risk Factors		29
Item 6 - Exhibits		29
Signatures		30
Index of Exhibits		31

PART I - FINANCIAL INFORMATION

Item 1 - FINANCIAL STATEMENTS

THE MCCLATCHY COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In thousands, except per share amounts)
ASSETS	April 1,			December 31,
CURRENT ASSETS:	2007			2006
Cash and cash equivalents	$	10,145		$	19,581
Trade receivables – (less allowance of $14,231 in 2007 and $12,732 in 2006)		271,024			311,785
Other receivables		36,254			36,477
Newsprint, ink and other inventories		43,420			52,097
Deferred income taxes		47,055			248,753
Prepaid income taxes		88,836			88,836
Newspaper assets held for sale		-			563,589
Land and other assets held for sale		231,050			231,029
Other current assets		22,911			23,192
		750,695			1,575,339
PROPERTY, PLANT AND EQUIPMENT:
Land		205,033			204,692
Building and improvements		392,515			382,206
Equipment		832,941			811,173
Construction in progress		15,014			36,401
		1,455,503			1,434,472
Less accumulated depreciation		(480,405	)		(458,496	)
		965,098			975,976
INTANGIBLE ASSETS:
Identifiable intangibles - net		1,354,079			1,369,046
Goodwill - net		3,591,862			3,559,828
		4,945,941			4,928,874
INVESTMENTS AND OTHER ASSETS:
Investments in unconsolidated companies		510,963			520,213
Income tax refund		200,998			-
Prepaid pension assets		29,878			32,457
Other assets		19,902			21,851
		761,741			574,521
TOTAL ASSETS	$	7,423,475		$	8,054,710
See notes to consolidated financial statements.

1

THE MCCLATCHY COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In thousands, except per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY	April 1,			December 31,
CURRENT LIABILITIES:	2007			2006
Current portion of bank debt		-		$	530,000
Accounts payable	$	92,063			139,501
Accrued compensation		109,372			135,363
Income taxes		9,298			47,330
Unearned revenue		84,875			82,524
Newspaper liabilities held for sale		-			83,806
Accrued interest		36,704			33,697
Accrued dividends		14,756			14,727
Other accrued liabilities		49,495			45,166
		396,563			1,112,114
NON-CURRENT LIABILITIES:
Long-term debt		2,756,386			2,746,669
Deferred income taxes		706,893			706,893
Pension and post retirement obligations		314,966			311,127
Other long-term obligations		101,997			74,283
		3,880,242			3,838,972
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock $.01 par value:
Class A - authorized 200,000,000 shares, issued
55,871,236 in 2007 and 55,795,162 in 2006		559			557
Class B - authorized 60,000,000 shares,
issued 26,104,397 in 2007 and 26,116,397 in 2006		261			261
Additional paid-in capital		2,188,793			2,182,544
Treasury stock, 3,029 shares at cost		(122	)		-
Retained earnings		1,007,870			1,016,023
Accumulated other comprehensive loss		(50,691	)		(95,761	)
		3,146,670			3,103,624
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,423,475		$	8,054,710
See notes to consolidated financial statements.

2

THE MCCLATCHY COMPANY
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (In thousands, except per share amounts)
	Three Months Ended
	April 1,			March 26,
	2007			2006
REVENUES - NET:
Advertising	$	477,023		$	166,334
Circulation		71,880			23,764
Other		17,655			4,365
		566,558			194,463
OPERATING EXPENSES:
Compensation		236,324			85,739
Newsprint and supplements		75,417			26,264
Depreciation and amortization		37,833			9,887
Other operating expenses		129,596			37,294
		479,170			159,184
OPERATING INCOME		87,388			35,279
NON-OPERATING (EXPENSES) INCOME:
Interest expense		(53,785	)		-
Interest income		64			13
Equity income (losses) in unconsolidated companies - net		(9,749	)		396
Other - net		(48	)		(7	)
		(63,518	)		402
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAX PROVISION		23,870			35,681
INCOME TAX PROVISION		9,357			13,900
INCOME FROM CONTINUING OPERATIONS		14,513			21,781
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES		(5,483	)		5,946
NET INCOME	$	9,030		$	27,727
NET INCOME (LOSS) PER COMMON SHARE:
Basic:
Income from continuing operations	$	0.18		$	0.46
Income (loss) from discontinued operations		(0.07	)		0.13
Net income per share	$	0.11		$	0.59
Diluted:
Income from continuing operations	$	0.18		$	0.46
Income (loss) from continuing operations		(0.07	)		0.13
Net income per share	$	0.11		$	0.59
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic		81,885			46,735
Diluted		81,982			46,974
See notes to consolidated financial statements.

3

THE MCCLATCHY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In thousands)
	Three Months Ended
	April 1,			March 26,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations	$	14,513		$	21,781
Reconciliation to net cash provided by continuing operations:
Depreciation and amortization		37,833			9,887
Contribution to pension plans		-			(31,545	)
Employee benefit expense		9,249			4,010
Stock compensation expense		2,182			2,020
Deferred income taxes		-			(2,258	)
Equity loss (income) in unconsolidated companies		9,749			(396	)
Other		1,210			141
Changes in certain assets and liabilities:
Trade receivables		40,761			9,324
Inventories		8,677			(569	)
Other assets		876			(3,258	)
Accounts payable		(42,911	)		(6,628	)
Accrued compensation		(25,991	)		(7,991	)
Income taxes		(38,032	)		9,839
Other liabilities		(2,779	)		3,587
Net cash provided by operating activities of continuing operations		15,337			7,944
Net cash provided by operating activities of discontinued operations		2,501			12,070
Net cash provided by operating activities		17,838			20,014
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(12,815	)		(9,669	)
Equity investments		(1,200	)		-
Other - net		162			14
Net cash used by investing activities of continuing operations		(13,853	)		(9,655	)
Proceeds from sale of newspaper, net of transaction costs		522,922			-
Other		(4,837	)		(2,540	)
Net cash provided (used) by investing activities of discontinued operations		518,085			(2,540	)
Net cash provided (used) by investing activities		504,232			(12,195	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of term bank debt		(350,000	)		-
Net borrowings (repayments) from revolving bank debt		(170,599	)		77,000
Net repayments of commercial paper		-			(77,900	)
Payment of cash dividends		(14,739	)		(8,415	)
Other - principally stock issuances		3,832			1,902
Net cash used by financing activities		(531,506	)		(7,413	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(9,436	)		406
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		19,581			3,052
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	10,145		$	3,458
OTHER CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds)	$	46,656		$	270
Interest (net of capitalized interest)	$	51,786		$	1,826
See notes to consolidated financial statements.

4

THE MCCLATCHY COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
(In thousands, except per share amounts)
													Accumulated
					Additional								Other
	Par Value				Paid-In		Treasury			Retained			Comprehensive
	Class A		Class B		Capital		Stock			Earnings			Loss			Total
BALANCES, DECEMBER 31, 2006	$	557	$	261	$	2,182,544	$	-		$	1,016,023		$	(95,761	)	$	3,103,624
Adoption of FIN 48											(2,427	)					(2,427	)
ADJUSTED BALANCES, JANUARY 1, 2007		557		261		2,182,544					1,013,596			(95,761	)		3,101,197
Net income											9,030						9,030
Total comprehensive income																	9,030
Adjustment to eliminate minimum pension    liability related to Star Tribune														45,070			45,070
Dividends declared ($.18 per share)											(14,756	)					(14,756	)
Conversion of 12,000 Class B shares
to Class A shares																	-
Issuance of 67,103 Class A shares
under stock plans		2				3,219											3,221
Stock compensation expense						2,297											2,297
Tax benefit from stock plans						733											733
Purchase of treasury stock								(122	)								(122	)
BALANCES, APRIL 1, 2007	$	559	$	261	$	2,188,793	$	(122	)	$	1,007,870		$	(50,691	)	$	3,146,670
See notes to consolidated financial statements.

5

THE MCCLATCHY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

  NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES

The McClatchy Company (the "Company") is the third largest newspaper company in the United States, with 31 daily newspapers and approximately 50 non-dailies.  Twenty of its daily newspapers were acquired on June 27, 2006 in the Knight Ridder acquisition (the "Acquisition") – see Note 2.  The Company's newspapers include The Miami Herald, The Sacramento Bee, the (Fort Worth) Star-Telegram, The Kansas City Star, The Charlotte Observer, and The (Raleigh) News & Observer.  In addition, McClatchy has a robust network of internet assets, including leading local websites in each of its daily newspaper markets, offering users information, comprehensive news, advertising, e-commerce and other services.  The Company also owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development; Real Cities, the largest national advertising network of local news websites and 14.4% of CareerBuilder, the nation’s largest online job site.  Effective May 9, 2007, the Company's ownership interest in CareerBuilder decreased to 14.4% from 15.0% due to a minority equity purchase in CareerBuilder by Microsoft Corporation.  McClatchy also owns 25.6% of Classified Ventures, a newspaper industry partnership that offers classified websites such as cars.com and apartments.com.

The consolidated financial statements include the Company and its subsidiaries.  Significant intercompany items and transactions are eliminated.  In preparing the financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary (consisting of normal recurring items, except as discussed in Note 2) to present fairly the Company's financial position, results of operations, and cash flows for the interim periods presented.  The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year.

Discontinued operations - On March 5, 2007, the Company sold the Star Tribune newspaper of Minneapolis, MN and other publications and websites related to the newspaper to an entity affiliated with Avista Capital Partners for $530.0 million.  In addition, the Company expects a cash income tax refund equal to approximately $201 million related to the sale in 2008.  The results of Star Tribune's operations, including interest expense directly attributable to the Star Tribune, have been recorded as discontinued operations in all periods presented.

Revenue recognition - The Company recognizes revenues from advertising placed in a newspaper and/or on a website over the advertising contract period or as services are delivered, as appropriate, and recognizes circulation revenues as newspapers are delivered over the applicable subscription term.  Circulation revenues are recorded net of direct delivery costs.  Other revenue is recognized when the related product or service has been delivered.  Revenues are recorded net of estimated incentive offerings including special pricing agreements, promotions and other volume-based incentives.  Revisions to these estimates are charged to income in the period in which the facts that give rise to the revision become known.

6

   Cash equivalents are highly liquid debt investments with original maturities of three months or less.

    Concentrations of credit risks - Financial instruments, which potentially subject the Company to concentrations of credit risks, are principally cash and cash equivalents and trade accounts receivables.  Cash and cash equivalents are placed with major financial institutions.  The Company routinely assesses the financial strength of significant customers and this assessment, combined with the large number and geographic diversity of its customers, limits the Company's concentration of risk with respect to trade accounts receivable.

   Inventories are stated at the lower of cost (based principally on the first-in, first-out method) or current market value.

    Property, plant and equipment is stated at cost.  Major improvements, as well as interest incurred during construction, are capitalized.  Expenditures for maintenance and repairs are charged to expense as incurred.

   Depreciation is computed generally on a straight-line basis over estimated useful lives of:

                          5 to 60 years for buildings and improvements

                          9 to 25 years for presses

                          2 to 15 years for other equipment

    Stock-based compensation - All share-based payments to employees, including grants of employee stock options, stock appreciation rights, restricted stock and purchases under the employee stock purchase plan ("ESPP"), are recognized in the financial statements based on their fair values.  At April 1, 2007, the Company had six stock-based compensation plans.  Total stock-based compensation expense from continuing operations was $2.1 million in the first fiscal quarter of 2007 and $2.0 million in the first fiscal quarter of 2006.

     The Company has issued a total of 65,000 shares of restricted Class A Common Stock to its Chief Executive Officer: (1) 40,000 shares on January 25, 2005, at the Company's closing stock price of $70.55, which vest on January 25, 2009, subject to certain performance criteria and (2) 25,000 shares on January 24, 2006, at the Company's closing stock price of $58.05, which vest over four annual installments, subject to certain performance criteria, beginning on January 24, 2007.  On January 24, 2007, 6,250 shares vested.  At this time, the Company expects such performance criteria to be met and is expensing the related stock-based compensation over the respective four-year periods.

     Deferred income taxes result from temporary differences between amounts of assets and liabilities reported for financial and income tax reporting purposes.  Determination of deferred income taxes related to the Acquisition is preliminary and is subject to change based upon further review (see Note 2).

    Comprehensive income (loss) - The Company records changes in its net assets from non-owner sources in its Statement of Stockholders’ Equity.

7

    Treasury stock - The Company accounts for treasury stock under the cost method.

Segment reporting - The Company's primary business is the publication of newspapers.  The Company aggregates its newspapers into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods.

Earnings per share ("EPS") - Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock options and are computed using the treasury stock method.  The anti-dilutive stock options that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, were 3,837,725 in the first fiscal quarter of 2007 and 2,108,138 in the first fiscal quarter of 2006.

Reclassifications- Certain prior period amounts have been reclassified to conform to the 2007 presentation.

Income Taxes - On July 13, 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 (“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return.  Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.  An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.  Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  FIN 48 is effective for fiscal years beginning after December 15, 2006.

The Company adopted the provisions of FIN 48 on January 1, 2007.  The total amount of unrecognized tax benefits as of the date of adoption was $66.7 million.  As a result of the implementation of FIN 48, the Company recognized a $25.2 million increase in the liability of unrecognized tax benefits which was accounted for as follows (in thousands):

Reduction in retained earnings (cumulative effect)	$               2,427
Additional goodwill	22,736
Increase in liability for unrecognized tax benefits	$             25,163

Of the $66.7 million of unrecognized tax benefits at January 1, 2007, $8.5 million are tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.  The other $58.2 million of unrecognized tax benefits would, if recognized, result in a decrease to goodwill previously recorded related to acquisitions.

    With few exceptions, the Company is no longer subject to examination by U.S. federal, state, or foreign tax authorities for years before 2002.

8

   NOTE 2.  ACQUISITION AND DIVESTITURES

     Acquisition Transaction:

On June 27, 2006 (the second day of the Company's third fiscal quarter), the Company completed the purchase of Knight-Ridder, Inc. ("Knight Ridder") pursuant to a definitive merger agreement entered into on March 12, 2006, under which the Company paid Knight Ridder shareholders a per share price consisting of $40.00 in cash and .5118 of a Class A McClatchy common share (the "Acquisition").  The Company issued approximately 35.0 million Class A common shares in connection with the Acquisition.  The total purchase price was approximately $4.6 billion.  In addition, the Company assumed $1.9 billion in Knight Ridder long-term debt at closing.

Prior to the Acquisition, Knight Ridder published 32 daily newspapers in 29 U.S. markets, operated websites in all of its markets and owned a variety of internet and other investments which consisted of: 33.3% of each of CareerBuilder LLC ("CareerBuilder") and ShopLocal LLC ("ShopLocal"), 25.0% of Topix.net ("Topix"), 21.5% of Classified Ventures LLC ("Classified Ventures"), 33.3% interest in SP Newsprint Company ("SP"), 13.5% interest in the Ponderay Newsprint Company ("Ponderay") and 49.5% of The Seattle Times Company which owns The Seattle Times newspaper and weekly newspapers in the Puget Sound area, and daily newspapers located in Walla Walla and Yakima, Washington and in Portland, Maine and various other smaller investments.  Knight Ridder was the founder and operator of Real Cities, the largest national advertising network of local news websites.

To consummate the Acquisition, the Company borrowed $3.076 billion under a new bank debt facility (see Note 5) and used the proceeds from the sales of four Knight Ridder newspapers in order to pay Knight Ridder shareholders ($2.7 billion) and refinance its and Knight Ridder's bank debt ($498.0 million).  The after-tax proceeds from the sales of the eight Knight Ridder newspapers sold after the Acquisition closed were used to reduce debt.

     Acquisition Accounting:

Pursuant to Emerging Issues Task Force No. 99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination, the McClatchy common stock issued on June 27, 2006 was valued based upon the average closing price of McClatchy common stock from March 8, 2006 through March 14, 2006 (two business days before and after the terms of the Acquisition were agreed to and announced), or $52.06 per share.   As a result, the fair value of the 35.0 million shares of McClatchy common stock issued in the Acquisition was recorded at $1.821 billion, which was included in the total Acquisition purchase price of approximately $4.6 billion.  The fair value of such shares declined to approximately $1.398 billion as of the Acquisition closing date (June 27, 2006), however the decline of $423.0 million in valuation had no effect on the total Acquisition purchase price recorded.  The difference is included in the allocation to goodwill in the allocation of the purchase price below.

9

The Acquisition was accounted for as a purchase.  Pursuant to SFAS 141, Business Combinations, the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of June 27, 2006, the date of the Acquisition.  The purchase price allocation was primarily based upon an independent valuation.  The purchase price allocation, while substantially complete, is subject to further adjustments based upon completion of analyses of deferred income tax assets and liabilities and other items.  See Note 4 to the Consolidated Financial Statements for adjustments made in the first fiscal quarter of 2007.

The following table summarizes, on an unaudited pro forma basis, the combined results of continuing operations of the Company for the first fiscal quarter of 2006 as though the Acquisition had taken place on the first day of the fiscal quarter (in thousands):

	March 26, 2006
Revenues	$	596,295
Income from continuing operations	$	18,880	(1)
Income from continuing operations per diluted share	$	0.23
(1) Excludes $18.1 million of income tax benefits related to the Company's recalculation of its deferred tax liabilities and assets.

     Disposition Transactions:

In conjunction with the Acquisition, the Company divested 12 Knight Ridder newspapers for strategic and antitrust reasons.  The divested newspapers were the Philadelphia Inquirer;Philadelphia Daily News;San Jose Mercury News; St. Paul Pioneer Press; Akron Beacon Journal (OH); Wilkes Barre Times Leader (PA); Aberdeen American News (SD); Grand Forks Herald (ND); Ft. Wayne News-Sentinel (IN); Contra Costa Times (CA); Monterey Herald (CA); and Duluth News Tribune (MN).  The Company received cash proceeds of approximately $2.0 billion (net of transaction costs) from these divestitures.  In addition, the buyers assumed approximately $77 million of Knight Ridder retirement obligations related to certain newspapers.  Four of the 12 newspapers were sold concurrently with the closing of the Acquisition.  The remaining eight newspapers were owned for periods ranging from two days to 36 days following the closing of the Acquisition.  The operating results of these eight divested newspapers for the periods they were owned by the Company, including interest expense and debt issuance costs related to bank debt incurred until their respective sales, are included in discontinued operations in the Company's Consolidated Statement of Income in 2006.  No accounting gain or loss was recognized on the sale of the 12 newspapers.

In July 2006, the Company sold 18.3% of its interest in each of CareerBuilder and ShopLocal, and 13.8% of its interest in Topix for an aggregate of $309.7 million in cash and used the after-tax proceeds to reduce debt.  The Company retained a 15.0% interest in CareerBuilder and ShopLocal, and an 11.3% interest in Topix.  No accounting gain or loss was recognized on the sale of these investments.

10

On March 5, 2007, the Company sold the Star Tribune newspaper of Minneapolis, MN and other publications and websites related to the newspaper to an entity affiliated with Avista Capital Partners for $530.0 million.  The Company expects to receive an income tax refund equal to approximately $201 million related to the sale in 2008.  This amount has been recorded as a long-term receivable on the consolidated balance sheet.  In the first fiscal quarter of 2007, the Company recorded income tax expense of approximately $40 million caused by the sale of Star Tribune-related intellectual property from the Company's intellectual property subsidiary when the transaction closed.  However, this income tax expense was offset by an additional $41 million income tax benefit from updated estimates of the Company's tax basis in the Star Tribune subsidiary.  Including the income tax refund, total proceeds of the sale of Star Tribune is estimated to be $731 million instead of the $690 million previously estimated.

The results of Star Tribune's operations, including interest on debt incurred to purchase it, have been recorded as discontinued operations in all periods presented. The Company used the proceeds from the sale of the Star Tribune to reduce debt.

     Revenues and loss from discontinued operations, net of income taxes, for the first fiscal quarters of 2007 and 2006 were as follows (in thousands):

	Three Months Ended
	April 1, 2007			March 26, 2006
Revenues	$	52,903		$	87,541
Income (loss) from discontinued operations before income taxes (1)		(4,783	)	$	10,257
Income tax expense		700			4,311
Income (loss) from discontinued operations	$	(5,483	)	$	5,946



 (1) Includes interest expense allocated to discontinued operations of $1.2 million and $2.1 million in the first fiscal quarters of 2007 and 2006, respectively.

    NOTE 3.  INVESTMENTS IN UNCONSOLIDATED COMPANIES

   The following is the Company's ownership interest and carrying value of investments in unconsolidated companies and joint ventures (dollars in thousands):

Company	% Ownership Interest			April 1, 2007		December 31, 2006
CareerBuilder		15.0	(1)	$	226,083	$	230,506
Seattle Times Company		49.5			99,142		102,228
Classified Ventures		25.6			98,033		98,259
SP Newsprint		33.3			39,997		40,666
Ponderay Newsprint		27.0			24,874		26,162
ShopLocal		15.0			11,461		10,993
Topix		11.3			9,718		9,956
McClatchy Tribune Information Services		50.0			861		773
Other	Various				794		670
				$	510,963	$	520,213

(1) See Note 1 on change in ownership interest.

The Company primarily uses the equity method of accounting for these investments.

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NOTE 4. INTANGIBLE ASSETS AND GOODWILL
Intangible assets and goodwill, along with their weighted-average amortization periods consisted of the following (dollars in thousands):
	April 1, 2007
		Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Amortization Period
Intangible assets subject to amortization:
Advertiser and subscriber lists		$	817,701	$	(162,815	)	$	654,886	14 years
Other			26,186		(9,993	)		16,193	8 years
Total		$	843,887	$	(172,808	)		671,079
Other intangible assets not subject to amortization:
Newspaper mastheads								683,000
Total								1,354,079
Goodwill - net								3,591,862
Total intangible assets and goodwill							$	4,945,941
	December 31, 2006
		Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Amortization Period
Intangible assets subject to amortization:
Advertiser and subscriber lists		$	817,701	$	(148,427	)	$	669,274	14 years
Other			26,161		(9,389	)		16,772	8 years
Total		$	843,862	$	(157,816	)		686,046
Other intangible assets not subject to amortization:
Newspaper mastheads								683,000
Total								1,369,046
Goodwill - net								3,559,828
Total intangible assets and goodwill							$	4,928,874

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The following is a summary of the changes in the identifiable intangible assets and goodwill in the first fiscal quarter of 2007 (in thousands):
		December 31, 2006			Additions		Disposals/ Adjustments		Amortization Expense			April 1, 2007
Intangible assets subject to amortization		$	843,862		$	25		-		-		$	843,887
Accumulated amortization			(157,816	)		-		-	$	(14,992	)		(172,808	)
Total			686,046			25		-		(14,992	)		671,079
Mastheads and other			683,000					-		-			683,000
Goodwill - net			3,559,828			32,034		-		-			3,591,862
Total		$	4,928,874		$	32,059	$	-	$	(14,992	)	$	4,945,941
The additional $32.0 million in goodwill related to purchase price adjustments for the Acquisition. The most significant individual items related to the increase in income tax reserves ($29.0 million) and working capital adjustments related to the sale of the 12 newspapers ($2.9 million).
Amortization expense for continuing operations was $15.0 million and $1.2 million in the first fiscal quarter 2007 and 2006, respectively. The estimated amortization expense for the remainder of fiscal year 2007 and the five succeeding fiscal years is as follows (in thousands):
					Amortization
	Year				Expense
	2007 (Remaining)				$	44,958
	2008					59,941
	2009					59,910
	2010					59,232
	2011					57,837
	2012					57,368

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NOTE 5. LONG-TERM DEBT

As of April 1, 2007 and December 31, 2006, long-term debt consisted of the following (in thousands):

	April 1, 2007		December 31, 2006
Term A bank debt, interest at 6.11% in 2007 and 6.12% in 2006	$	750,000	$	1,100,000
Revolving bank debt, interest at 6.08% in 2007 and 6.10% in 2006		494,923		665,795
Publicly-traded notes:
$100 million 6.625% debentures due in 2007		100,019		100,025
$200 million 9.875% debentures due in 2009		211,545		212,950
$300 million 7.125% debentures due in 2011		304,259		304,512
$200 million 4.625% debentures due in 2014		173,573		172,705
$400 million 5.750% debentures due in 2017		360,786		359,848
$100 million 7.150% debentures due in 2027		90,828		90,717
$300 million 6.875% debentures due in 2029		270,453		270,117
Total debt		2,756,386		3,276,669
Less current portion		-		530,000
Long-term debt	$	2,756,386	$	2,746,669

The publicly-traded notes are stated net of unamortized discounts and premiums (totaling $88.5 million and $89.1 million of net discounts as of April 1, 2007 and December 31, 2006, respectively) resulting from recording such assumed liabilities at fair value as of the June 27, 2006, Acquisition date.  The notes due in 2007 are expected to be refinanced on a long-term basis by drawing on the Company's revolving credit facility and accordingly, are included in long-term debt.

Until June 27, 2006, the Company used its senior unsecured revolving credit facility, which was initially put into place in 1998 to finance the purchase of The Star Tribune Company, as a back-up facility for commercial paper. This senior unsecured revolving credit facility provided borrowings of up to $500 million and was refinanced with a new $3.2 billion senior unsecured credit facility ("Credit Agreement") entered into in connection with the Acquisition.  At closing, the Company’s new Credit Agreement consisted of a $1 billion five-year revolving credit facility and $2.2 billion five-year Term A loan.  Both the Term A loan and the revolver are due on June 27, 2011.

On June 27, 2006, McClatchy borrowed $2.2 billion under the Term A loan and $876.0 million under the revolving credit facility.  The Company has repaid $1.45 billion of the Term A loan and $381.1 million of the revolving credit facility, primarily from proceeds received in the sale of the eight newspapers, net of income taxes paid on the tax gain on the sale (see Note 2).  A total of $449.9 million of funds were available under the revolving credit facility at April 1, 2007.  Under the Company's covenant for debt to cash flow, the Company had incremental borrowing capacity of approximately $188.9 million as of April 1, 2007.  

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Debt under the Credit Agreement bears interest at the London Interbank Offered Rate ("LIBOR") plus a spread ranging from 37.5 basis points to 125.0 basis points.  Applicable rates are based upon the Company’s ratings on its long-term debt from Moody’s Investor Services ("Moody’s") and Standard & Poor’s.  A commitment fee for the unused revolving credit ranges from 10.0 basis points to 20.0 basis points depending on the Company’s ratings.  Standard & Poor’s has rated the facility "BB+" and Moody’s has rated the facility “Baa3”.  According to the Credit Agreement, the Company will pay interest at LIBOR plus 75.0 basis points on outstanding debt and its commitment fees are currently at 15.0 basis points.

The Credit Agreement contains financial covenants including a minimum interest coverage ratio (as defined in the Credit Agreement) of 3:00 to 1:00 and a maximum leverage ratio (as defined in the Credit Agreement) of 4.75 to 1.00 through September 30, 2008, declining to 4.25 to 1.00 on December 28, 2008 and to 4.00 to 1.00 on December 27, 2009 and thereafter.  At April 1, 2007, the Company was in compliance with all debt covenants.

As a result of a downgrade by Standard & Poor’s of the Company’s credit rating to “BB+” from “BBB” on April 26, 2007, a provision was triggered in the Credit Agreement that requires the Company to cause its Material Subsidiaries (as defined in the Credit Agreement) to guarantee the Company’s obligations under the Credit Agreement if at any time the ratings on the Company’s bank debt from Moody’s and Standard & Poor’s are not investment grade.  These guarantees were effected on May 4, 2007, and will be in effect upon the earlier of the termination of the Credit Agreement and the date which is one year after the date both ratings agencies have rated the Company’s bank debt as investment grade.

At April 1, 2007, the Company had outstanding letters of credit totaling $55.2 million, securing estimated obligations stemming from workers compensation claims and other contingent claims.

The following table presents the approximate annual maturities of debt, based upon the Company's required payments (adjusted for management’s expectations regarding the notes due in 2007 as discussed above), for the next five years and thereafter (in thousands):

Year	Payments
2008		-
2009	$	200,000
2010		-
2011		1,644,923
2012		-
Thereafter		1,000,000
		2,844,923
Less discount		(88,537	)
Total debt	$	2,756,386

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   NOTE 6.  EMPLOYEE BENEFITS

The Company sponsors defined benefit pension plans (“retirement plans”), which cover a majority of its employees.  Benefits are based on years of service and compensation.  Contributions to the retirement plans are made by the Company in amounts deemed necessary to provide the required benefits.  The Company made $40.0 million in voluntary contributions to its retirement plans in early fiscal 2006 (including $8.5 million to Star Tribune plans).  No contributions to the Company's retirement plans are currently planned for fiscal 2007.

The Company also has a limited number of supplemental retirement plans to provide key employees with additional retirement benefits.  The terms of the plans are generally the same as those of the retirement plans, except that the supplemental retirement plans are limited to key employees and provide an enhanced pension benefit.  These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations.

    The elements of pension costs for continuing operations are as follows (in thousands):

	Three Months Ended
	April 1, 2007			March 26, 2006
Service Cost	$	7,939		$	3,793
Interest Cost		24,217			5,796
Expected return on plan assets		(28,226	)		(7,751	)
Prior service cost amortization		80			44
Actuarial loss		4,009			2,119
Net pension expense	$	8,019		$	4,001

    No material contributions were made to the Company's multi-employer plans for continuing operations for the first fiscal quarters of 2007 and 2006.

The Company also provides or subsidizes for post-retirement healthcare and certain life insurance benefits for employees.  The elements of post-retirement benefits for continuing operations are as follows (in thousands):

	Three Months Ended
	April 1, 2007		March 26, 2006
Service cost	$	221		-
Interest cost		1,009	$	9
Net post-retirement benefit expense	$	1,230	$	9

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   NOTE 7.   COMMON STOCK AND STOCK PLANS

On June 27, 2006 the Company increased the authorized number of its Class A Common shares from 100,000,000 to 200,000,000 shares and issued 34,988,009 new Class A Common shares in connection with the Acquisition (see Note 2).  The Company's Class A and Class B Common Stock participate equally in dividends.  Holders of Class B are entitled to one vote per share and to elect as a class 75% of the Board of Directors, rounded down to the nearest whole number.  Holders of Class A Common Stock are entitled to one-tenth of a vote per share and to elect as a class 25% of the Board of Directors, rounded up to the nearest whole number.  Class B Common Stock is convertible at the option of the holder into Class A Common Stock on a share-for-share basis.

The holders of shares of Class B Common Stock are parties to an agreement, the intent of which is to preserve control of the Company by the McClatchy family.  Under the terms of the agreement, the Class B shareholders have agreed to restrict the transfer of any shares of Class B Common Stock to one or more "Permitted Transferees," subject to certain exceptions.  A "Permitted Transferee" is any current holder of shares of Class B Common Stock of the Company; any lineal descendant of Charles K. McClatchy (1858 to 1936); or a trust for the exclusive benefit of, or in which all of the remainder beneficial interests are owned by, one or more lineal descendants of Charles K. McClatchy.

Generally, Class B shares can be converted into shares of Class A Common Stock and then transferred freely (unless, following conversion, the outstanding shares of Class B Common Stock would constitute less than 25% of the total number of all outstanding shares of common stock of the Company).  In the event that a Class B shareholder attempts to transfer any shares of Class B Common Stock in violation of the agreement, or upon the happening of certain other events enumerated in the agreement as "Option Events," each of the remaining Class B shareholders has an option to purchase a percentage of the total number of shares of Class B Common Stock proposed to be transferred equal to such remaining Class B shareholder's ownership percentage of the total number of outstanding shares of Class B Common Stock.  If all the shares proposed to be transferred are not purchased by the remaining Class B shareholders, the Company has the option of purchasing the remaining shares.  The agreement can be terminated by the vote of the holders of 80% of the outstanding shares of Class B Common Stock who are subject to the agreement.  The agreement will terminate on September 17, 2047, unless terminated earlier in accordance with its terms.

At April 1, 2007, the Company had six stock-based compensation plans, which are described below.  The Company applied APB Opinion 25 and related interpretations in accounting for its plans in fiscal 2005 and prior years.  The Company has adopted SFAS No. 123R for its stock plans effective December 26, 2005, the first day of fiscal 2006 (see Note 1).

The Company has a stock incentive plan (the "2004 plan") under which the Company has reserved 3,000,000 Class A common shares for issuance to key employees and outside directors.  Terms of the 2004 plan are similar to the Employee and Directors' Plans, except that the 2004 plan permits the following type of incentive awards in addition to stock options and stock appreciation rights:  restricted stock, unrestricted stock, stock units and dividend equivalent rights.

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Beginning in fiscal 2005, the Company awarded stock-settled stock appreciation rights ("SARs") in lieu of stock options to its employees.  The SARs were granted at fair market value, have a ten-year term and vest in four equal annual installments beginning on March 1 following the year for which the award was made.

    Outstanding options and SARs are summarized as follows:

	Options/ SARs			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Outstanding December 31, 2006		4,064,075		$	52.78	$	4,857
Granted		36,000		$	39.45
Exercised		(64,000	)	$	26.63
Forfeited		(92,000	)	$	63.97
Expired		(31,000	)	$	51.13	$	117
Outstanding April 1, 2007		3,913,075		$	52.83
Options exercisable:
April 1, 2007		2,331,450		$	53.70

     As of April 1, 2007, there were $12.8 million of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Company's plans.  The cost is expected to be recognized over a weighted average period of 2.2 years.

    The following tables summarize information about stock options and SARs outstanding in the stock plans at April 1, 2007:

Range of Exercise Prices		Options/ SARs Outstanding		Average Remaining Contractual Life		Weighted Average Exercise Price		Options/ SARs Exercisable		Weighted Average Exercise Price
$	25.75 - $42.50		1,517,750		6.95	$	40.72		619,750	$	38.32
$	45.98 - $59.09		1,352,950		6.54	$	54.34		992,575	$	52.96
$	59.58 - $73.36		1,042,375		7.07	$	68.51		719,125	$	67.95
$	25.75 - $73.36		3,913,075		6.84	$	52.83		2,331,450	$	53.70

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The weighted average remaining contractual life on options exercisable at April 1, 2007 was 5.37 years.  The fair value of the stock options and SARs granted was estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected life of the options represents the period of time that options granted are expected to be outstanding using the historical exercise behavior of employees.  Expected volatility was based on historical volatility for a period equal to the stock option's expected life for shares granted in the first fiscal quarters of 2007 and 2006, and for a one-year look back period for shares granted prior to fiscal 2006. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three Months Ended
	April 1, 2007			March 26, 2006
Dividend yield		1.96			1.35
Expected life in years		5.41			5.33
Volatility		0.19			0.19
Risk-free interest rate		4.74	%		4.61	%
Weighted average fair value of options/SARs granted	$	8.40		$	12.80

      The Company also offers eligible employees the option to purchase common stock under its ESPP.  The expense associated with the plan is computed using a Black-Scholes option valuation model with similar assumptions to those described for stock options, except that volatility is computed using a one-year look back given the short-term nature of this option.  Expense associated with the ESPP is included in the stock-related compensation discussed in Note 1.

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  ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   Overview

 The McClatchy Company (the "Company") is the third largest newspaper company in the United States, with 31 daily newspapers and approximately 50 non-dailies.  Twenty of its daily newspapers were acquired on June 27, 2006 in the Knight Ridder acquisition (the "Acquisition") – see Note 2 to the Consolidated Financial Statements.  The Company's newspapers include The Miami Herald, The Sacramento Bee, the (Fort Worth) Star-Telegram, The Kansas City Star, The Charlotte Observer, and The (Raleigh) News & Observer.  In addition, McClatchy has a robust network of internet assets, including leading local websites in each of its daily newspaper markets, offering users information, comprehensive news, advertising, e-commerce and other services.  The Company also owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development; Real Cities, the largest national advertising network of local news websites and 14.4% of CareerBuilder, the nation’s largest online job site.  Effective May 9, 2007, the Company's ownership interest in CareerBuilder decreased to 14.4% from 15.0% due to a minority equity purchase in CareerBuilder by Microsoft Corporation.  McClatchy also owns 25.6% of Classified Ventures, a newspaper industry partnership that offers classified websites such as cars.com and apartments.com.

        The Company's primary source of revenue is advertising, which accounts for roughly 84% of the Company's revenue.  While percentages vary from year to year and from newspaper to newspaper, retail advertising carried as a part of newspapers ("run-of-press" or "ROP" advertising) or in advertising inserts placed in newspapers (preprint advertising) generally contributes roughly 36% of advertising revenues at the Company's newspapers.  Recent trends have been for certain national or regional retailers to use greater preprint and online advertising and less ROP advertising, although that trend shifts from time to time.  Nonetheless, ROP advertising still makes up the majority of retail advertising.  Classified advertising (including online classified advertising), primarily in automotive, employment and real estate categories, generally contributes about 33% of advertising revenue and national advertising generally contributes about 8% of total advertising revenue.  Direct marketing and other advertising make up the remainder of the Company's advertising revenues.  Circulation revenues contribute roughly 13% of the Company's newspaper revenues, depending upon the size and locale of the newspaper.  Most newspapers are delivered by independent contractors.  Circulation revenues are recorded net of direct delivery costs.

        See the following "Results of Operations" for a discussion of the Company's revenue performance and contribution by category for the first fiscal quarter of 2007 and the first fiscal quarter of 2006.

Recent Events and Trends

Acquisition Transaction:

        On June 27, 2006 (the second day of the Company’s third fiscal quarter), the Company completed the purchase of Knight-Ridder, Inc. ("Knight Ridder") pursuant to a definitive merger agreement entered into on March 12, 2006, under which the Company paid Knight Ridder shareholders a per share price consisting of $40.00 in cash and .5118 of a Class A McClatchy common share (the "Acquisition").  The Company issued approximately 35.0 million Class A common shares in connection with the Acquisition.  The total purchase price was approximately $4.6 billion.  In addition, the Company assumed $1.9 billion of Knight Ridder's long-term debt at closing.

20

      Prior to the Acquisition, Knight Ridder published 32 daily newspapers in 29 U.S. markets, operated websites in all of its markets and owned a variety of internet and other investments which consisted of:  33.3% of each of CareerBuilder LLC ("CareerBuilder") and ShopLocal LLC ("ShopLocal"), 25.0% of Topix.net ("Topix"), 21.5% of Classified Ventures LLC ("Classified Ventures"), 33.3% interest in SP Newsprint Company ("SP"), 13.5% interest in the Ponderay Newsprint Company ("Ponderay") and 49.5% of The Seattle Times Company which owns The Seattle Times newspaper and weekly newspapers in the Puget Sound area, and daily newspapers located in Walla Walla and Yakima, Washington and in Portland, Maine and various other smaller investments.  Knight Ridder was the founder and operator of Real Cities,the largest national advertising network of local news websites.

To consummate the Acquisition, the Company borrowed $3.076 billion under a new bank debt facility (see Note 5 to the Consolidated Financial Statements) and used the proceeds from the sales of four Knight Ridder newspapers (see Disposition Transactions below) in order to pay Knight Ridder shareholders ($2.7 billion) and refinance its and Knight Ridder's bank debt ($498.0 million).  The after-tax proceeds from the sales of the eight Knight Ridder newspapers sold after the Acquisition closed were used to reduce debt.

     The Acquisition was accounted for as a purchase.  The purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of June 27, 2006, Acquisition date.  The purchase price allocation was primarily based upon an independent valuation.  The purchase price allocation, while substantially completed, is subject to further adjustments based upon completion of analyses of deferred income tax assets and liabilities and other items.

   Disposition Transactions:

 In conjunction with the Acquisition, the Company divested 12 Knight Ridder newspapers for strategic and antitrust reasons.  The divested newspapers were the Philadelphia Inquirer;Philadelphia Daily News;San Jose Mercury News; St. Paul Pioneer Press; Akron Beacon Journal (OH); Wilkes Barre Times Leader (PA); Aberdeen American News (SD); Grand Forks Herald (ND); Ft. Wayne News-Sentinel (IN); Contra Costa Times (CA); Monterey Herald (CA); and Duluth News Tribune (MN).  The Company received cash proceeds of approximately $2.0 billion (net of transaction costs) from these divestitures.  In addition, the buyers assumed approximately $77 million of Knight Ridder retirement obligations related to certain newspapers.  Four of the 12 newspapers were sold concurrently with the closing of the Acquisition.  The remaining eight newspapers were owned for periods ranging from two days to 36 days following the closing of the Acquisition.  The operating results of these eight divested newspapers for the periods they were owned by the Company, including interest expense and debt issuance costs related to bank debt incurred until their respective sales, are included in discontinued operations in the Company's Consolidated Statement of Income in 2006.  No accounting gain or loss was recognized on the sale of the 12 newspapers.

In July 2006, the Company sold 18.3% of its interest in each of CareerBuilder and ShopLocal, and 13.8% of its interest in Topix for an aggregate of $309.7 million in cash and used the after-tax proceeds to reduce debt.  The Company retained a 15.0% interest in CareerBuilder and ShopLocal and an 11.3% interest in Topix.  No accounting gain or loss was recognized on the sale of these investments.

21

On March 5, 2007, the Company sold the Star Tribune newspaper of Minneapolis, MN and other publications and websites related to the newspaper to an entity affiliated with Avista Capital Partners for $530.0 million.  The Company expects to receive an income tax refund equal to approximately $201 million related to the sale in 2008.  This amount has been recorded as a long-term receivable on the consolidated balance sheet.  In the first fiscal quarter of 2007, the Company recorded income tax expense of approximately $40 million caused by the sale of Star Tribune-related intellectual property from the Company's intellectual property subsidiary when the transaction closed.  However, this income tax expense was offset by an additional $41 million income tax benefit from updated estimates of the Company's tax basis in the Star Tribune subsidiary.  Including the tax refund, total proceeds of the sale of Star Tribune is estimated to be $731 million instead of the $690 million previously estimated.

The results of Star Tribune's operations, including interest on debt incurred to purchase it, have been recorded as discontinued operations in all periods presented. The Company used the proceeds from the sale of the Star Tribune to reduce debt.

    Advertising Revenues:

Classified advertising revenues have continued to decline from the third fiscal quarter of 2006.  The decline in classified advertising partially reflected an industry-wide decline in automotive advertising that began in 2004.  Employment advertising has continued to decline in most markets from the third fiscal quarter of 2006.  Real estate advertising has continued to decline from the fourth fiscal quarter of 2006.  The Company has seen significant declines in California and Florida, where real estate values and thus advertising were strong in the first fiscal quarter of 2006.  The Company expects declines in this revenue category to continue because of the difficult trends in these states.  National advertising also declined in the first fiscal quarter of 2007 reflecting a slowdown in a number of segments including telecommunications and national automotive advertising, an industry-wide trend.  These declines were partially offset by growth in retail, direct marketing and online advertising.  See the revenue discussions in management’s review of “Results of Operations”.

    Newsprint:

Newsprint prices began to decline in the first fiscal quarter of 2007 after a sustained period of increasing prices from 2002 through early 2006.  Newsprint expense was 10.5% lower than pro forma newsprint expense in the first fiscal quarter of 2006, primarily reflecting lower newsprint usage.  Newsprint pricing is dependent on global demand and supply for newsprint.  Significant changes in newsprint prices can increase or decrease the Company's operating expenses.  However, because the Company has ownership interests in newsprint producers (Ponderay and SP), the recent trend of falling newsprint prices, while favorably affecting operating expenses, is reducing its earnings from these investments.  Ponderay and SP are also currently impacted by the higher cost of energy and fiber used in the papermaking process.  The impact of newsprint price increases on the Company's financial results is discussed under "Results of Operations".

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RESULTS OF OPERATIONS

    The Company noted the following items related to the Acquisition and other matters that impacted the 2007 first fiscal quarter results:

·   The Company issued approximately 35.0 million Class A shares in connection with the Acquisition. As a result, the weighted average diluted shares used to calculate earnings per share in the first fiscal quarter of 2007 increased to 82.0 million shares compared to 47.0 million in first fiscal quarter of 2006.

·   On March 5, 2007, the Company sold the (Minneapolis) Star Tribune newspaper for $530.0 million in proceeds and is expected to receive a tax refund of approximately $201 million related to the sale in 2008.  The results of Star Tribune's operations have been recorded as discontinued operations in all periods presented.

·   The purchase price for the Acquisition has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of June 27, 2006, the date of the Acquisition. The purchase price allocation, while substantially complete, is subject to further adjustments based upon completion of analyses of deferred income tax assets and liabilities and other items.

    The Company's results from continuing operations since the close of the Acquisition (and all pro forma amounts for prior periods discussed) include the operations of the 20 retained former Knight Ridder newspapers and all of the Company's previously owned newspaper operations except for the (Minneapolis) Star Tribune newspaper.

The growth in revenues and expenses in the first fiscal quarter of 2007 compared to the same period in the first fiscal quarter of 2006 resulted from the Acquisition. To facilitate an analysis of operating results, the first fiscal quarter of 2006 has been prepared to include pro forma results from continuing operations.  Pro forma amounts reflect the results of continuing operations of the Company as defined in the preceding paragraph.  The financial results for Knight Ridder and the 20 newspapers retained by the Company included in the pro forma information were derived from the historical unaudited financial statements of Knight Ridder. The Company believes that the use of pro forma reporting of operating results enhances measurement of performance by permitting comparisons with prior historical data.  Such supplemental pro forma data is not necessarily indicative of the operating results that would have occurred if the Acquisition had been completed as of the date indicated.

     First Fiscal Quarter of 2007 Compared to First Fiscal Quarter of 2006

      The Company reported first fiscal quarter of 2007 income from continuing operations of $14.5 million or $0.18 per share, compared to $21.8 million or $0.46 per share in the first fiscal quarter of 2006.  The Company recorded a loss from discontinued operations of $5.5 million or $0.07 per share relating to the results of the (Minneapolis) Star Tribune.  The Company’s total net income was $9.0 million or $0.11 per share including discontinued operations in the first fiscal quarter of 2007, compared to net income of $27.7 million or $0.59 per share in the first fiscal quarter of 2006.

23

    Revenues:

Revenues from continuing operations of the Company in the first fiscal quarter of 2007 were $566.6 million, up $372.1 million or 191.3% from the first fiscal quarter of 2006 revenues from continuing operations of $194.5 million, due to the addition of the 20 former Knight Ridder newspapers and the sale of the (Minneapolis) Star Tribune.  Advertising revenues totaled $477.0 million and circulation revenues were $71.9 million.

The following summarizes the Company's revenue by category on a pro forma basis, which compares first fiscal quarter of 2007 with pro forma first fiscal quarter of 2006 (dollars in thousands):

	As Reported						Pro Forma
	April 1, 2007		March 26, 2006		% Change		March 26, 2006		% Change
Advertising:
Retail	$	206,028	$	64,688		218.5	$	204,345		0.8
National		45,150		13,758		228.2		50,399		(10.4	)
Classified:
Auto		42,135		18,499		127.8		50,221		(16.1	)
Employment		69,646		25,127		177.2		75,713		(8.0	)
Real estate		55,150		26,463		108.4		64,214		(14.1	)
Other		21,604		6,193		248.8		21,528		0.4
Total classified		188,535		76,282		147.2		211,676		(10.9	)
Direct marketing and other		37,310		11,606		221.5		37,353		(0.1	)
Total advertising		477,023		166,334		186.8		503,773		(5.3	)
Circulation		71,880		23,764		202.5		74,585		(3.6	)
Other		17,655		4,365		304.5		17,937		(1.6	)
Total revenues	$	566,558	$	194,463		191.3	$	596,295		(5.0	)

Retail advertising increased $141.3 million in the first fiscal quarter of 2007 or 218.5% from the first fiscal quarter of 2006 reflecting the Acquisition.  On a pro forma basis, retail advertising, including online and preprint advertising, increased $1.7 million or 0.8% from the first fiscal quarter of 2006.  On a pro forma basis, online retail advertising increased $2.7 million or 85.1% from the first fiscal quarter of 2006, while print ROP advertising decreased $3.1 million or 2.5% from the first fiscal quarter of 2006.  On a pro forma basis, preprint advertising increased $2.0 million or 2.6% from the first fiscal quarter of 2006.

National advertising increased $31.4 million or 228.2% from the first fiscal quarter of 2006 reflecting the Acquisition.  On a pro forma basis, national advertising decreased $5.2 million or 10.4% from the first fiscal quarter of 2006.  The declines in total national advertising were primarily in the telecommunications and automotive advertising categories, reflecting an industry-wide trend.  Online national advertising increased $1.4 million from the first fiscal quarter of 2006 and declined $0.8 million on a pro forma basis.

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Classified advertising increased $112.3 million or 147.2% from the first fiscal quarter of 2006 reflecting the Acquisition.  On a pro forma basis, classified advertising decreased $23.1 million or 10.9% from the first fiscal quarter of 2006.  Online classified advertising increased $25.0 million or 282.6% from the first fiscal quarter of 2006.  On a pro forma basis, online classified advertising increased $0.3 million or 0.8% from the first fiscal quarter of 2006.

·   Automotive advertising increased $23.6 million or 127.8% from the first fiscal quarter of 2006.  On a pro forma basis, automotive advertising declined $8.1 million or 16.1% from the first fiscal quarter of 2006, reflecting an industry-wide trend.

·   Employment advertising increased $44.5 million or 177.2% from the first fiscal quarter of 2006.  On a pro forma basis, employment advertising decreased $6.1 million or 8.0% from the first fiscal quarter of 2006.  Employment advertising was affected by the new affiliate agreement with CareerBuilder for online employment advertising.  This agreement is helping to grow online employment revenues at the legacy McClatchy newspapers.  However, under the new affiliate agreement selected products are no longer available to be sold by the 20 acquired Knight Ridder newspapers, which are depressing their internet revenues.  The Company will begin cycling through this change in August 2007.

·   Real estate advertising was up $28.7 million or 108.4% from the first fiscal quarter of 2006. On a pro forma basis, real estate advertising decreased $9.1 million or 14.1% from the first fiscal quarter of 2006.  The Company has seen dramatic declines in California and Florida, where real estate values and thus advertising were exceptionally strong in 2006.  The Company expects declines in this revenue category to continue because of the difficult trends in these states.

·   Online classified advertising increased $25.0 million or 282.6% from the first fiscal quarter of 2006.  On a pro forma basis, online classified advertising increased $0.3 million or 0.8% from the first fiscal quarter of 2006.

Online advertising, which is included in each of the advertising categories discussed above, totaled $41.2 million in the first fiscal quarter of 2007, an increase of $30.7 million or 292.4% over the first fiscal quarter of 2006 reflecting the Acquisition and the new affiliate agreement with CareerBuilder for online employment advertising, discussed above.  On a pro forma basis, online advertising increased $2.1 million or 5.4% from the first fiscal quarter of 2006.

Direct marketing revenues increased $25.9 million or 233.0% from the first fiscal quarter of 2006 reflecting the Acquisition.  On a pro forma basis, direct marketing revenues increased $0.1 million or 0.3% from the first fiscal quarter of 2006, slower than traditional growth rates as the Company evaluates and discards some niche publications at the acquired newspapers.  The Company extends its newspaper franchises by supplementing the mass reach of the newspaper with direct marketing and direct mail products so that advertisers can both achieve broad appeal and capture targeted audiences with one-stop shopping.

Circulation revenues increased $48.1 million or 202.5% from the first fiscal quarter of 2006 reflecting the Acquisition.  On a pro forma basis, consolidated circulation revenues decreased $2.7 million or 3.6% from the first fiscal quarter of 2006.

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Operating Expenses:

Operating expenses increased $320.0 million or 201.0% in the first fiscal quarter of 2007 related to expenses added by the Acquisition.  On a pro forma basis, operating expenses were down $29.2 million or 5.7% from the first fiscal quarter of 2006, as the Company continued to reduce costs and realized synergies from the Acquisition.  On a pro forma basis, compensation costs were down 8.7%, with payroll down 8.8%, and a 5.6% reduction in staffing.  On a pro forma basis, fringe benefits were down 8.6%.  On a pro forma basis, newsprint and supplement expense was down 10.5% with newsprint expense down 8.0% and supplement expense down 23.9%.  On a pro forma basis, other operating costs were up 1.3%, reflecting higher bad debt.  On a pro forma basis, depreciation and amortization expense increased by 1.7% due primarily to the purchase price accounting related to the Acquisition.

Interest:

Interest expense for continuing operations was $53.8 million for the first fiscal quarter of 2007 reflecting the service costs on debt incurred to finance the Acquisition.  While the Company used the proceeds of the Star Tribune sale to reduce debt, it carried interest on this debt for the first two months of the year, which equated to about $5.7 million in interest expense included in continuing operations. Interest expense also included $1.3 million related to the liability for unrecognized tax benefit. Excluding these two items, the Company’s interest expense was $46.8 million.  The Company’s effective interest rate in the first fiscal quarter of 2007 was approximately 6.4%.  In the first fiscal quarter of 2007, a total of $1.2 million of interest expense was allocated to discontinued operations related to debt used to acquire the (Minneapolis) Star Tribune newspaper, which was sold on March 5, 2007.

Equity Income (Loss):

Loss from unconsolidated companies resulted from operating results of the Company's newsprint investments and from seasonally low profitability at CareerBuilder, Classified Ventures and the Seattle Times Company.

Income Taxes:

The income tax rate from continuing operations in the first fiscal quarter of 2007 was 39.2%, compared to 39.0% in the first fiscal quarter of 2006.  The effective tax rate for the current fiscal year is expected to be in the 39.0% to 39.5% range, but the tax rate is preliminary and may change when the purchase price allocation and related deferred taxes are finalized.

Discontinued Operations:

Loss from discontinued operations, (related to the Star Tribune newspaper of Minneapolis, MN-- see Note 2 to the Consolidated Financial Statements) in the first fiscal quarter of 2007 was $5.5 million or $0.07 per share. Income from discontinued operations was $5.9 million or $0.13 per share in the first quarter of 2006.  Additionally, $1.2 million and $2.1 million in interest incurred on the debt used to finance the purchase of the Star Tribune was recorded in discontinued operations in the first fiscal quarters of 2007 and 2006, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Liquidity and Capital Resources:

The Company’s cash and cash equivalents were $10.1 million as of April 1, 2007.  The Company generated $17.8 million of cash from operating activities in the first fiscal quarter of 2007.

The Company generated $504.2 million of cash from investing activities largely from the $530.0 million proceeds from the sale of the Star Tribune newspaper (see Note 2 to the Consolidated Financial Statements) in the first fiscal quarter of 2007.  These sources of funds were offset by $12.8 million purchases of property, plant and equipment

The Company used $531.5 million of cash from financing sources in the first fiscal quarter of 2007, primarily for repayment of bank debt.  The Company paid $14.7 million in dividends in the first fiscal quarter of 2007 and also received $3.2 million in proceeds from issuing Class A stock under employee stock plans in the first fiscal quarter of 2007.

At April 1, 2007, the Company had $231.1 million of land and other assets held for sale. The Company expects to sell its Miami land within the next twelve months, San Jose land in the third fiscal quarter of 2007 and certain property, plant and equipment in the second fiscal quarter of 2007.  Gross proceeds (before transaction fees) from these sales will be $190.0 million, $25.0 million and $19.5 million, respectively.

Debt and Related Matters:

Until June 27, 2006, the Company used its senior unsecured revolving credit facility, which was initially put into place in 1998 to finance the purchase of The Star Tribune Company, as a back-up facility for commercial paper. This senior unsecured revolving credit facility provided borrowings of up to $500 million and was refinanced with a new $3.2 billion senior unsecured credit facility ("Credit Agreement") entered into in connection with the Acquisition.  At closing, the Company’s new Credit Agreement consisted of a $1 billion five-year revolving credit facility and $2.2 billion five-year Term A loan.  Both the Term A loan and the revolver are due on June 27, 2011.

On June 27, 2006, McClatchy borrowed $2.2 billion under the Term A loan and $876.0 million under the revolving credit facility.  The Company has repaid $1.45 billion of the Term A loan and $381.1 million of the revolving credit facility, primarily from proceeds received in the sale of the eight newspapers, net of income taxes paid on the tax gain on the sale (see Note 2 the to Consolidated Financial Statements).  A total of $449.9 million of funds were available under the revolving credit facility at April 1, 2007.  Under the Company's covenant for debt to cash flow, the Company had incremental borrowing capacity of approximately $188.9 million as of April 1, 2007.  

Debt under the Credit Agreement bears interest at the London Interbank Offered Rate ("LIBOR") plus a spread ranging from 37.5 basis points to 125.0 basis points.  Applicable rates are based upon the Company’s ratings on its long-term debt from Moody’s Investor Services ("Moody’s") and Standard & Poor’s.  A commitment fee for the unused revolving credit ranges from 10.0 basis points to 20.0 basis points depending on the Company’s ratings.  Standard & Poor’s has rated the facility "BB+" and Moody’s has rated the facility “Baa3”.  According to the Credit Agreement, the Company will pay interest at LIBOR plus 75.0 basis points on outstanding debt and its commitment fees are currently at 15.0 basis points.

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The Credit Agreement contains financial covenants including a minimum interest coverage ratio (as defined in the Credit Agreement) of 3:00 to 1:00 and a maximum leverage ratio (as defined in the Credit Agreement) of 4.75 to 1.00 through September 30, 2008, declining to 4.25 to 1.00 on December 28, 2008 and to 4.00 to 1.00 on December 27, 2009 and thereafter.  At April 1, 2007, the Company was in compliance with all debt covenants.

As a result of a downgrade by Standard & Poor’s of the Company’s credit rating to “BB+” from “BBB” on April 26, 2007, a provision was triggered in the Credit Agreement that requires the Company to cause its Material Subsidiaries (as defined in the Credit Agreement) to guarantee the Company’s obligations under the Credit Agreement if at any time the ratings on the Company’s bank debt from Moody’s and Standard & Poor’s are not investment grade.  These guarantees were effected on May 4, 2007, and will be in effect upon the earlier of the termination of the Credit Agreement and the date which is one year after the date both ratings agencies have rated the Company’s bank debt as investment grade.

At April 1, 2007, the Company had outstanding letters of credit totaling $55.2 million, securing estimated obligations stemming from workers compensation claims and other contingent claims.

Contractual Obligations:

As of April 1, 2007, the Company had purchase obligations primarily related to capital expenditures for property, plant and equipment expiring at various dates through 2008, totaling approximately $18.7 million.

Significant changes in the Company's contractual obligations since fiscal year-end 2006 include the reduction of current-portion of long-term debt of $530.0 million (see Note 2 to the Consolidated Financial Statements) and an increase of $32.3 million in income tax reserves, of which $25.2 million related to the adoption of FIN 48 (see Note 1 to the Consolidated Financial Statements).

ITEM 3.  QUANTITIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

A hypothetical 25 basis point change in LIBOR for a fiscal year would increase or decrease in the annual net income by $2.0 million to $2.5 million.

See the discussion at “Recent Events and Trends - Operating Expenses” in Management's Discussion and Analysis of Financial Condition and Results of Operations for the impact of market changes on the Company's newsprint and pension costs.

  ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.  Our management evaluated, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a - 15(e) or 15d - 15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at that time to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and

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communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission Rules and Forms.

Changes in internal control over financial reporting.  There was no change in our internal control over financial reporting that occurred during the first fiscal quarter of 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings - None.

Item 1A. Risk Factors

Forward-Looking Information:

This quarterly report on Form 10-Q contains forward-looking statements regarding the Company's actual and expected financial performance and operations.  These statements are based upon our current expectations and knowledge of factors impacting our business, including, without limitation, statements about litigation, disposition of the (Minneapolis) Star Tribune newspaper, tax and other benefits from the sale of the Star Tribune, advertising revenues, return on pension plan assets and assumed salary increases, newsprint costs, amortization expense, stock option expenses, prepayment of debt, capital expenditures, sufficiency of capital resources and possible acquisitions and investments.  Such statements are subject to risks, trends and uncertainties.  Forward-looking statements are generally preceded by, followed by or are a part of sentences that include the words "believes," "expects," "anticipates," "estimates," or similar expressions.  For all of those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  You should understand that the following important factors, in addition to those discussed elsewhere in this document and in the documents which we incorporate by reference, could affect the future results of McClatchy and could cause those future results to differ materially from those expressed in our forward-looking statements: general economic, market or business conditions, especially in any of the markets where we operate newspapers; impact of any litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in newsprint prices and/or printing and distribution costs from anticipated levels; changes in interest rates; changes in pension assets and liabilities; increased competition from newspapers, internet sites or other forms of media reaching the markets we serve; increased consolidation among major retailers in our markets or other events depressing the level of advertising; changes in our ability to negotiate and obtain favorable terms under collective bargaining agreements with unions; competitive action by other companies; difficulties in servicing our debt obligations; other occurrences leading to decreased circulation and diminished revenues from retail, classified and national advertising; and other factors, many of which are beyond our control.

See McClatchy’s 2007 Form 10-K filed with the Securities and Exchange Commission on March 1, 2007 for further discussion of risk factors that could affect operating  results.

Item 6.  Exhibits filed as part of this Report as listed in the Index of Exhibits, on page 31 hereof.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The McClatchy Company
	Registrant
May 11, 2007	/s/ Gary B. Pruitt
Date	Gary B. Pruitt Chief Executive Officer
May 11, 2007	/s/ Patrick J. Talamantes
Date	Patrick J. Talamantes Chief Financial Officer

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		INDEX OF EXHIBITS
Exhibit		Description
2.1	*	Agreement and Plan of Merger, dated March 12, 2006, between the Company and Knight-Ridder, Inc., included as Exhibit 2.1 in the Company’s Current Report on Form 8-K filed March 12, 2006.
3.1	*	The Company's Restated Certificate of Incorporation dated June 26, 2006, included as Exhibit 3.1 in the Company's Quarterly Report on Form 10-Q for the quarter ended June 25, 2006.
3.2	*	The Company's By-laws as amended as of June 22, 2006, included as Exhibit 3.2 in the Company's Current Report on Form 8-K filed June 28, 2006.
4.1	*	Form of Physical Note for Commercial Paper Program included as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 27, 2004.
10.1	*	Credit Agreement dated June 27, 2006 by and among the Company, lenders party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Letter of Credit Issuer, JPMorgan Chase Bank as Syndication Agent and Banc of America Securities LLC and JPMorgan Securities Inc. as Joint Lead Arrangers and Joint Book Managers, included as Exhibit 10.2 in the Company's Current Report on Form 10-Q filed for the quarter ending on June 25, 2006.
10.2	*	Amendment 1 to Credit Agreement dated March 28, 2007 by and between The McClatchy Company and Bank of America, N.A., as Administrative Agent, included as Exhibit 99.1 in the Company's Current Report on Form 8-K filed April 2, 2007.
10.3		General Continuing Guaranty dated May 4, 2007 by each Material Subsidiary in favor of the Lenders party to the Credit Agreement dated June 27, 2006 by and between The McClatchy Company, the Lenders and Bank of America, N.A., as Administrative Agent.
10.4	*	Second Supplemental Indenture dated June 27, 2006, between the Company and Knight-Ridder, Inc. included as Exhibit 10.3 in the Company's Current Report on Form 10-Q filed for the quarter ending on June 25, 2006.
10.5	*	Fourth Supplemental Indenture dated June 27, 2006, between the Company and Knight-Ridder, Inc. included as Exhibit 10.4 in the Company's Current Report on Form 10-Q filed for the quarter ending on June 25, 2006.
**10.6	*	The McClatchy Company Management by Objective Plan Description included as Exhibit 10.4 in the Company's Report filed on Form 10-K for the Year ending December 31, 2000.
**10.7	*	The Company's Amended and Restated Long-Term Incentive Plan included as Exhibit 99.1 to the Company's Report on Form 8-K filed May 23, 2005.
**10.8	*	Amended and Restated Supplemental Executive Retirement Plan included as Exhibit 10.4 to the Company's 2001 Form 10-K.

**10.9	*	The Company's Amended and Restated 1990 Directors' Stock Option Plan dated February 1, 1998 included as Exhibit 10.12 to the Company's 1997 Form 10-K.
**10.10	*	Amended and Restated 1994 Stock Option Plan included as Exhibit 10.15 to the Company's Report on Form 10-Q filed for the Quarter Ending on July 1, 2001.

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**10.11	*	Form of 2004 Stock Incentive Plan Nonqualified Stock Option Agreement included as Exhibit 99.1 to the Company's Current Report on Form 8-K filed December 16, 2004.
**10.12	*	Amendment 1 to The McClatchy Company 2004 Stock Incentive Plan dated January 23, 2007, included as Exhibit 10.10 to the Company's 2006 Report on Form 10-K.
**10.13	*	Form of Restricted Stock Agreement related to the Company's 2004 Stock Incentive Plan, included as Exhibit 99.1 to the Company's Current Report on Form 8-K dated January 28, 2005.
**10.14	*	The Company's Amended and Restated Chief Executive Bonus Plan, included as Exhibit 10.12 to the Company's Report on Form 10-Q for the Quarter Ending June 29, 2003.
**10.15	*	Amended and Restated Employment Agreement between the Company and Gary B. Pruitt dated October 22, 2003, included as Exhibit 10.10 to the Company's 2003 Form 10-K.
10.16	*	Form of Indemnification Agreement between the Company and each of its officers and directors, included as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on May 23, 2005.
**10.17	*	Amended and Restated 1997 Stock Option Plan included as Exhibit 10.7 to the Company's 2002 Report on Form 10-K.
**10.18	*	Amendment 1 to The McClatchy Company 1997 Stock Option Plan dated January 23, 2007, included as Exhibit 10.16 to the Company's 2006 Report on Form 10-K.
**10.19	*	The Company's Amended and Restated 2001 Director Stock Option Plan, included as Exhibit 10.13 to the Company's 2004 Report on Form 10-K.
**10.20	*	Amendment 1 to The McClatchy Company 2001 Director Option Plan dated January 23, 2007, included as Exhibit 10.18 to the Company's 2006 Report on Form 10-K.
10.21	*	Stock Purchase Agreement by and between The McClatchy Company and Snowboard Acquisition Corporation, dated December 26, 2006, included as Exhibit 2.1 to the Company's Report on Form 8-K filed December 26, 2006.
21	*	Subsidiaries of the Company.
31.1		Certification of the Chief Executive Officer of The McClatchy Company pursuant to Rule 13a-14(a) under the Exchange Act.
31.2		Certification of the Chief Financial Officer of The McClatchy Company pursuant to Rule 13a-14(a) under the Exchange Act.
32.1		Certification of the Chief Executive Officer of The McClatchy Company pursuant to 18 U.S.C. Section 1350.
32.2		Certification of the Chief Financial Officer of The McClatchy Company pursuant to 18 U.S.C. Section 1350.
	*	Incorporated by reference
*	*	Compensation plans or arrangements for the Company's executive officers and directors

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EX-10.3

Exhibit 10.3

GUARANTY

THIS GENERAL CONTINUING GUARANTY (“Guaranty”), dated as of May 4, 2007, is executed and delivered by each Subsidiary that is a signatory hereto and any future Material Subsidiary (as defined in the Credit Agreement referenced below) that executes and delivers a Joinder hereto (each a “Guarantor” and, collectively, the “Guarantors”), in favor of the commercial lending institutions (the “Lenders”) from time to time party to the Credit Agreement (as hereinafter defined) and Bank of America, N.A. (“Bank of America”), as Administrative Agent (in such capacity, together with any successor appointed pursuant to Section 9.06 of the Credit Agreement, the “Administrative Agent”) for the Lenders.

WHEREAS, the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuer are parties to a Credit Agreement dated as of June 27, 2006 (said Agreement, as it may hereafter be amended, supplemented, modified or restated from time to time, being the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein defined) with The McClatchy Company, a Delaware corporation (the “Borrower”);

WHEREAS, each of the Guarantors will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement;

NOW, THEREFORE, in consideration of the foregoing and in order to induce the Lenders to make the credit extensions contemplated under the Credit Agreement, the Guarantors hereby agree, jointly and severally, as follows:

1.               Definitions and Construction.

(a)             Definitions.  The following terms, as used in this Guaranty, shall have the following meanings:

“Bankruptcy Code” shall mean The Bankruptcy Reform Act of 1978 (11 U.S.C. §§101-1330), as amended or supplemented from time to time, and any successor statute, and any and all rules issued or promulgated in connection therewith.

“Beneficiaries” shall mean Administrative Agent and Lenders.

“Guarantied Obligations” shall mean the due and punctual payment of all Indebtedness owing by Borrower.

“Indebtedness” shall mean any and all obligations, indebtedness, or liabilities of any kind or character owed to Beneficiaries by Borrower and arising directly or indirectly out of or in connection with the Credit Agreement, the Notes, or the other Loan Documents (in each case as amended, supplemented, modified or restated from time to time) plus all of the obligations of the Borrower or any of its Subsidiaries under any and all Swap Contracts between the Borrower and any Lender or Affiliate of a Lender (or any Person that was a Lender or Affiliate of a Lender at the time such Swap Contract was executed) that hedge interest rate exposure for Indebtedness, including all such obligations, indebtedness, or liabilities, whether for principal, interest (including any and all interest which, but for the application of the provisions of the Bankruptcy Code, would have accrued on such amounts), premium, reimbursement obligations, fees, costs, expenses (including reasonable attorneys’ fees), or indemnity obligations, whether heretofore, now, or hereafter made, incurred, or created, whether voluntarily or involuntarily made, incurred, or created, whether secured or unsecured (and if secured, regardless of the nature or extent of the security), whether absolute or contingent, liquidated or unliquidated, or determined or indeterminate, whether Borrower is liable individually or jointly with others, and whether recovery is or hereafter becomes barred by any statute of limitations or otherwise becomes unenforceable for any reason whatsoever, including any act or failure to act by Beneficiaries.

(b)           Construction.  Unless the context of this Guaranty clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the part includes the whole, the term “including” is not limiting, and the term “or” has the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and other similar terms refer to this Guaranty as a whole and not to any particular provision of this Guaranty.  Any reference in this Guaranty to any of the following documents includes any and all alterations, amendments, extensions, modifications, renewals, supplements or restatements thereto or thereof, as applicable: the Loan Documents; the Credit Agreement; this Guaranty; and the Notes.  Neither this Guaranty nor any uncertainty or ambiguity herein shall be construed or resolved against Beneficiaries or any Guarantor, whether under any rule of construction or otherwise.  On the contrary, this Guaranty has been reviewed by Guarantors, Beneficiaries, and their respective counsel, and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of Beneficiaries and Guarantors.

2.           Guarantied Obligations.  Each Guarantor, jointly and severally, hereby irrevocably and unconditionally guaranties to Beneficiaries, as and for its own debt, until final and indefeasible payment thereof has been made, the due and punctual payment of the Guarantied Obligations, in each case when and as the same shall become due and payable, whether at maturity, by acceleration, or otherwise; it being the intent of each Guarantor that the guaranty set forth herein shall be a guaranty of payment and not a guaranty of collection; provided, however, that each Guarantor shall be liable under this Guaranty for the maximum amount of such liability that can be incurred without rendering this Guaranty, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount.

Each Guarantor represents and warrants to Beneficiaries that (i) neither this Guaranty nor any collateral security therefor has been given with an intent to hinder, delay or defraud any creditor of such Guarantor; (ii) such Guarantor is not engaged, or about to engage, in any business or transaction for which its assets (other than those necessary to satisfy its obligations under this Guaranty or those given as collateral security for such obligations) are unreasonably small in relation to the business or transaction, nor does such Guarantor intend to incur, or believe or reasonably should believe that it will incur, debts beyond its ability to pay as they become due; and (iii) such Guarantor is not insolvent at the time it gives this Guaranty, and the giving of this Guaranty and any collateral security provided in connection herewith will not result in such Guarantor’s becoming insolvent.  Each Guarantor hereby covenants and agrees that, as long as this Guaranty remains in effect, such Guarantor (i) shall incur no indebtedness beyond its ability to repay the same in full in accordance with the terms thereof; and (ii) shall not take any action, or suffer to occur any omission, which could give rise to a claim by any third party to set aside this Guaranty or any collateral given in connection herewith, or in any manner impair Beneficiaries’ rights and privileges hereunder or thereunder.

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3.           Continuing Guaranty.  This Guaranty includes Guarantied Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Guarantied Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Guarantied Obligations after prior Guarantied Obligations have been satisfied in whole or in part.  To the maximum extent permitted by law, each Guarantor hereby waives any right to revoke this Guaranty as to future Indebtedness.  If such a revocation is effective notwithstanding the foregoing waiver, each Guarantor acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been received by Beneficiaries, (b) no such revocation shall apply to any Guarantied Obligations in existence on such date (including any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Guarantied Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Beneficiaries in existence on the date of such revocation, (d) no payment by any Guarantor, Borrower, or from any other source, prior to the date of such revocation, shall reduce the maximum obligation of such Guarantor hereunder, and (e) any payment by Borrower or from any source other than such Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Guarantied Obligations as to which the revocation is effective and which are not, therefore, guarantied hereunder, and to the extent so applied shall not reduce the maximum obligations of such Guarantor hereunder.

4.           Performance under this Guaranty.  In the event that Borrower fails to make any payment of any Guarantied Obligations on or before the due date thereof, each Guarantor immediately shall cause such payment to be made.

5.           Primary Obligations.  This Guaranty is a primary and original obligation of each Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to the issuance of the Notes.  Each Guarantor agrees that it is directly, jointly and severally with each other Guarantor, liable to Beneficiaries, that the obligations of such Guarantor hereunder are independent of the obligations of Borrower or any other Guarantor, and that a separate action may be brought against such Guarantor, whether such action is brought against Borrower or another Guarantor or whether Borrower or any such other Guarantor is joined in such action.  Guarantor agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement by Beneficiaries of whatever remedies they may have against Borrower or any other Guarantor, or the enforcement of any lien or realization upon any security Beneficiaries may at any time possess.   Each  Guarantor  agrees  that  any release  which  may  be  given by Beneficiaries to Borrower or any other Guarantor shall not release such Guarantor.  Each Guarantor consents and agrees that Beneficiaries shall be under no obligation to marshal any property or assets of Borrower or any other Guarantor in favor of such Guarantor, or against or in payment of any or all of the Guarantied Obligations.

6.           Waivers.

(a)           Each Guarantor hereby waives: (i) notice of acceptance hereof; (ii) notice of any loans or other financial accommodations made or extended under the Credit Agreement, or the creation or existence of any Guarantied Obligations; (iii) notice of the amount of the Guarantied Obligations, subject, however, to such Guarantor’s right to make inquiry of Administrative Agent to ascertain the amount of the Guarantied Obligations at any reasonable time; (iv) notice of any adverse change in the financial condition of Borrower or of any other fact that might increase such Guarantor’s risk hereunder; (v) notice of presentment for payment, demand, protest, and notice thereof as to the Notes or any other instrument; (vi) notice of any Default or Event of Default under the Credit Agreement; and (vii) all other notices (except if such notice is specifically required to be given to a Guarantor under this Guaranty or any other Loan Document to which such Guarantor is party) and demands to which such Guarantor might otherwise be entitled.

(b)           To the fullest extent permitted by applicable law, each Guarantor waives the right by statute or otherwise to require Beneficiaries to institute suit against Borrower or to exhaust any rights and remedies which Beneficiaries have or may have against Borrower.  In this regard, each Guarantor agrees that it is bound to the payment of each and all Guarantied Obligations, whether now existing or hereafter accruing, as fully as if such Guarantied Obligations were directly owing to Beneficiaries by such Guarantor.  Each Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Guarantied Obligations shall have been fully and finally performed and indefeasibly paid) of Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower in respect thereof.

(c)           To the maximum extent permitted by law, each Guarantor hereby waives: (i) any rights to assert against Beneficiaries any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have against Borrower or any other party liable to Beneficiaries; (ii) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guarantied Obligations or any security therefor; (iii) any defense arising by reason of any claim or defense based upon an election of remedies by Beneficiaries; (iv) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Guarantied Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to such Guarantor’s liability hereunder; and (v) to the fullest extent permitted by law, any defense or benefit that may be derived from or afforded by law which limits the liability of or exonerates guaranties or sureties or requires Beneficiaries to exhaust remedies against the Borrower prior to commencing any action or foreclosure against such Guarantor or its properties including, without limitation, the benefits of California Civil Code §§ 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, and 2850, California Code of Civil Procedure §§ 580A, 580B, 580C, 580D, and 726, and Chapter 2 of Title 14 of the California Civil Code.  Notwithstanding the foregoing, this Section 6(c) shall not be deemed to waive any portion of any right of subrogation, reimbursement, contribution or indemnification or similar right that would not be waived pursuant to the provisions of Section 6(e).

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(d)           Each Guarantor agrees that if all or a portion of the Indebtedness or this Guaranty is at any time secured by a deed of trust or mortgage covering interests in real property, Beneficiaries, in their sole discretion, without notice or demand and without affecting the liability of such Guarantor under this Guaranty, may foreclose pursuant to the terms of the Credit Agreement or otherwise the deed of trust or mortgage and the interests in real property secured thereby by non-judicial sale.  Each Guarantor understands that the exercise by Beneficiaries of certain rights and remedies contained in the Credit Agreement and any such deed of trust or mortgage may affect or eliminate such Guarantor’s right of subrogation against Borrower and that such Guarantor may therefore incur a partially or totally non-reimbursable liability hereunder.  Nevertheless, each Guarantor hereby authorizes and empowers Beneficiaries to exercise, in their sole discretion, any rights and remedies, or any combination thereof, which may then be available, since it is the intent and purpose of such Guarantor that the obligations hereunder shall be absolute, independent and unconditional under any and all circumstances.  Notwithstanding any foreclosure of the lien of any deed of trust or security agreement with respect to any or all of any real or personal property secured thereby, whether by the exercise of the power of sale contained therein, by an action for judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, each Guarantor shall remain bound under this Guaranty including its obligation to pay any deficiency following a non-judicial foreclosure.

(e)           (1) Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document, until full and final payment of the Guaranteed Obligations, each Guarantor hereby waives with respect to Borrower and its respective successors and assigns (including any surety) and any other party any and all rights at law or in equity, to subrogation, to reimbursement, to exoneration, to contribution, to setoff or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, or to a holder or transferee against a maker and which such Guarantor may have or hereafter acquire against Borrower or any other party in connection with or as a result of Borrower’s execution, delivery and/or performance of the Credit Agreement or any other Loan Document.  Each Guarantor agrees that it shall not have or assert any such rights against Borrower or Borrower’s successors and assigns or any other Person (including any surety), either directly or as an attempted setoff to any action commenced against such Guarantor by Borrower (as borrower or in any other capacity) or any other Person until the Guaranteed Obligations have been fully and finally repaid to the Beneficiaries.  Each Guarantor hereby acknowledges and agrees that this waiver is intended to benefit the Beneficiaries and shall not limit or otherwise affect any of the Borrower’s liability hereunder, under any other Loan Document to which Borrower is a party, or the enforceability hereof or thereof.

(2)           To the extent any waiver of subrogation contained in subparagraph (e)(1) is unenforceable, each Guarantor shall, until the Guaranteed Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been terminated or canceled, withhold exercise of (a) any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (i) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower, (ii) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (iii) any benefit of, and any right to participate in, any collateral or security now or hereafter held by the Beneficiaries, and (b) any right of contribution such Guarantor may have against any other Guarantor (including without limitation any such right of contribution).  Each Guarantor further agrees that, to the extent the agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution Guarantor may have against any such other Guarantor, shall be junior and subordinate to any rights the Administrative Agent or Lenders may have against Borrower, to all right, title and interest the Beneficiaries may have in any such collateral or security, and to any right the Beneficiaries may have against such other Guarantor.  The Administrative Agent, on behalf of Lenders, may use, sell or dispose of any item of collateral or security as it sees fit without regard to any subrogation rights any Guarantor may have, and upon any such disposition or sale any rights of subrogation Guarantors may have shall terminate.  If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement or indemnification rights at any time when all Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the Administrative Agent on behalf of Lenders and shall forthwith be paid over to the Administrative Agent for the benefit of Lenders to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with Section 12 of this Guaranty.

7.           Releases.  Each Guarantor consents and agrees that, without notice to or by such Guarantor and without affecting or impairing the obligations of such Guarantor hereunder, Beneficiaries may, by action or inaction, compromise or settle, extend the period of duration or the time for the payment, or discharge the performance of, or may refuse to, or otherwise not enforce, or may, by action or inaction, release all or any one or more parties to, any one or more of the Credit Agreement, the Notes, or any of the other Loan Documents or may grant other indulgences to Borrower in respect thereof, or may amend or modify in any manner and at any time (or from time to time) any one or more of the Credit Agreement, the Notes, or any of the other Loan Documents, or may, by action or inaction, release or substitute any other Guarantor, if any, of the Guarantied Obligations, or may enforce, exchange, release, or waive, by action or inaction, any security for the Guarantied Obligations (including any collateral) or any other guaranty of the Guarantied Obligations, or any portion thereof.

8.           No Election.  Beneficiaries shall have the right to seek recourse against any Guarantor to the fullest extent provided for herein and no election by Beneficiaries to proceed in one form of action or proceeding, or against any Guarantor or other party, or on any obligation, shall constitute a waiver of Beneficiaries’ right to proceed in any other form of action or proceeding or against any other Guarantor or other parties unless Beneficiaries have expressly waived such right in writing.  Specifically, but without limiting the generality of the foregoing, no action or proceeding by Beneficiaries under any document or instrument evidencing the Guarantied Obligations shall serve to diminish the liability of Guarantors under this Guaranty except to the extent that Beneficiaries finally and unconditionally shall have realized indefeasible payment by such action or proceeding.

9.           Indefeasible Payment.  The Guarantied Obligations shall not be considered indefeasibly paid for purposes of this Guaranty unless and until all payments to Beneficiaries are no longer subject to any right on the part of any person whomsoever, including Borrower, Borrower as a debtor in possession, or any trustee (whether appointed under the Bankruptcy Code or otherwise) of Borrower’s assets to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or to declare same to be fraudulent or preferential.  In the event that, for any reason, all or any portion of such payments to Beneficiaries is set aside or restored, whether voluntarily or involuntarily, after the making thereof, the obligation or part thereof intended to be satisfied thereby shall be revived and continued in full force and effect as if said payment or payments had not been made and each Guarantor shall be liable for the full amount Beneficiaries are required to repay plus any and all costs and expenses (including attorneys’ fees) paid by Beneficiaries in connection therewith.

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10.           Financial Condition of Borrower.  Each Guarantor represents and warrants to Beneficiaries that it is currently informed of the financial condition of Borrower and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guarantied Obligations.  Each Guarantor further represents and warrants to Beneficiaries that it has read and understands the terms and conditions of the Credit Agreement, the Notes, and the other Loan Documents.  Each Guarantor hereby covenants that it will continue to keep itself informed of Borrower’s financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Guarantied Obligations.

11.           Subordination.  Each Guarantor hereby agrees that after the occurrence and during the continuance of an Event of Default any and all present and future indebtedness of Borrower owing to such Guarantor shall be postponed in favor of and subordinated to payment in full of the Guarantied Obligations.  Each Guarantor agrees that amounts paid over to Beneficiaries pursuant to the subordination provisions of this Section 11 shall be separate and apart from, and shall not be credited to, the liability of such Guarantor pursuant to Section 2.

12.           Payments; Application.  All payment to be made hereunder by any Guarantor shall be made in lawful money of the United States of America at the time of payment, shall be made in immediately available funds, and shall be made without setoff, deduction (whether for Taxes or otherwise) or counterclaim.  All payments made by any Guarantor hereunder shall be applied as follows:  first, to all reasonable costs and expenses (including attorneys’ fees) incurred by Beneficiaries in enforcing this Guaranty or in collecting the Guarantied Obligations; second, to all accrued and unpaid interest, premium, if any, and fees owing to Beneficiaries constituting Guarantied Obligations; and third, to the balance of the Guarantied Obligations.

13.           Attorneys’ Fees and Costs.  Each Guarantor agrees to pay, on demand, all reasonable attorneys’ fees and all other reasonable costs and expenses which may be incurred by Beneficiaries in the enforcement of this Guaranty or in any way arising out of, or consequential to the protection, assertion, or enforcement of the Guarantied Obligations (or any security therefor), irrespective of whether suit is brought.

14.           Notices.  All notices and other communications provided to any party hereto under this Guaranty shall be in writing or by facsimile and addressed, delivered or transmitted to such party at its address or facsimile number set forth below or at such other address or facsimile number as may be designated by such party in a notice to the other parties.  Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when transmitted.

If to any Guarantor: c/o The McClatchy Company

2100 Q Street

Sacramento, CA 95816

Attention:  Elaine Lintecum

Facsimile:  (916) 321-1964

With a copy to:                                  Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, California 94304-1050

Attention:  Andrew Hirsch, Esq.

         Facsimile:  (650) 493-6811

If to Beneficiaries:                                Bank of America, N.A.

800 Fifth Avenue, Floor 32

Seattle, WA 98104

Mail Code:  WA1-501-32-37

Attention:  Ken Puro

Facsimile:  (415) 343-0559

With a copy to: Mayer, Brown, Rowe & Maw LLP

350 South Grand Avenue

25^th Floor

Los Angeles, California 90071

Attention:  Brian E. Newhouse, Esq.

Facsimile: (213) 625-0248

15.           Cumulative Remedies.  No remedy under this Guaranty, under the Credit Agreement, the Notes, or any Loan Document is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given under this Guaranty, under the Credit Agreement, the Notes, or any other Loan Document, and those provided by law.  No delay or omission by Beneficiaries to exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver thereof.  No failure on the part of Beneficiaries to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Guaranty preclude any other or further exercise thereof or the exercise of any other right.

16.           Severability of Provisions.  Any provision of this Guaranty which is prohibited or unenforceable under applicable law, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

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17.           Entire Agreement; Amendments.  This Guaranty constitutes the entire agreement among each Guarantor and Beneficiaries pertaining to the subject matter contained herein.  This Guaranty may not be altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by each Guarantor and Administrative Agent.  Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and for the specific purpose for which given.  No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed a waiver of any other, similar or dissimilar, right or default or otherwise prejudice the rights and remedies hereunder.

18.           Successors and Assigns.  Subject to the terms of the Credit Agreement, this Guaranty shall be binding each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of Beneficiaries; provided, however, no Guarantor shall assign this Guaranty or delegate any of its duties hereunder without Beneficiaries’ prior written consent and any unconsented to assignment shall be absolutely void.  In the event of any assignment or other transfer of rights by Beneficiaries, the rights and benefits herein conferred upon Beneficiaries shall automatically extend to and be vested in such assignee or other transferee.

19.           Choice of Law and Venue; Service of Process.  THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF EACH GUARANTOR AND BENEFICIARIES, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, GUARANTOR ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS ASSETS, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE.

20.           Waiver of Jury Trial.  TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE DEALINGS OF GUARANTORS AND BENEFICIARIES WITH RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.  TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH GUARANTOR HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDINGS SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT BENEFICIARIES MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

21.           Joint and Several Liability.  The liability of the Guarantors hereunder shall be joint and several.

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IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Guaranty as of the day and year first written above.

MCCLATCHY NEWSPAPERS, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Chief Financial Officer

EAST COAST NEWSPAPERS, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President and Assistant Secretary

THE NEWS AND OBSERVER PUBLISHING COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President and Assistant Secretary

TACOMA NEWS, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President and Assistant Secretary

SAN LUIS OBISPO TRIBUNE, LLC

By:  The McClatchy Company

         its Sole Member

/s/ Patrick J. Talamantes

Name:  Patrick Talamantes

Title:    Vice President, Finance and Chief Financial

             Officer

6

MCCLATCHY MANAGEMENT SERVICES, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    President

MIAMI HERALD MEDIA COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

            Assistant Treasurer

MACON TELEGRAPH PUBLISHING COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

COLUMBUS LEDGER ENQUIRER, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

GULF PUBLISHING COMPANY, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

THE BRADENTON HERALD, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

7

SUN PUBLISHING COMPANY, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

NITTANY PRINTING AND PUBLISHING COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

COLUMBIA STATE, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

THE CHARLOTTE OBSERVER PUBLISHING COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

WICHITA EAGLE AND BEACON PUBLISHING COMPANY

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

PACIFIC NORTHWEST PUBLISHING COMPANY, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Executive Vice President and Assistant

             Corporate Secretary

8

LEXINGTON H-L SERVICES, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President and Assistant Secretary

CYPRESS MEDIA, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

OAK STREET REDEVELOPMENT CORPORATION

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

CYPRESS MEDIA, LLC.

By:  CYPRESS MEDIA, INC.,

        its Sole member

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

QUAD COUNTY PUBLISHING, INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

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STAR-TELEGRAM OPERATING, LTD.

By:  CYPRESS MEDIA, LLC,

        its General Partner

By:  CYPRESS MEDIA, INC.

         its Sole Member

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

MCCLATCHY U.S.A., INC.

/s/ Patrick J. Talamantes

Name:  Patrick J. Talamantes

Title:    Vice President, Assistant Secretary and

             Assistant Treasurer

BANK OF AMERICA, N.A. as Administrative Agent.

/s/ Ken Puro

Name:  Ken Puro

Title: Vice President

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Gary B. Pruitt, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The McClatchy Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 11, 2007	/s/ Gary B. Pruitt
	Gary B. Pruitt      Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Patrick J. Talamantes, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The McClatchy Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 11, 2007	/s/ Patrick J. Talamantes
	Patrick J. Talamantes      Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The McClatchy Company (the "Company") on Form 10-Q for the fiscal period ended April 1, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary B. Pruitt, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2007	/s/ Gary B. Pruitt
	Gary B. Pruitt      Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The McClatchy Company (the "Company") on Form 10-Q for the fiscal period ended April 1, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Patrick J. Talamantes, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2007	/s/ Patrick J. Talamantes
	Patrick J. Talamantes      Chief Financial Officer