Newspaper upheaval seen with filings
With the four owners of 33 US daily newspapers seeking bankruptcy protection in the past 2 1/2 months, even more upheaval looms for an industry clearly gasping for survival.
Analysts doubt those newspaper companies will be able to emerge from Chapter 11 bankruptcy protection without agreeing to lenders' demands for radical changes, such as switching some of their newspapers exclusively to online delivery.
Of course, the newspaper publishers already have been mulling dramatic makeovers, including scrapping their print editions, and it's still not clear whether their creditors can come up with any better ideas. But that probably won't discourage exasperated lenders from trying to shake things up.
Newspaper publishers say the filings won't have any immediate effects on their day-to-day operations, and the 33 affected newspapers likely won't close en masse as part of any reorganization.
Still, the industry's troubles were underscored over the weekend with separate Chapter 11 filings by New Haven (Conn.) Register publisher Journal Register Co. and by the owners of The Philadelphia Inquirer and the Philadelphia Daily News.
They followed a December filing by Tribune Co., whose media stable includes the Los Angeles Times, and the Chicago Tribune, and January's filing by the owners of the Star Tribune in Minneapolis. Other publishers could seek bankruptcy protection as advertising prospects for 2009 remain bleak.
Newspapers across the country have been cutting jobs, trimming widths, and making other cuts to offset reductions in advertising revenue, but for many, those efforts haven't gone far enough to stop the bleeding.
All four publishers turned to the bankruptcy court for help as their debts became unbearable amid a two-year slump in advertising revenue that has been worsening as the recession stifles spending.
The owners of the Philadelphia newspapers, the Minneapolis newspaper, and the Tribune Co. all borrowed heavily to finance buyouts that were completed during the early stages of the advertising downturn.
If those loans didn't have to be repaid, some of the newspapers would be making money.
"Our debt is out of line with current economic realities," Brian Tierney, the Philadelphia newspapers' publisher and chief executive said in a recording posted online yesterday.
Tierney predicted the 180-year-old newspapers will survive the current crisis, suggesting he believes the company will be able to re-negotiate the terms of its loans.
"Years from now, people will look back at this time and say, 'You know what, we got through this challenge,' " he said.
Although the newspapers have been boosting their Internet operations, growth in online ad revenue isn't anywhere near what's needed to offset the reductions in print.
The bleak outlook for newspapers actually could help keep them alive because lenders may be reluctant to press for a liquidation, knowing the publications are unlikely to fetch much money in a forced sale, said Fitch Ratings analyst Mike Simonton.
He said creditors instead "may choose to remove the management team and put in a new team that's more focused on restructuring costs or more talented at it."