Posted at 12:21 PM on May 6, 2008
by Tim Nelson
It's probably a lot like what's going on wherever they're putting out a newspaper these days, according to Lauren Fine. She's a former Merrill Lynch media industry analyst - considered one of the country's best newspaper watchers. She's now teaching at Kent State University.
She doesn't have any direct knowledge of the situation in Minneapolis. But Fine doesn't think the Star Tribune's owners brought in the Blackstone Group in preparation for a bankruptcy.
Its sounds more like a sub-prime mortgage, as Fine explains it:
"My guess is that if there were covenants at any time that they could be coming dangerously close to breaking through them, and this would be the time ahead when you hit those problems, that you would look for alternatives. And alternatives could range from trying to get an infusion of equity. It could be renegotiating to a different type of instrument that maybe has no near term cash pay component, but maybe something that defers those payments to later. It could be something that takes into account new covenants and doesn't change the interest rate structure... I'm guessing, but I imagine that they're facing some severe pressure points right now."
She's not putting any odds on a workout. Fine ran through a list of other scenarios for the endgame for the Newspaper(s) of the Twin Cities. Here's her run-down, from likeliest to the longest shot:
● A joint operating agreement with the Media News-owned Pioneer Press that would combine back shop and production resources and leave the newsrooms separate. Whether they are "intact" would be another matter altogether. "If they are interested in a JOA, I doubt the Justice Department would have a problem with that," says Fine.
● An acquisition of the Star Tribune by MediaNews. It would be difficult for the bigger paper to buy a smaller competitor under the Newspaper Protection Act, but if the Strib does declare bankruptcy, it could help satisfy the NPA requirement that an acquired property be "failing." But Fine and other industry observers don't think Media News is in any condition to be borrowing for or spending money on any acquisitions either.
● The Hail Mary. The Capital Times in Madison, Wis., recently quit publishing a paper and went online only. It slashed costs, but doesn't allow them to monetize sheet after sheet of newsprint any more, whether anyone reads through the "Bargain Pet" classifieds or not. The online revenue today is only a fraction of the print revenue, and Fine doubts there's enough time for the two to converge in Minnesota.
● Stop the presses. Businesses close down all the time, some of them quite substantial. Bear Stearns started in 1923 and survived the Great Depression. But not the foreclosure meltdown. It had more than 15,000 employees when J.P. Morgan bought it at fire sale prices. "The option would also be to basically say, 'You know what? This isn't working," says Fine. "We're really sorry. You have another paper. It's a great paper. We made them a better paper by virtue of competition, but we're sorry, we can't afford this any more, we're shutting the doors. I doubt that would happen."
You can hear the whole 7 minute Megillah right here.
My non-professional opinion is that the Strib doesn't know what it wants to be. Their online offerings are meagre & half-hearted. Their redesign of the physical paper is designed to appeal to the coveted young readers, but has alienated others (speaking anecdotally, if nothing else). They lost great talent with the last round of buyouts. OK, costs were cut, but so was the quality of the product. If you're struggling for market share, is that a smart thing to do?
The local dailies could learn a few things from the editor of The Economist, as covered twice last week by MN Post. Stop dumbing down the news.
I leaned not to trust the Strb for news years ago. Though I am sad at the demise of any newspaper, this one is an exception.
They should have folded years ago.
How can you expect to produce a viable paper by marketing to the extreme left? A monthy like the Utne, sure. A paper, no.
Does no one else have the reaction of "that's one down"?
The commercial media has long since stopped providing anything worthwhile other than advertising and entertainment. Its insistence that news and information serve that business model helps create a distorted reality that is unhealthy. It is universally unreliable, irresponsible and biased. The opaque manner in which those biases are expressed makes it impossible to reliably sort out what is fact from fancy.
I am hoping we will see centralized commercial news media die and be replaced by more diffused news and information providers. The rise of community journalism at least gives some hope that we will end up with something better.
Every time the Strib calls me and wants me to subscribe, I ask them if they're fired Katherine Kersten yet.
If the answer is no, then that's what I tell them on subscribing to the paper.
Nancy, I ask them if they have fired everyone BUT Katherine Kersten. The day the Red Star dies, I will dance on its grave.