With four owners of 33 U.S. daily newspapers seeking bankruptcy protection in the past 2 1/2 months, even more upheaval looms for an industry clearly gasping for survival.
Analysts doubt that those newspaper companies will be able to emerge from Chapter 11 bankruptcy protection without agreeing to lenders’ demands for radical changes, such as switching some of their newspapers exclusively to online delivery.
Of course, the newspaper publishers already have been mulling drastic makeovers, including scrapping their print editions, and it’s still not clear whether their creditors can come up with any better ideas. But that probably won’t discourage exasperated lenders from trying to shake things up.
“These first few bankruptcy filings are like the canaries in the coal mine,” said John Penn, a bankruptcy lawyer in Fort Worth, Texas. “It’s almost a certainty that they are going to have to change their business models because the old ones aren’t working.”
Newspaper publishers say the filings won’t have any immediate effects on their day- to-day operations, and the 33 affected newspapers likely won’t close en masse as part of any reorganization.
Still, the industry’s troubles were underscored over the weekend with separate Chapter 11 filings by New Haven (Conn.) Register publisher Journal Register Co. and by the owners of The Philadelphia Inquirer and the Philadelphia Daily News.
They followed a December filing by Tribune Co., whose media stable includes the Los Angeles Times and the Chicago Tribune, and January’s filing by the owners of the Star Tribune in Minneapolis.
“There’s a fairly high degree of uncertainty,” said Rick Edmonds, a media analyst with the Poynter Institute.
He said the filings put “the future in the hands of the courts. Creditors will have a fair amount to say.”
Newspapers across the country have been cutting jobs, trimming newspaper widths and making other cost cuts to help offset reductions in advertising revenue, but for many, those efforts haven’t gone far enough to stop the bleeding.
All four publishers turned to bankruptcy court for help as their debts became unbearable amid a two-year slump in advertising revenue that has been worsening as the recession stifles spending.
