Investments In Unconsolidated Companies And Miami Land

12 Months Ended

Dec. 25, 2011

Investments In Unconsolidated Companies And Miami Land [Abstract]

Investments In Unconsolidated Companies And Miami Land

NOTE 2. INVESTMENTS IN UNCONSOLIDATED COMPANIES AND MIAMI LAND  

The following is the Company's ownership interest and investment in unconsolidated companies and joint ventures as of December 25, 2011, and December 26, 2010, (dollars in thousands):

Company	% Ownership Interest		December 25, 2011		December 26, 2010
CareerBuilder, LLC		15.0	$	218,805	$	220,777
Classified Ventures, LLC		25.6		66,886		66,976
HomeFinder, LLC		33.3		1,628		3,061
Seattle Times Company (C-Corporation)		49.5		—		—
Ponderay Newsprint Company (general partnership)		27.0		11,800		13,320
Other		Various		5,774		2,747
			$	304,893	$	306,881

The Company uses the equity method of accounting for a majority of investments.

In fiscal 2011 and 2010, Classified Ventures, LLC paid the Company dividends totaling $17.4 million and $24.3 million, respectively. In fiscal 2011 CareerBuilder, LLC paid the Company a dividend of $7.5 million and other unconsolidated companies paid dividends totaling $6.7 million.

In 2010, a less-than-50% owned company identified goodwill impairment at a reporting unit and as a result, the Company recognized $3.0 million as its portion of the charge related to this write-down in fiscal 2010.

The Company is required to purchase 56,800 metric tons of newsprint of annual production from Ponderay Newsprint Company on a "take-if-tendered" basis at prevailing market prices.

The Company recorded its share of the comprehensive losses from The Seattle Times Company (STC) to the extent that it had a carrying value in its investment in STC. The Company's investment in STC is now zero, and no future income or losses from STC will be recorded until the Company's carrying value on its balance sheet is restored through future earnings by STC.

The Company also incurred expense related to the purchase of products and services provided by these companies, for the uploading and hosting of online advertising on behalf of the Company's newspapers' advertisers.

The following table summarizes expenses incurred for products provided by its less-than 50% owned companies and is recorded in operating expenses in fiscal 2011, 2010 and 2009 (in thousands):

	Career- Builder		Classified Ventures		Ponderay
2011	$	1,230	$	12,552	$	20,414
2010		1,272		11,073		23,048
2009		1,241		10,250		27,413

As of December 25, 2011, and December 26, 2010, the Company had approximately $3.6 million payable to CareerBuilder, LLC and Ponderay Newsprint Company in each year.

The table below presents the summarized financial information for the Company's investments in unconsolidated companies on a combined basis (dollars in thousands):

	2011		2010
Current assets	$	480,050	$	473,765
Noncurrent assets		563,286		603,216
Current liabilities		359,891		298,229
Noncurrent liabilities		228,713		280,184
Equity		454,732		498,568
	2011		2010		2009
Net revenues	$	1,332,394	$	1,195,755	$	1,142,551
Operating income		154,257		102,863		67,442
Net income		171,305		95,855		66,524

On January 31, 2011, the original contract to sell certain land in Miami terminated because the buyer did not consummate the transaction by the closing deadline in the contract. Under the terms of an agreement with the developer, McClatchy is entitled to receive a $7.0 million termination fee and has filed a claim against the developer to secure payment. However the Company has not recorded any amounts in its financial statements related to this fee pending the resolution of this claim. McClatchy previously received approximately $16.5 million in nonrefundable deposits, which it used to repay debt.

On May 27, 2011, the Company sold 14.0 acres of land in Miami, including the building holding the operations of one of its subsidiaries, The Miami Herald Media Company, and an adjacent parking lot for a purchase price of $236.0 million. Approximately 9.4 acres of the Miami land was previously subject to the original contract, which was terminated as discussed above. The Company received cash proceeds of $230.0 million, and an additional $6.0 million is being held in an escrow account, payable to McClatchy once expenses are incurred related to the relocation of its Miami operations.

Under the sale agreement, The Miami Herald Media Company will continue to operate from its existing location through May 2013 rent free. Because the Company will not pay rent for this period, the Company is deemed to have continuing involvement in the property. As a result, under generally accepted accounting principles, the sale is treated as a financing transaction. Accordingly, the Company will continue to depreciate the carrying value of the building in its financial statements until its operations are moved, and no gain or loss has been recognized on the transaction.

As a result of the accounting treatment described above, the Company has recorded a liability (in financing obligations) equal to the sales proceeds received in the second quarter of 2011 ($230.0 million). The Company is required to impute rent based on market rates. The imputed rent will be reflected as interest expense as required by generally accepted accounting principles until the operations are moved. The Company expects to recognize a gain of approximately $10 million at the time the operations are moved and there is no longer continuing involvement with the Miami property.

See Note 11, "Subsequent Event", for a discussion of the Company's plans to relocate its Miami newspaper operations.