Former Mercury News Exec Foresees More Job Eliminations

By Lou Alexander

Lou Alexander was the advertising manager of the Mercury News for 20 years, and retired in 2003. — Editor

A couple of people have asked me for my take on the announcement that the parent company of MediaNews has reached a deal with its senior creditors to carry out a pre-packaged Chapter 11 bankruptcy as part of a financial restructuring.
According to a press release distributed to the media and employee late Friday afternoon the company’s creditors have agreed to reduce the company’s debt from $930 million to $165 million in exchange for stock in the company.  In exchange for the debt reduction the creditors will own 80 percent of the stock of the company.  In what is being seen is some quarters as a face saving action for Chief Executive Officer William Dean Singleton, he and MediaNews President Jody Lodovic will own the other 20 percent of the business and control the company’s board of directors.

I doubt this bankruptcy will make much difference in the day-to-day work lives of people who work at the SJMN and other MediaNews newspapers, at least for the moment.  The company’s material says there will be no layoffs as a result of this action. And the same guys will be in charge.
And this is the type of high-level, esoteric financial dealing that tends not to be felt at the frontline.
But I do think that over time the people who work at the individual newspapers around the company will find their lives changed. If for no other reason Singleton and his minions have been busy for a while working out this deal.  And before that they were hustling to handle to payments on all of this debt. With their plates cleared up they will be able to focus much more intently on the daily operation of the company.
Also, the bankruptcy is seen as likely to  lead to more consolidation of newspapers and functions. This will mean  jobs will be eliminated and the people who are left will be looking at changes in their jobs.
A couple of people have asked me why anyone would accept stock in a company that is part of an industry struggling to stay afloat. I am operating way above my pay grade here but I suspect the willingness of the creditors to make a deal like this has to do with their balance sheets.
If MediaNews went bankrupt at this time the creditors would have to write down the debts right now.  If they accept the stock they can pretend that it has value and hold on to it for a while, which will allow them to write it off the books sometime when business is better.
At this level of hundreds of millions the Generally Accepted Accounting Practices are pretty alien compared to how we mere mortals balance our checkbooks.
I do think it is interesting that MediaNews made these announcements late in the afternoon on the Friday before a three day weekend. I suspect two things drove the timing. First, pulling a deal like this together does take time.  Second, I have found very little commentary around the internet about this pending filing.  I think that is because the announcement was made after much of the financial community headed off the MLK holiday.
One thing I did find on line this afternoon is an announcement from The Newspaper Guild that some Guild people from around the country are meeting this weekend in San Francisco this weekend to work on a plan “to ensure employees are represented in the process.”   The Guild obviously has an obligation to look out for the interests of it members.  Dean Singleton’s antipathy to the unions is well-known and I cannot imagine that The Guild opinion will have much impact.


  1. A letter was sent to Singleton from employees, community
    leaders,ex editors, demanding the resignation of Barbara
    Marshman outlining past employee complaints of abusive conduct.

  2. I pay for my news.  I cancelled by Wall Street Journal subscription 2 years ago, so that I could support the Merc.  I intend to pay for the NYtimes as well once it has a pay-plan.

    Search engines should pay for any news content their users read.  I don’t think the news reporters would be in so much trouble if the search engines like Google paid for half of the news that they pirate for their customers.  It is ironic that Google would argue for freedom of speech on the internet in China, then starve the very people who can speak truth to power in the US.

    • Google search links provide links to articles on the original web pages belonging to newspapers. Those pages contain advertising which is sold by the newspaper. The result of Google linking to a page is to increase readership, which should enable the newspaper to increase its on-line advertising rates.

      However the advertising market is not willing to pay as much for on-line ads as for print ads. For whatever reason that causes this situation, it is capitalism in operation.

      If newspapers don’t want Google to index their websites, it is a trivial technical modification to the site to disable indexing.

    • I agree with Mr. Nguyen.  I paid for my Merc and NY Times, but when times got lean, I switched to online reading for the Merc except for Sunday when I still get the full paper.  So I feel like I’m paying my tithe.  I like the NY Times, but cancelled the delivered print copy as a found I was rarely reading it, but would be interested in a Kindle or other kind of subscription.  The content is worth it.

      For the Merc, even if you don’t like the opinions or people, its the paper of record for our community and to boycott it is like covering your ears during a debate everytime someone you don’t like talks.  Your out of it, and unworthy to continue participating in civic discussions.

  3. As I recall when Singleton took over the Merc he also told employees there would be no layoffs. We all know how that worked out.

    Most folks in Silicon Valley know that when the employer says “there will be no layoffs” it’s time to update resumes, pronto!

  4. The SJ Mercury News should start its next cost-cutting program with putting the boring Scot Herhold and equally insipid Patty Fisher into retirement. What value they create is beyond me.

    • Sorry but the confidentiality agreement signed two weeks ago prevents further comment. One recently retired fellow offered to go through all the folds to get at the papers but his colleagues told him there no openings or loopholes.  Closed completely to the guys,

    • That’s the San Jose spirit! (sarcasm).  And what exactly does bringing our National Pastime to San Jose have to do with the Merc filing for bankruptcy anyway?!

  5. It isn’t if, but when and how many layoffs the Mercury will have adding to 2/3rds Mercury staff reductions in last 5 years

    MediaNews will soon consolidate their Northern California newspapers:

      Alameda Times-Star (Alameda)
      The Argus (Fremont)
      The Daily Review (Hayward)
      Daily Democrat (Woodland)
      Enterprise-Record (Chico)
      Contra Costa Times (Contra Costa)
      ¬ San Ramon Valley Times
      ¬ East County Times
      ¬ West County Times
      ¬ Valley Times
      Ft Bragg Advocate News (Ft Bragg)
      Humboldt Beacon
      Lake County Record-Bee (Lakeport)
      Clear Lake Observer American
      Los Gatos Daily News
      Marin Independent Journal (Marin)
      Mendocino Beacon (Mendocino)
      Milpitas Post (Milpitas)
      Monterey County Herald (Monterey)
      Oakland Tribune (Oakland)
      Pacifica Tribune (Pacifica)
      Palo Alto Daily News
      Paradise Post (Paradise)
      Oroville Mercury-Register (Oroville)
      Red Bluff Daily News (Red Bluff)
      Redwood Times (Humboldt)
      San Jose Mercury News (San Jose)
      San Mateo County Times
      Santa Cruz Sentinel
      Times-Standard (Eureka)
      Times-Herald (Vallejo)
      The Daily News
      The Reporter (Vacaville)
      Tri-City Weekly
      Tri-Valley Herald (Pleasanton)
      The Ukiah Daily Journal
      Willits News (Willits) 

    and like USA Today will publish common Northern California newspaper with small local news and sports sections then have layoffs

    The few remaining smaller papers will be sold, go to advertising supported free weeklies or go out of business

    Bankruptcy provides a business opportunity to renegotiate labor /vendor contracts, cut newspaper circulation routes for outlying unprofitable areas and raise newspaper prices.

    MediaNews / Mercury will not be successful like a few well respected national newspapers in charging for online access for weak local content, opinions and aggregated national news.

    Most people will get their national and local news on TV, radio ( KLIV, KCBS ) or Online News

  6. Can you imagine the valley without the Merc?  I can and a pretty picture it is not.

    Unlined bird cages, unwrapped fish, unlit fires on spare the air nights.

    The horror.

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