Philadelphia Newspapers, Journal Register Join the Bankrupt
NEW YORK (AdAge.com) -- Two more newspaper owners have thrown themselves to the mercies of bankruptcy court, arguing that their underlying businesses are sound none the less.
"This restructuring is focused solely on our debt, not our operations," said Brian Tierney, CEO of Philadelphia Newspapers, publisher of The Philadelphia Inquirer and Philadelphia Daily News. "Our operations are sound and profitable."
Mr. Tierney and his partners paid $562 million for the papers in 2006, but need relief from the $390 million debt they incurred. A few years ago that debt looked manageable, but relentless competition and the onset of recession have made conditions much more challenging than anticipated.
The Journal Register Cos., publisher of papers including The New Haven Register in Connecticut and The Trentonian in New Jersey, is suggesting a plan to cancel its stock and become a private company owned by its lenders -- to whom it owes $692 million.
"We intend to emerge from the Chapter 11 process stronger, leaner and more financially viable in the current environment," CEO James Hall said on the company website.
The pair of companies join Sam Zell's Tribune in bankruptcy court, where Mr. Zell put his company for some refuge from crushing debt payments. They won't be the last to seek protection.
But it will be very interesting to see whether the newspapers owned by companies can continue more successfully than their over-leveraged owners. Most newspapers in the U.S. continue to post healthy, if eroding, profits margins, suggesting that their current owners are far more endangered than the properties themselves.