Bankruptcy Filing Still Top Story for Many Newspapers

Bankruptcy continues to dominate the newspaper headlines as the new year is bringing new filings for a host of notable names.

Over the last two years, many newspapers across the country have decided to file bankruptcy or close completely, including the Chicago Tribune, Rocky Mountain News and Philadelphia Inquirer.

Now, Affiliated Media Inc., owners of more than 150 newspapers across the country, is preparing to file Chapter 11 bankruptcy.

The newspaper publisher is a holding company for Media News Group Inc. and includes papers such as the Denver Post and San Jose Mercury News. They operate 54 daily newspapers, 100 non-daily papers, Web sites and television and radio broadcast services.

According to the Canadian Press, the company hopes to file for bankruptcy very soon but no definite date it set. When they do file, it will be under the Delaware Bankruptcy Court.

This will be the 13th newspaper publisher to file for bankruptcy in the past 12 months. The industry has had to compete with the internet for advertising revenue as many websites offer free advertising.

They have set up a prepackaged bankruptcy plan that has already been approved by its lenders. The company currently has $930 million in debt, but under the reorganization plan most of the debt will be eliminated. After filing Affiliated Media Inc will have $165 million in debt.

There are 116 lenders including Bank of America. Senior lenders will exchange debt for stocks in the company.

Even thought the lenders will have a majority of the stock, they will not receive any voting control.
CEO and Media News Group Chairman William Dean Singleton will own 20 percent of company through stocks and warrants. Warrants allow Singleton to buy stock at a specified price.

With the bankruptcy plan, Singleton will also have class A stocks that will give him the power to pick the majority of the board directors for the company.

Affiliates request to file chapter bankruptcy is due to the same reasons that many newspapers have filed already: Lack of advertising revenue.

Print advertising has sharply declined over the past four years. Industry ad sales have dropped more than $20 billion – a 40 percent decline.

Many publishers have made cuts to stay afloat during the recession such as mass layoffs. At this point there is no mention of layoffs with Affiliate as the prepackaged plan would eliminate most of their debt.

Singleton advised the company has enough money to fund the operations throughout the bankruptcy and believes that Affiliated Media will survive the hard economic time.

Singleton wrote in a letter to his employees, “Communities we serve rely on newspapers, not only to keep everyone informed, and to check government and corporate abuse, but also to provide cohesiveness that our society very much needs.”