Archive for the ‘Financial pressures’ Category

One of the biggest media bankruptcy cases appeared to be headed toward a reorganization settlement when negotiations abruptly broke down last week. Now, major creditors are planning their own reorganization, and Tribune’s management isn’t even allowed to take part in the discussions.

The creditors claim that the company became functionally insolvent when Chicago real estate tycoon Sam Zell bought the company in a leveraged buyout. The company entered bankruptcy proceedings 20 months ago.

Tribune owns the Los Angeles Times, Chicago Tribune, Hartford Courant, South Florida Sun-Sentinel, and numerous radio and TV stations.

Oriella PR surveyed 770 journalists from in 15 countries about their perceptions of the future of their media channels. More than half (52%) said their print publication, TV station or radio station might well be taken off the market, though they didn’t ask for a specific time frame. This was a sharp increase from the one in 3 who shared that view a year ago.

You can download a PDF of the study (free registration required).

The proposed buyout of the bankrupt Sun-Times Media Group may hit a snag over the requirement that the publisher’s workers continue the concessions they made during the bankruptcy hearings.

The biggest sticking point seems to be the union’s desire to keep seniority rules in place. Without the seniority rules, older and better paid employees are “low hanging fruit” when it comes to cost-cutting decisions. Companies save more by firing the senior people and keeping the younger ones who haven’t worked their way up the pay scale.

The union also isn’t happy about cutting severance pay from 50 weeks to four.

I wonder if we’re all overlooking the grim nature of the reality that the whole media group could be bought by an investor who’s only putting up $5 million in cash.

The New York Times, Wall Street and other major financial media are reporting that Freedom Communications will file for Chapter 11 bankruptcy as early as Tuesday. Freedom owns the Orange County Register and 30 other newspapers, as well as eight television stations and several magazines.

Freedom is the latest major chain to enter reorganization as the newspaper industry struggles to deal with the double whammy of recession and secular shift away from print media.

The news — specifically the precarious position of newspapers — is suddenly big news, and everybody seems to have an idea about how to ensure the future of a vibrant, free American press.

Time has a major story on the demise of the Ann Arbor News, suggesting that Advance Publications (aka Newhouse, aka my employer from 1975 to 1984) killed the newspaper “to save it,” hoping that in its new form (www.annarbor.com) it could create enough of a following to become a more profitable operation. Of course, dying to re-emerge like a Phoenix isn’t exactly a new idea. Indeed, it’s the essence of Chapter 11.

Fast Company is focusing on hyperlocal web sites that are seeking to capitalize on the hunger for local news. Make no mistake: Local media must stay local to survive. There’s nothing they can offer in the way of national news that we can’t get elsewhere, and I have no idea why they still carry wire stories. But how much money they can make at the hyperlocal game — using which model (print, web, hybrid) — has yet to be seen. While Fast Company”s breathless headline calls hyperlocal news a “100 billion market,” the story is realistic enough to point out that people aren’t swarming to local media sites, and current online ad rates make them anything but a gold mine.

The New York Times — which has its own problems figuring out what to do with the Boston Globe — seems to have made newspaper profitability a major beat, with the latest story reminding us that the Financial Times was clever enough never to give away its content. Thanks for the reminder, guys.

Then, of course, there are the dozen or two models for online payment, ranging from subscriptions to micropayments to handheld subscriptions.

Here’s one ray of hope from left field: There is a school of thought — popularized by Megatrends author John Naisbitt — that a trend is over by the time the major media discover it. Might that mean the newspaper crisis has bottomed out?

I would bet on it, but as with apologies to Hemingway, “isn’t it pretty to think so?”

Editor & Publisher reports that Tribune Co. could emerge from its Chapter 11 bankruptcy as early as the end of 2009. But is this good news or bad news?

On the surface, it seems positive (coming out of bankruptcy is generally a good thing). But it’s not quite that simple. The flip side is that CEO Sam Zell is now having to ask for his second extension for completing the reorganization. Zell told CNBC that there’s no plan yet, and he told the court that Tribune needs more time to build consensus among creditors regarding its $12 billion in debt. In other words, this announcement may be a sign of trouble more than hope.

Tribune Company owns 14 dailies, including the Chicago Tribune, Los Angeles Times, Newsday, Baltimore Sun, Orlando Sentinel, and South Florida Sun-Sentinel. The company also owns the Chicago Cubs and Wrigley Field, as well as a number of other media properties.

It appears the months of cost-cutting are paying off for the media companies. The parade of strong earnings continued this morning, with the New York Times reporting a surprise profit.

As with Gannett and McClatchy, who also reported strong earnings in the last few days, the improvement came despite a serious drop in advertising revenues, which were down 30 percent. The Times earnings included some special items, including a tax break. But even without those, the company earned 8 cents per share — much better than the consensus earnings forecast, which was a loss of 4 cents.

Media General got into the black with a $20.6 million profit, and its stock doubled in minutes. Media General earnings release. You may also want to read Mark Fitzgerald’s story in Editor & Publisher.

Next up is the New York Times, which will release earnings before the markets open Thursday. The Times has been selling all the assets it can, and employees have had their pay cut 5 percent (which is mild compared to most other newspapers). Analysts are predicting a loss of 4 cents per share, but with the strong reports we’ve seen this week, I wouldn’t be surprised if they beat that.

It’s time to report 2Q earnings, and unless some miracle happened in the last quarter, that means we’re about to be treated to a series of bad earnings reports from publicly held media chains. McClatchy will lead off the parade with an earnings announcement scheduled before the markets open Tuesday.  A fair number of analysts think McClatchy is on the verge of default and bankruptcy. They were hoping to reduce their debt load in a series of complicated transactions, but the bondholders wouldn’t bite.

Even with ad revenue down 27.2%, Gannett Co. — publisher of USA Today and numerous other newspapers around the country — surprised analysts by reporting a 2Q profit of $70.5 million. The worst ad news was in classified, where revenues were down 38.5 percent. Read Editor & Publisher wrapup.