McClatchy: Defending or Defensive?

In direct contradiction to its intended affect, the public endorsement of a CEO by the board is usually not a good sign. In fact, Jack Flack once called it the "kiss of death" that comes when a CEO plummets down to second level ("On the Ropes") of the Five Levels of CEO Media Hell, usually ensuring a quick slide down to Level 1 ("Dead Man Walking"), and then out the door.

So what's the significance of the led of Steve Stecklow's WSJ A1 story, which tells us the family-controlled board of McClatchy has expressed explicit support of CEO Gary Pruitt?

Dunno. Jack Flack would have pegged Pruitt up at Level 5 ("The Hero Stumbles"), given that McClatchy had earned a reputation as an over-achiever among newspaper companies during the first decade of Pruitt's command. McClatchy's superior performance ended only when the company happily gobbled down Knight Ridder at exactly the wrong time. And yes, since that mid-2006 deal, McClatchy stock has severely underperformed its struggling peers.

But even so, why the public defense of Pruitt? Jack Flack offers three explanations.

1. Speculation further damages the stock. The family has patience, but McClatchy's suddenly shrunken market cap hamstrings its ability to do additional deals any time soon. Speculation generated by stories such as Louis Hau's Forbes' piece certainly doesn't help the stock, particularly when the outside world is not exactly over-flowing with CEOs who have the proven ability to lead a newspaper company into the 21st Century.

2. The family genuinely doesn't like seeing their boy kicked. The media-world schadenfreude is strong with the pearly-toothed Pruitt, with much of the coverage unable to resist labeling the charismatic newspaper zealot as a former "golden boy." One cranky pundit even plunked Pruitt on his list of "10 CEOs that Need to Leave in 2008," helpfully suggesting Pruitt at least "bring in an outside digital media superstar."

3. The reporter framed it. The reporter requested interviews from board members Kevin McClatchy and Larry Jinks, who obliged to be supportive. Do you support Gary? You bet. There's the easy led, which distinguishes the piece from every other newspaper-biz-in-trouble report.

Nothing is more high-profile in the world of business news than an A1 WSJ story, and Stecklow's piece has undoubtedly intensified the chatter. And while the descent can be swift down the five levels, this boss still likely stands on solid ground. Pruitt benefits from the fact that McClatchy is indeed tightly held, and thus not nearly as susceptible to activist investors who enjoy collecting scalps of plodding incumbents. And that means that unless Pruitt somehow damages the board relationships he's carefully built, the still-only-50-year-old CEO will oversee another chapter or two of the McClatchy saga.

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