Good riddance Gary Pruitt?

As he departs for the East Coast, The McClatchy Co. CEO Gary Pruitt gets credit for steering his company through financial disaster.

Wait, during his tenure Gary Pruitt steered The McClatchy Co. into financial disaster. Wait …

Either way, Pruitt is out of here as of last week, resigning his post as boy genius at McClatchy (The Sacramento Bee’s parent company, headquartered in Midtown Sacramento) and heading to New York to lead the Associated Press news service, for better or worse. For both organizations.

The Bee’s own business writer Dale Kasler wrote an evenhanded account of Pruitt’s tenure, saying the man will “will be forever judged by one transaction: the $4.4 billion takeover of Knight Ridder Inc. in 2006.”

That purchase made McClatchy, briefly, the second largest newspaper chain in the country (it’s now the third) and was variously described in the trade press as being like “a dolphin swallowing a small whale,” or a “python swallowing an elephant” or, (in SN&R) “like a cat eating a watermelon.”

Who could have known that Pruitt’s big deal would cause such heartburn later on?

The company took on $2.5 billion in debt, just as the bottom was falling out of the newspaper industry (and a couple of years later, the whole economy). In 2005, the year before the acquisition, McClatchy stock hit a high of $75.05 per share. Today, it’s less than $3.

For years, McClatchy papers had a no-layoff policy, preferring to reduce costs through attrition when necessary. That policy was dramatically reversed with several rounds of layoffs throughout the chain. Just at the Sacramento paper, the Bee went through seven downsizings, losing about 400 people, in the last four years.

Today, the company’s debt remains at about $1.6 billion. But McClatchy revenue has gone from plummeting to merely sliding, and there haven’t been layoffs for many months.

Revenue is down for newspapers everywhere, and Pruitt certainly didn’t cause the turmoil that the industry finds itself in today. But Bee writer Ed Fletcher wrote on the website of the Sacramento Bee newspaper guild (the paper’s union) that Pruitt deserved his chunk of the blame.

“Gary Pruitt quickly went from being the Boy Wonder of newspaper industry to a subject of scorn and derision,” Fletcher wrote.

“As others saw trouble ahead for the newspaper industry, he doubled down thinking he could outsmart the market by jettisoning less profitable papers. That bet proved to be wrong.”

Financial news blog Wall Street 24/7 put it less charitably, declaring, “AP Hires Worst CEO in Newspaper Industry.”

The McClatchy board thought more highly of Pruitt, and rewarded him generously. He was consistently ranked by the Sacramento Business Journal as the best compensated CEO in Sacramento—racking up salaries and bonuses many, many multiples beyond the pay of the average worker Bee. According to the Business Journal, in 2010 Pruitt was paid $2.97 million. (Cosmo Garvin)