Tuesday, February 24, 2009
Newspapers' Chapter 11 filings promise shakeups
By Michael Liedtke and Andrew Vanacore • ASSOCIATED PRESS • February 24, 2009 With the four owners of 33 U.S. daily newspapers seeking bankruptcy protection in the past 2½ 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 newspapers exclusively to online delivery. Of course, the publishers already have been weighing 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. "These first few bankruptcy filings are like the canaries in the coal mine," said John Penn, a bankruptcy lawyer in Fort Worth, Texas. "It's almost a certainty that they are going to have to change their business models because the old ones aren't working." Ad prospects are bleak Newspaper publishers say the filings won't have any immediate effects on their day-to-day operations, and the 33 affected newspapers probably 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 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 in the coming months, too, as advertising prospects for 2009 remain bleak. "There's a fairly high degree of uncertainty," said Rick Edmonds, a media analyst with the Poynter Institute. He said the filings put "the future in the hands of the courts. Creditors will have a fair amount to say." Newspapers cut costs Newspapers nationwide have been cutting jobs, trimming newspaper widths and making other cost cuts to help offset reductions in advertising revenue, but for many, those efforts haven't stopped the bleeding. Although 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. In the third quarter of last year, print advertising in U.S. newspapers totaled $8.2 billion while the online operations fetched $750 million. "They have to hope some of their revenue comes back before their businesses just break through ice," Benchmark Co. analyst Edward Atorino said. "Some of these companies are looking at the end of the world here."
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