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The General Counsel for McClatchy is All About the News
The McClatchy Co. was born as the publisher of The Sacramento Bee in 1857. Today, it is the third-largest newspaper publisher in the country, with 30 daily newspapers in 15 states. Since the purchase of Knight Ridder in 2006, McClatchy has shed properties and redoubled its efforts to figure out life as a communications giant in an increasingly post-print world. The company which still has members of the founding family on the board has navigated the turmoil in the media industry by whittling down merger debt in part through the sale of real estate and accelerated its investments and focus on digital news and advertising products and services. McClatchy is profitable, reporting net income of $24.8 million for the first six months of 2012, compared to $3 million in the same period a year ago.
THE QUICK BIO
Karole Morgan-Prager has spent most of her career close to a newsroom. The vice president of corporate development, general counsel and corporate secretary of The McClatchy Co. earned her B.A. in journalism and political science in 1984 from the University of Nevada at Reno where she did a reporting internship at the Reno Gazette-Journal. With an early plan to become a First Amendment attorney, she graduated from the UCLA School of Law in 1987. But she never saw herself as a litigator, so after graduation, she joined Morrison & Foerster as an associate in corporate law. "I realized that litigation really wasn't my cup of tea. Transactional work was more in keeping with my personality, but MoFo was really good about junior associates," she said, adding that she had a chance to do real estate and corporate finance work before landing in the securities and M&A practice skill sets she uses in her work today.
She left the firm in 1993 to join former Los Angeles Times publisher Times Mirror Co. as associate general counsel reporting to former MoFo partner Thomas Unterman. "It was a great opportunity to get back into newspapers," she said, adding that she was lead in-house attorney on the 1995 sale of Times Mirror's cable operations to Cox Communications for $2.3 billion. She was recruited by McClatchy as its GC later that year. Morgan-Prager said the timing of her move to McClatchy was right she was ready to step up to a GC position and the Sacramento location put her young family closer to relatives in Reno.
Morgan-Prager acknowledges that the past 17 years have been a study in extremes in the communications business. "In the mid-1990s, a lot was happening around the Internet how to figure it out, how to deal with it, how it was going to change our business." She began working on web ventures almost immediately on the revenue side, and today sits on the boards of employment advertising giant CareerBuilder (jointly owned by McClatchy, the Tribune Co. and Gannett Co.), Classified Ventures (which operates cars.com and apartments.com) and The Seattle Times Co.
When she joined McClatchy, the company was on a path of selective acquisition outside its California home for family-owned media operations. She supervised the $1.4 billion acquisition of the Minneapolis Star Tribune in 1998 and the $40.5 million purchase of the Merced Sun-Star in 2004. But the biggest deal of all came in 2006 with the $6.5 billion purchase of Knight Ridder, which propelled the company to its current ranking. The deal itself was complex because it involved the immediate sales of 12 properties that McClatchy had determined not to keep. "The deal had a little bit of everything," said Morgan-Prager. "It was a large, complex merger, we disposed of some major properties for over $2 billion to buyers without ever having operated those properties which adds a lot of complexity and interesting issues and we did a major bank financing." That activity began in fall of 2005 and closed in June of 2006.
Morgan-Prager acknowledges those were the last heady days before the bottom dropped out of the national economy and the media sector in particular. With the Great Recession turning into a depression for the media industry, "we're continuing to manage successfully through the downturn." She presided over a major debt refinancing in 2010 and adds that digital investments are paying off online advertising now accounts for more than 20 percent of company revenues and properties in growth markets should benefit as the economy rebounds. She'll be the face of that activity, having been named head of McClatchy's corporate development efforts and the company's real estate and internal audit operations in May. "I love being in the middle of it," she says. "We're figuring out where the next product is coming from. Mobile is a big deal. Smartphones and tablets are the next frontier. The traffic is there, but nobody has cracked the code on revenue. That's our challenge."
Despite the uncertainty, Morgan-Prager takes comfort in being part of a fifth-generation media company. "The family's still on the board and they're dedicated to journalism. That's a very special thing. This company has been around since before the electric light bulb, radio and TV. We fully expect to weather the storm."
INSIDE AND OUTSIDE COUNSEL
Morgan-Prager leads a team of five attorneys and two assistants. "I like to assign by function," she says, adding that her deputies have specific territories including newsroom/First Amendment work, operations, intellectual property, employment, real estate and advertising.
Now, with her new responsibilities, the main challenges for Morgan-Prager include "finding efficiencies and realizing the value in the company's noncore asset portfolio" and seeking out investment opportunities in the digital arena. "It's been a little while, but we're looking to gear up in making investments in digital companies. There are signals that the economy is strengthening. We continue to look for efficiencies so we can drive our business smartly."
Outside counsel is led by longtime firm Wilson Sonsini Goodrich & Rosati and partner Katharine Martin. The firm advised McClatchy on the Knight Ridder acquisition and the deals that stemmed from it. Hogan Lovells in Washington, D.C., and partner Margaret de Lisser handle employee benefits and executive compensation matters. "We value long-time relationships. I like working with attorneys who have an appreciation for our unique mission as a corporation and a news organization," Morgan-Prager said. "I'm looking for people with good common business sense."
Morgan-Prager has two sons in college and a daughter who's in the sixth grade. "I love the time I spend with my kids and exercise and read a book when I can." She's also participated in five triathlons. "I enjoy training with my friends a group of women who like to run and swim and ride bikes. When I relax, I try to do something healthy."
This article originally appeared in The Recorder.