US: Good news, bad news: an update on newspaper bankruptcies

Posted by Liz Webber on September 11, 2009 at 3:19 PM

Following a couple of recent developments in the world of the bankruptcy proceedings of US newspaper companies, Philip M. Stone at followthemedia.com has put together a recap of the major publishers currently under Chapter 11 status. So where do the newspapers stand?

The Tribune Company, the first to file for bankruptcy last December, may also be the last to emerge given the ongoing conflict between bondholders on one side and Sam Zell and bank lenders on the other side. While the company has put together a deal with the banks that would relinquish most of its control in exchange for debt forgiveness, the bondholders feel that deal gives them the short end of the stick.

It seems likely that Zell will lose his original investment; the Tribune owner has said that privatizing the company was a "mistake." On the plus side, the company has finally unburdened itself of Wrigley Field and the Chicago Cubs baseball team. Tribune properties the Chicago-Tribune and Baltimore Sun have both used the bankruptcy period to trim staff and put more focus on local content and digital projects.

Elsewhere in Chicago, a group of investors have stepped in with a plan to buy the Sun-Times Media Group. The main obstacle in the deal is $608 million in back taxes and penalties accumulated by former owner Conrad Black; Stone argues if that liability is not waived in the sale the company has small chance of survival.

The Minneapolis Star Tribune seems poised to exit bankruptcy by the end of September, after securing $20 million in cuts from unions and finalizing a deal to forgive most of its debt in return for command of the company. The newspaper has seen a great deal of community support, including an Internet campaign called "Save the Strib."

Much like at the Tribune, proceedings involving Philadelphia Newspapers have seen their fair share of controversy. Current owner Brian Tierney continues to battle with creditors, who have rejected a deal Tierney organized to pay off the company's financial obligations. This will be one to watch as next week a court will decide how to move forward. Meanwhile, Tierney's campaign against the creditors in his newspapers the Inquirer and Daily News to "Keep It Local" has provoked court proceedings of its own.

Finally, the most recent addition to the bankruptcy club is Freedom Communications, a publisher of 30 newspapers including the Orange County Register. A tentative deal has been reached that would give lenders a 58 percent stake in the company and reduce the current owners' stake to 2 percent.

While bankruptcy is not the best position in which a newspaper company could find itself, in the long run it may serve certain benefits by allowing the publication to continue printing while reducing the burden of debt. Overall, the chances seem good for the Sun-Times and the Star Tribune to put bankruptcy behind them in the near future. Hopefully the others will follow suite.

Source: followthemedia.com