Writings and observations

A paper bankruptcy?

Reports are out from Bloomberg News that Lee Enterprises is scrambling to refinance its debt – seen as an indicator it is moving to avoid bankruptcy.

And: “Lenders will also be asked to approve a prepackaged bankruptcy, which the newspaper owner will pursue if an out-of-court restructuring doesn’t gain enough support, they said.”

The Northwest significance is that Lee is one of the major newspaper owners in the region. It has a near monopoly on newspapers in the Magic Valley area (after buying up what were 20 years ago a bunch of independently owned businesses). And in Oregon, it owns the papers in Albany, Corvallis and Coos Bay, and in Washington the paper in Longview.

Following up on additional weak circulation reports in the newspaper industry, including serious downtowns at a number of Northwest papers. Newspaper troubles aren’t getting the attention they were a few years ago, but they haven’t gone away – or, apparently, slowed.

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One Comment

  1. rplothow said:

    Randy:

    Two things (and I’m not a Lee employee or an insider, so I don’t have any inside information — just what I read in the papers):

    1. Lee’s big issue was its purchase of the St. Louis Post-Dispatch, a paper probably too large for Lee to manage well and clearly over-priced, particularly given the collapse of the economy. Take that out of the picture and Lee’s financial situation is probably very solid. A bankruptcy would really be a way to get the time and terms necessary to restructure the debt. Lee will ultimately be fine, I suspect, because its underlying business units are doing well.

    2. Relying on print circulation data alone to determine the health of newspapers is simplistic and misleading. We’re in the Internet Age, right? Print circulation is going to continue to drop, while total readership will likely continue to rise. Yet our own trade publications want to focus on print circulation alone, which tells a small part of the story. Those in my circle report the same thing we’re experiencing — revenues are finally beginning to rebound and profits are improving, though we’ll never again see the days of 25-plus percent margins of the 1980s and 1990s.

    I encourage more thorough reporting of the newspaper business — we are clearly undergoing a sea change, but new business models are emerging and most of the 1,450 daily newspapers in the U.S. will likely be publishing 25 years from now and beyond.

    Roger Plothow
    Editor and Publisher
    Post Register
    Idaho Falls, Idaho

    July 17, 2011

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