The San Jose Mercury News’ owner will seek bankruptcy protection in a major restructuring of the company’s ownership and debt, news agencies reported Friday night.
The Chapter 11 filing will slice holding company Affiliated Media’s debt from $930 million to $165 million. The negotiated transaction will cost executives Dean Singleton and Jody Lodovic ownership control.
Controlling equity in the struggling newspaper group will be issued to 116 creditors, a group led by Bank of America Corp.
Hearst Corp., which owns the San Francisco Chronicle, will see its $400 million investment in MediaNews wiped out in the proceedings, according to the Wall Street Journal. Hearst declined comment, the Journal said.
Singleton said that for advertisers, vendors, employees and subscribers, “it is business as usual,”
Singleton and Lodovic will retain control of the board, despite their diluted ownership, under the reorganization plan.
On August 2, 2006, MediaNews bought the Mercury News from McClatchy Corp. following McClatchy’s purchase of Knight-Ridder’s newspapers. Pummeled by the economy, the Internet and debt service obligations, the Mercury News under Singleton has consolidated shrunk its staff and page counts while consolidating operations and coverage with its other Bay Area publications.
Media News owns most of the daily newspapers in the San Francisco Bay Area and Monterey Bay regions, as well as the Silicon Valley Community Newspapers group of weeklies.
Here’s how the Merc headlined the story of Singleton’s bankruptcy:
“Denver Post owner plans prepackaged Ch. 11 filing”
Which means which of the following?
a) The editor was lazy and simply posted the headline that came across the AP wire.
b) The headline writer was hoping to disguise the fact that Singleton owns the Merc.
c) The headline was written in Bangalore by a MediaNews employee who doesn’t know the Post and Merc are owned by the same company.
Well, I’ve always said that you can’t wrap a fish in a laptop computer and it’s prohibitively expensive to line your bird cage with iPhones.
So, there will likely continue to be a need for newspapers.
So, what is the fundamental problem with the Chronicle and the Merc, could a newspaper or newspapers succeed in the Bay Area, and what would newspapers have to do differently?
I have a theory of how a viable newspaper could succeed in the Bay Area (and in other markets), but before I broadcast my idea to the entire internet, I would rather discreetly run it by someone who has $500 million to invest.
The Mercury was clearly spinning the news and not being honest with its readers, casting it as a “prepackaged” debt restructuring. In fact, this is an ownership control change, effectively a distress sale to creditors. Management is being allowed to retain a 20 percent stake while investors Scudder and Hearst are being wiped out. Lodovic keeps a piece because Singleton is ill.
I notice that the New York Times has started a Bay Area edition. Not 7 days a week so far.
> I notice that the New York Times has started a Bay Area edition. Not 7 days a week so far.
I interpret this as evidence that the New York Times is producing more manure than can be consumed locally, so they have to find a third world backwater on which to dump their excess production.
Can we expect even more full pages of gold buying and chiropractor ads? These dubious ads tell me the Mercury News is getting desperate.
I wouldn’t be surprised at the demise of all the urban-coastal western large-page daily newspapers within ten years, like the LA Times, SF Chronicle, Sacto Bee, or those in San Diego, San Jose, Portland, and Seattle.
They’ve all misbehaved pretty badly over the last two decades, turning former subscribers and readers away with malicious and malignant reporting. The new business model (I predict) will look like our own Metro with the first three or four pages devoted to national and global news reported by national reporters, and the inside pages devoted to regional or municipal news reported locally. Plus ads so the paper will be free.
The age of the rogue large-page newspaper than turns on its own readership is over, we merely await the funeral.
As I see it there are three elements causing the problems in the newspaper business.
One is certainly the elimination of substantive reporting, causing a drop-off in readership. Part of this has been due to the simple elimination of reporters as a cost-cutting measure. But part is also due to the erosion of traditional journalistic independence.
Problem two is reckless financial management of the same kind seen throughout the US. In the 1990s monopoly papers, as found in most US cities, made huge profits that were used to finance leveraged buyouts and other dubious financial schemes that have now collapsed.
Problem three is Craigslist, which has done away with classified ads, a formerly dependable source of cash.
Newspapers in other countries, which have not had the first two problems to deal with nearly as much, have seen lower earnings but are not nearly in as bad shape as in the US.
I’m wondering if the future is going to be the New York Times with a local news section for each West Coast city.
The NYT is disliked by many on both the right and the left, but despite its flaws it bears more resemblance to a real newspaper than any of the others do.
Looks like San Jose followed the Denver media strategy of burying the bankruptcy story and releasing on a Friday night, on a holiday weekend.
Westword wrote here http://bit.ly/8RheK1:
“The Post should have trusted its readers to understand these facts and put them into perspective. Instead, it treated them like children too naive to understand what’s really going on. And that’s as insulting as it is unnecessary—particularly in light of all those other articles floating around that use the word “bankruptcy” up-front instead of burying it.”
Nice way to spend MLK day, ranting on and on against the Merc.
Question: What do you guys do for fun?
Here’s a link to another story:
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1004059782
I warned the Merky Pravda. I wrote their editors and told them their readership would increase if they worked on their bias problem. They dismissed me with a smug “our finances are fine.” They also explained their 9:1 liberal/conservative letters section as “reflecting the demographics of the area.” Other papers handle it by issue, rather than populace.
JC has it right.
Look at two letters written by a favorite of Marshman,Mary Emerson:
Israel is not a Democracy
American troops are dupes of Bush
Lies, bigoted lies, on both occasions.