UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2006

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

The McClatchy Company

(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)

Registrant’s telephone number, including area code: 916-321-1846

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Class A Common Stock, par value $.01 per share	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    x  Yes    ¨  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨  Yes    x  No

Indicate by check mark whether the registrant (1) has 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    ¨  Yes    x  No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Based on the closing price of the Company’s Class A Common Stock on the New York Stock Exchange on June 25, 2006: approximately $2,365,373,000. For purposes of the foregoing calculation only, as required by Form 10-K, the Registrant has included in the shares owned by affiliates, the beneficial ownership of Common Stock of officers and directors of the Registrant and members of their families, and such inclusion shall not be construed as an admission that any such person is an affiliate for any purpose.

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Shares outstanding as of February 23, 2007:

Class A Common Stock	55,865,162 Shares
Class B Common Stock	26,110,397 Shares

DOCUMENTS INCORPORATED BY REFERENCE

Definitive Proxy Statement for the Company’s May 16, 2007 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 (incorporated in Part II and Part III to the extent provided in Items 10, 11, 12, 13 and 14 hereof).

INDEX TO THE McCLATCHY COMPANY

2006 FORM 10-K

Item No.		Page
	PART I
1.	Business	1
1. A.	Risk Factors	7
1. B.	Unresolved Staff Comments	8
2.	Properties	8
3.	Legal Proceedings	8
4.	Submission of Matters to a Vote of Security Holders	8
	PART II
5.	Market for the Registrant’s Common Stock and Related Stockholder Matters and Issuer Purchases of Equity Securities	9
6.	Selected Financial Data	11
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
7A.	Quantitative and Qualitative Disclosures About Market Risk	25
8.	Financial Statements and Supplementary Data	26
9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	52
9A.	Controls and Procedures	52
9B.	Other Information	53
	PART III
10.	Directors and Executive Officers and Corporate Governance	53
11.	Executive Compensation	54
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
13.	Certain Relationships and Related Transactions and Director Independence	54
14.	Principal Accountant Fees and Services	54
	PART IV
15.	Exhibits and Financial Statement Schedules	55

PART I

ITEM 1. BUSINESS

Available Information

The McClatchy Company (“McClatchy” or the “Company”) maintains a website which includes an investor relations page available to all interested parties at www.mcclatchy.com. All filings with the United States Securities and Exchange Commission, along with any amendments thereto, are available free of charge on our website at www.mcclatchy.com/investor/. The Company’s corporate governance guidelines; charters for the following committees of the board of directors: audit, committee on the board, pension and savings plan, compensation and nominating committees; and the Company’s codes of business conduct may also be found on this website. In addition, paper copies of any such filings and corporate governance documents are available free of charge by contacting us at the address listed on the cover page of this filing. The contents of this website are not incorporated into this filing. Further, our reference to the URL for this website is intended to be an inactive textual reference only.

Overview

The Company dates from the California Gold Rush era of 1857. Its three original California newspapers—The Sacramento Bee, The Fresno Bee and The Modesto Bee—were the core of the Company until 1979 when the Company began to diversify geographically outside of California. At that time it purchased two newspapers in the Northwest, the Anchorage Daily News and the Tri-City Herald in Southeastern Washington. In 1986, the Company purchased The (Tacoma) News Tribune. The Company expanded into the Carolinas when it purchased newspapers in South Carolina in 1990 and The News and Observer Publishing Company in North Carolina in 1995. In 1998, the Company expanded into Minnesota with the acquisition of The Star Tribune Company. It expanded further in California with the purchase of the Merced Sun-Star and five related non-daily newspapers (the “Merced Group”) in 2004.

On June 27, 2006, the Company acquired Knight-Ridder, Inc. (the “Acquisition”) and subsequently sold 12 of the daily newspapers acquired in the Acquisition. On December 26, 2006, the Company entered into an agreement to sell the (Minneapolis) Star Tribune newspaper. Accordingly, the 12 former Knight Ridder newspapers which have been sold and the Star Tribune’s results are not included in any of the Company’s discussions of continuing operations in this Report.

The Company is the third largest newspaper company in the United States based on daily circulation (after the sale of the (Minneapolis) Star Tribune newspaper), with 31 daily newspapers and approximately 50 non-dailies located in 29 markets across the country. McClatchy-owned 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, the Company 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, including more than 140 newspaper websites; and 15.0% of CareerBuilder LLC, the nation’s largest online job site. The Company also owns 25.6% of Classified Ventures LLC, a newspaper industry partnership that offers classified websites such as cars.com and apartments.com.

The Company’s newspapers range from large dailies serving metropolitan areas to non-daily newspapers serving small communities. For the fiscal year 2006, the Company had an average paid daily circulation of 2,842,452 and Sunday circulation of 3,523,177.

The Company is committed to a three-pronged strategy:

• First, to operate high-quality newspapers in growth markets.

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• Second, to extend these franchises by supplementing the mass reach of the newspaper with direct marketing and direct mail products so that advertisers can capture broad appeal and targeted audiences with one-stop shopping.

• And finally, to operate the leading local internet business in each of its daily newspaper markets.

Forward-Looking Statements—When used in this Report, the words “believes,” “expects,” “anticipates,” “estimates,” and similar expressions are generally intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including those discussed under the heading “Risk Factors that Could Affect Operating Results” in Part I, Item 1A that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report.

NEWSPAPER OPERATIONS

The operations and results of the (Minneapolis) Star Tribune newspaper are not included in any of the Company’s newspaper operations discussed below due to its pending sale.

Each of the Company’s newspapers is largely autonomous in its business and editorial operations so as to meet most effectively the needs of the communities it serves. Publishers and editors of the newspapers make the day-to-day decisions and, within limits, are responsible for their own budgeting and planning.

Each of the Company’s daily newspapers has the largest circulation of any newspaper serving its particular community, and coupled with a leading local website in each community, reaches a broad audience in each market. The Company believes that its broad reach in each market is of primary importance in attracting advertising, the principal source of revenues for the Company. Advertising revenues were 86% of consolidated net revenues in fiscal 2006 and 2005 and circulation revenues approximated 12% of consolidated net revenues in these years.

The Company’s newspaper business is somewhat seasonal, with peak revenues and profits generally occurring in the second and fourth quarters of each year. The first quarter is historically the weakest quarter for revenues and profits.

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The following table summarizes the circulation of each of the Company’s daily newspapers. These circulation figures are reported on the Company’s fiscal year basis and are not meant to reflect Audit Bureau of Circulations (“ABC”) reported figures. The acquired newspapers were not operated by the Company prior to June 27, 2006.

	2006		2005
Circulation by Newspaper	Daily	Sunday	Daily	Sunday
The Miami Herald * (1)	367,923	464,365	387,481	507,232
The Sacramento Bee	283,561	323,271	293,350	334,234
The Kansas City Star * (2)	260,535	360,221	262,891	368,918
Charlotte Observer *	215,410	269,474	222,126	276,107
(Fort Worth) Star-Telegram *	213,425	309,766	227,408	324,970
The (Raleigh) News & Observer	171,971	211,501	171,794	211,490
The Fresno Bee	155,697	180,288	160,769	186,454
The (Tacoma) News Tribune	118,479	132,986	125,057	139,738
Lexington Herald-Leader *	112,039	138,116	114,711	144,347
The (Columbia) State *	107,163	139,476	113,878	142,345
The Wichita Eagle *	88,505	138,880	90,511	146,707
The Modesto Bee	82,064	87,073	83,859	88,944
Anchorage Daily News	65,997	75,271	67,712	78,111
Idaho Statesman *	64,825	85,260	64,895	85,924
The (Macon) Telegraph *	58,000	74,299	60,563	79,540
Belleville News-Democrat *	52,966	65,646	54,086	64,540
The (Myrtle Beach) Sun News *	50,042	60,733	50,634	60,859
The Bradenton Herald *	45,419	50,391	45,977	51,052
(Biloxi) Sun Herald *	44,325	50,076	41,530	48,866
(Columbus) Ledger-Enquirer *	43,429	51,756	44,855	56,035
Tri-City Herald	41,484	44,036	41,956	44,843
The (San Luis Obispo) Tribune *	38,233	43,446	39,838	44,517
The Olympian *	33,268	40,189	33,572	41,462
The (Rock Hill) Herald	30,961	32,568	31,575	33,021
(Pennsylvania) Centre Daily Times *	24,656	32,288	25,358	33,514
The Bellingham Herald *	23,146	29,667	23,485	29,981
The Island Packet	20,164	20,806	19,854	20,509
Merced Sun-Star	16,034	—	16,435	—
The Beaufort Gazette	12,729	11,329	12,537	11,326
El Nuevo Herald * (1)	—	—	—	—
The (Kansas) Olathe News * (2)	—	—	—	—

* Acquired on June 27, 2006 in the Acquisition.

(1) El Nuevo Herald circulation figures are included in The Miami Herald circulation figures.

(2) The (Kansas) Olathe News circulation figures are included in The Kansas City Star circulation figures.

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The following table summarizes total revenues for each of the Company’s daily newspapers. No revenues were recorded by the Company for the acquired newspapers prior to the Acquisition and the pro forma information (as if the Company operated all 31 newspapers for both years) is provided to allow the reader to better understand the relative size of each newspaper. See Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the Company’s revenue trends.

Total Revenues by Newspaper (dollars in thousands)	52-weeks Pro Forma 2006		Pro Forma 2005
The Miami Herald * (1)	$	345,298	$	346,067
The Sacramento Bee		254,741		259,741
(Fort Worth) Star-Telegram *		236,777		241,428
The Kansas City Star * (2)		227,364		237,595
Charlotte Observer *		176,246		185,245
The (Raleigh) News & Observer		136,138		136,843
The Fresno Bee		111,825		105,440
The (Columbia) State *		87,825		85,414
Lexington Herald-Leader *		80,218		82,279
The (Tacoma) News Tribune		79,592		79,712
The Wichita Eagle *		66,393		67,676
The Modesto Bee		65,943		63,861
Anchorage Daily News		60,622		59,241
Idaho Statesman *		58,099		55,405
The (Myrtle Beach) Sun News *		45,203		41,052
The Bradenton Herald *		38,051		35,875
The (Macon) Telegraph *		36,731		39,267
(Biloxi) Sun Herald *		36,320		33,524
(Columbus) Ledger-Enquirer *		34,330		34,803
Belleville News-Democrat *		31,615		34,203
The (San Luis Obispo) Tribune *		30,893		30,748
The Olympian *		27,046		26,039
Tri-City Herald		26,235		26,376
The Bellingham Herald *		19,975		19,316
The Island Packet		19,307		18,082
(Pennsylvania) Centre Daily Times *		18,612		18,108
The (Rock Hill) Herald		14,009		13,984
Merced Sun-Star		12,952		11,514
The Beaufort Gazette		7,084		6,765
El Nuevo Herald * (1)		—		—
The (Kansas) Olathe News * (2)		—		—

* Acquired on June 27, 2006 in the Acquisition.

(1) El Nuevo Herald total revenues are included in The Miami Herald total revenues.

(2) The (Kansas) Olathe News total revenues are included in The Kansas City Star total revenues.

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The Company’s newspapers supplement newspaper publishing operations with an array of niche products and direct marketing initiatives, including direct mail. While the direct marketing operations are financially successful in their own right, they also help retain advertising in the newspapers. The newspapers also operate leading local websites in each daily newspaper market, offering users information, comprehensive news, advertising, e-commerce and other services. Online advertising has become one of the Company’s fastest growing revenue sources. The Company’s websites had approximately 2.3 billion page views in fiscal 2006. Together with the mass reach of its in-paper advertising, these lines of business help each of the Company’s newspapers maintain its position as a leading media outlet in each of its daily newspaper markets.

Other Operations

The Company’s rapidly expanding internet activities have produced robust local websites in each of its daily newspaper markets. These efforts are supported by McClatchy Interactive, the Company’s interactive media operation that provides newspapers with content, publishing tools, hosting services and software development. The primary mission of McClatchy Interactive is to be a technology and content partner to the Company’s newspaper internet sites. The Company’s internet operations are included in the operations of each of its newspapers, and, internet revenues (primarily advertising) and expenses are reported in the newspaper’s results. McClatchy Interactive also provides services to third party newspapers. Revenue from McClatchy Interactive is reported in “Other Revenues” in the Consolidated Statement of Income.

The Company acquired Knight Ridder Digital (“KRD”), Knight Ridder’s interactive media operation, in the Acquisition. The Company also owns Real Cities, the largest national advertising network of local news websites, including more than 140 newspaper websites. Real Cities also acts as a broker of online advertising, primarily in the national category. The Company continues to integrate the capabilities of KRD and its systems, where appropriate, with those provided by McClatchy Interactive. As it moves to one internet platform, the Company will marry the best of McClatchy Interactive and KRD to support and grow its newspaper and stand alone internet operations.

The Company owns 15.0% of Career Builder, LLC (“Career Builder”), the nation’s largest online job site, and 15.0% of ShopLocal, LLC (“ShopLocal”), a provider of web-based marketing solutions for national and local retailers. The Company also owns a 15.0% interest in TKG Internet Holdings, which owns 75.0% of Topix.net (“Topix”), for an aggregate ownership of 11.3%.

The Company owns 25.6% of Classified Ventures, LLC (“Classified Ventures”), a newspaper industry partnership that offers classified websites such as cars.com and apartments.com.

McClatchy Tribune Information Service (“MCT”), a joint venture of McClatchy and Tribune Company (“Tribune”), offers stories, graphics, illustrations, photos and paginated pages for print publisher and web-ready content for online publishers. All the Company’s newspapers, Washington D.C. staff and foreign bureaus produce MCT editorial material. Content is also supplied by Tribune properties and a number of other newspapers.

The Company owns 49.5% of the voting stock and 70.6% of the nonvoting stock of the Seattle Times Company. The Seattle Times Company owns The Seattle Times newspaper, and weekly newspapers in Puget Sound and daily newspapers located in Walla Walla and Yakima, Washington and in Portland, Maine.

In addition, the Company owns a 27.0% interest in Ponderay Newsprint Company (“Ponderay”), a general partnership, which owns and operates a newsprint mill in the State of Washington. The Company is required to purchase 56,800 metric tons of newsprint annually from Ponderay on a “take-if-tendered” basis at prevailing market prices, until Ponderay’s debt is repaid. The Company owns a 33.3% interest in SP Newsprint Co. (“SP”). SP is a newsprint manufacturing company in North America. The Company has an annual purchase commitment for 86,000 metric tons of newsprint from SP.

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The Company primarily uses the equity method of accounting for its investments in unconsolidated companies.

Raw Materials

During fiscal 2006, the Company consumed approximately 298,000 metric tons of newsprint compared to 156,000 metric tons in fiscal 2005 for its continuing operations. The increase in tons consumed was primarily due to the additional newspapers added in the Acquisition, offset partially by the conversion to lighter weight newsprint at certain existing operations. The Company currently obtains its supply of newsprint from a number of suppliers primarily under long-term contracts.

Newsprint expense accounted for 14.9% of total operating expenses in fiscal 2006 and in 2005. Consequently, the Company’s earnings are sensitive to changes in newsprint prices. A significant increase in newsprint prices would increase the Company’s operating expenses. However, because the Company has ownership interests in newsprint producers (Ponderay and SP), an increase in newsprint prices, while negatively affecting operating expenses, would increase its share of earnings from these investments. Ponderay and SP could also be impacted by higher energy costs and other factors that would affect their results. Management believes its newsprint sources of supply under existing arrangements are adequate for its anticipated current needs. The Company estimates that it will use approximately 400,000 metric tons of newsprint in fiscal 2007, depending on the level of print advertising, circulation volumes and other business considerations.

The Company is required to purchase 142,800 metric tons of newsprint annually from Ponderay and SP at prevailing market prices. See the discussion above; Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and the financial statements and accompanying notes for further discussion of the impact of these investments on the Company’s business.

Competition

The Company’s newspapers, direct marketing programs and internet sites compete for advertising revenues and readers’ time with television, radio, other internet sites, direct mail companies, free shoppers, suburban neighborhood and national newspapers and other publications, and billboard companies, among others. In some of its markets, the Company’s newspapers also compete with other newspapers published in nearby cities and towns. Competition for advertising is generally based upon circulation levels, readership demographics, price, internet usage and advertiser results, while competition for circulation and readership is generally based upon the content, journalistic quality, service and the price of the newspaper.

The Company’s major daily newspapers lead their direct local newspaper competitors in both advertising linage and general circulation and readership in their respective markets, and its internet sites are generally the leading local sites in each of the Company’s major daily newspaper markets, based upon research conducted by the Company and various independent sources. Nonetheless, the Company has experienced a greater shift of advertising in the classified categories to online advertising and faces greater competition, particularly in the areas of employment, automotive and real estate advertising, by online competitors.

Employees—Labor

As of December 31, 2006, the Company had 16,791 full and part-time employees (equating to 15,250 full-time equivalent employees), of whom approximately 5.5% were represented by unions. Most of the Company’s union-represented employees are currently working under labor agreements expiring in various years. Twenty-one of the Company’s 31 daily papers have no unions.

While the Company’s newspapers have not had a strike for decades and do not currently anticipate a strike occurring, the Company cannot preclude the possibility that a strike may occur at one or more of its newspapers when future negotiations occur. The Company believes that, in the event of a newspaper strike, it would be able

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to continue to publish and deliver to subscribers, a capability which is critical to retaining revenues from advertising and circulation, although there can be no assurance of this.

ITEM 1A. RISK FACTORS THAT COULD AFFECT OPERATING RESULTS

Forward-Looking Information:

This report on Form 10-K 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, successful 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.

Additional Information Regarding Certain Risks:

The Company’s primary source of revenue is advertising, followed by circulation revenues. In recent years, the advertising industry generally has experienced a secular shift toward internet advertising and away from other traditional media. In addition, the Company’s circulation has declined over the last two years, reflecting general trends in the newspaper industry including consumer migration toward the internet and other media for news and information. The Company has attempted to take advantage of the growth of online media and advertising by operating local internet sites in each of its daily newspaper markets, but faces increasing competition from other online sources for both advertising and circulation revenues. This increased competition has had and may continue to have an adverse effect on the Company’s business and financial results, including negatively impacting revenues and margins.

Newsprint is the major component of our cost of raw materials. Newsprint accounted for 14.9% of McClatchy’s operating expenses for fiscal 2006. Accordingly, our earnings are sensitive to changes in newsprint prices. We have not attempted to hedge fluctuations in the normal purchases of newsprint or enter into contracts with embedded derivatives for the purchase of newsprint. If the price of newsprint increases materially, our operating results could be adversely affected. If our newsprint suppliers experience labor unrest, transportation difficulties or other supply disruptions, our ability to produce and deliver newspapers could be impaired and/or the cost of the newsprint could increase, both of which would negatively affect our operating results.

If McClatchy experiences labor unrest, our ability to produce and deliver newspapers could be impaired. The results of future labor negotiations could harm our operating results. Our newspapers have not endured a

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labor strike for decades. However, we cannot ensure that a strike will not occur at one or more of our newspapers in the future. As of December 31, 2006, approximately 5.5% of our full-time and part-time employees were represented by unions. Most of the Company’s union-represented employees are currently working under labor agreements, which expire at various times. McClatchy faces collective bargaining upon the expirations of these labor agreements. Even if our newspapers do not suffer a labor strike, the Company’s operating results could be harmed if the results of labor negotiations restrict our ability to maximize the efficiency of our newspaper operations.

The Company continues to evaluate its business and make strategic investments in digital ventures, either alone or with partners, to further its growth in its online businesses. There can be no assurances that these investments or partnerships will result in growth in advertising or will produce equity income in future years.

The Company expects to realize cost savings of approximately $70.0 million in the first year of ownership from the Acquisition, primarily by reducing redundancy in staffing for corporate and digital functions, and to a lesser extent, savings at the individual newspaper level through combined purchasing of products and capital expenditures. There is no assurance that these cost savings will be realized in the amount or timing that management has projected.

As of December 31, 2006, the Company had approximately $3.3 billion in total consolidated debt outstanding. This debt could increase the Company’s vulnerability to general adverse economic and industry conditions. Debt service costs are subject to interest rate changes as well as any changes in the Company’s credit ratings. Negative changes in credit ratings could increase the level of debt service costs and also affect the Company’s future ability to refinance certain maturing debt, or affect the ultimate structure of such refinancing. The Company expects to use the sale of the (Minneapolis) Star Tribune to reduce debt in the first quarter of fiscal 2007, and expects that over the next several years its primary use of cash flow from operations will be to reduce debt.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The corporate headquarters of the Company are located at 2100 “Q” Street, Sacramento, California. At December 31, 2006 the Company had newspaper production facilities in 29 markets situated in 15 states. The Company’s facilities vary in size and in total occupy about 7.8 million square feet. Approximately 1.5 million of the total square footage is leased from others. The Company owns substantially all of its production equipment, although certain office equipment is leased.

The Company maintains its properties in good condition and believes that its current facilities are adequate to meet the present needs of its newspapers.

ITEM 3. LEGAL PROCEEDINGS

The Company becomes involved from time to time in claims and lawsuits incidental to the ordinary course of its business, including such matters as libel, invasion of privacy, intellectual property infringement, wrongful termination actions, and complaints alleging discrimination. In addition, the Company is involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental and other claims. Historically, such claims and proceedings have not had a material adverse effect upon the Company’s consolidated results of operations or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information:

The Company’s Class A Common Stock is listed on the New York Stock Exchange (NYSE symbol—MNI). A small amount of Class A Stock is also traded on other exchanges. The Company’s Class B Stock is not publicly traded. The following table lists per share dividends paid on both classes of Common Stock and the prices of the Company’s Class A Common Stock as reported by these exchanges for fiscal 2006 and 2005:

	HIGH		LOW		DIVIDENDS
Year Ended December 31, 2006:
First quarter	$	59.64	$	47.48	$	0.18
Second quarter	$	50.64	$	38.80	$	0.18
Third quarter	$	43.80	$	38.96	$	0.18
Fourth quarter	$	44.95	$	39.40	$	0.18
Year Ended December 25, 2005:
First quarter	$	76.05	$	69.62	$	0.13
Second quarter	$	75.85	$	65.28	$	0.18
Third quarter	$	68.40	$	61.38	$	0.18
Fourth quarter	$	66.46	$	56.30	$	0.18

Holders:

The number of record holders of Class A and Class B Common Stock at February 23, 2007 was 7,523 and 21, respectively.

Dividends:

The payment and amount of future dividends remain within the discretion of the Board of Directors and will depend upon the Company’s future earnings, financial condition and requirements, and other factors considered relevant by the Board.

Equity Compensation Plan Information:

Information regarding McClatchy’s equity compensation plans, including both shareholder approved plans and non-shareholder approved plans, is set forth in the section entitled “Securities Authorized for Issuance Under Equity Compensation Plans” in the definitive Proxy Statement for the Company’s 2007 Annual Meeting of Shareholders, which information is incorporated into Item 12 herein by reference.

Sales of Unregistered Securities:

None.