Two publishers file for bankruptcy protection
Two newspaper companies — Philadelphia Newspapers and The Journal Register Co. — filed for bankruptcy protection over the weekend. Both assured readers and employees that business would continue as usual while debts were renegotiated.
Philadelphia Newspapers is parent company to The Philadelphia Inquirer, which had an average weekday paid circulation of 300,675 as of September 30, and The Philadelphia Daily News, at 97,696 average weekday circulation.
A main focus of the bankruptcy negotiations will be seeking concessions from the banks that hold Philadelphia Newspapers' $390 million or so in debt, said Brian Tierney, publisher of The Inquirer and part of the group of investors who bought the papers in 2006. He said the company will not try to cut back on its union contracts. This tactic differs from that of some other troubled papers, like New Jersey's Star-Ledger, which had to rework its union contracts late in 2008 to ensure that the paper would not be closed or sold.
“Over the last two years, we have made significant progress in improving the quality of our journalism, building a relationship based on mutual trust and respect with our unions, making our operations among the most efficient in the industry and innovatively serving our readers and advertisers,” Tierney said in an earlier statement. “This restructuring is focused solely on our debt, not our operations. Our operations are sound and profitable. We are the medium of choice in this region for advertisers and readers.”
Philadelphia Newspapers suspended payment on its debt last fall, which has allowed the company some cash flow. One executive, according to the New York Times, said the company had earnings before income, taxes, depreciation and amortization of $36 million in 2008.
Journal Register Co. publishes 20 daily and 159 other newspapers in Philadelphia, Michigan, Connecticut, the Cleveland area and New York, and reports an average daily circulation of circulating to 450,000 total. The company reported $596 million in assets as of November 30 and $692 million in debt, including unpaid interest, and suggested in its filing canceling its stock and becoming a concern controlled by its lenders.
“We intend to emerge from the Chapter 11 process stronger, leaner and more financially viable in the current environment,” said James W. Hall, chief executive for Journal Register, in a statement. “Our business will continue its normal operations.”
As part of their bankruptcy protection filings, both Philadelphia Newspapers and Journal Register have requested that the court permit all salaries and benefits, including pensions and 401(k)s to continue as usual. The companies also have asked to be able to honor customer programs, meaning distribution and subscriptions should not be interrupted.
The papers have company: Long-falling print ad revenues also have brought Tribune Co., the Minneapolis Star Tribune and other publishers to declare bankruptcy in the past year.