Submitted by Jen Jones on Wed, 01/20/2010 - 11:34am
The traditional media industry is hurting. Specifically, hard news print vehicles, newspapers mainly, have been decimated by the rise of the Internet and a rapid decline in advertiser spending as a result of both new media opportunities and of course, the recession.
The most recent indication of America's tilting favoritism toward all things online, the publishing parent of newspapers like the Denver Post and San Jose Mercury News is expected to petition for bankruptcy in the next few days. MediaNews Group, Inc. isn't saying much about the details but those "in the know" believe it could happen as soon as Friday.
As of today, it is suspected the company is working on ways to operate the restructured organization. It is widely believed that William Dean Singleton, the top executive, will retain control along with current president Joseph Lodovic IV.
The idea that current management will remain in control is surprising to many in the media industry for a couple of reasons. Primarily, it is rare for a corporate bankruptcy to not include massive management shifts. Additionally, Singleton is considered a member of newspaper industry's "old guard."
Because so much of traditional print media is being outpaced by the speed of online news and the flexibility of Web-based advertising, most expect a bankruptcy to spark a refreshed approach toward embracing contemporary industry trends, especially when close to 80 percent of the company's revenue stems from ads being placed within the pages of its newspapers.
However, Singleton has a plan to tighten the operation through an aggressive consolidation effort that he hopes will lead to a more streamlined company that can better sustain profits and manage debts. More than likely, he will work to bond newspapers in Minnesota's Twin Cities and in Southern California, where there is no shortage of regional print news outlets. And because only the holding company is declaring bankruptcy, the financial situation for many of its newspapers should remain stable.
The company also expects that the majority of its newspapers' employees will be unaffected. However, consolidations cannot succeed without the elimination of redundant positions. For example, how many high school sports copy editors does one newspaper need? Or press technicians?
Currently, MediaNews owns 54 daily newspapers throughout the country and also has stakes in broadcast media outlets.
MediaNews' bankruptcy will be yet another example of a corporate pre-packaged bankruptcy, a method of bankruptcy that entails substantial pre-planning and settlement talks with creditors before officially presenting a plan to the court. The idea is to enter and exit bankruptcy in very little time, as the pre-packaging enables the court to merely approve, in some cases, only the most minor legal facets of the bankruptcy.
Reports are showing that the company's plan involves debt for equity swaps, which probably helps explain why Singleton will remain in charge. Creditors that will soon own parts of the company instead of its debt are going to be more confident with a seasoned leader than new blood. The company is expected to reduce its $930 million debt to a much more manageable $165 million.
One of the company's largest investors, the most recognized newspaper company in the world, Hearst Corp., will lose close to $400 million as result of the bankruptcy. MediaNews is said to be working closely with Hearst on the situation.
There is no telling what lies ahead for the newspaper industry. However, there are not a whole lot of reasons to be optimistic, as MediaNews' filing is one of seven that has occurred within the last 54 weeks. The Los Angeles Times and Chicago Tribune are notable examples.
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