Friday, April 11, 2008

"Bad, bad, horrible news!" - Troubling times ahead for the Phoenix newspaper?

It was one of those calls left on my home telephone that I've come to dread.

"Bad, bad, horrible news, Karen...", said an emotion-filled voice on my answering service. No further details were given except for a hurried request for a return call after I listened to the message.

Not knowing what to expect, I'm certain there was a period of time when I just held my breath in uneasy anticipation waiting for the ringing telephone to be answered.

"JRC (parent company of the Phoenix newspaper) is in trouble, big trouble, financially. Their stock closed at $.26 today, and there are rumors of massive lay-offs and possible impending bankruptcy!"

Horrible news, indeed.

I remembered reading about JRC's stock at $.16 on Monday, and that figure was low enough to make me gasp.

Checking online news sources I found the following:

Moody's Downgrades Journal Register Deeper Into Junk

By Mark Fitzgerald

Published: April 10, 2008 7:45 PM ET

CHICAGO Moody's Investors Service downgraded Journal Register Company's corporate debt rating two notches deeper into junk territory late Thursday on concerns the publisher of the New Haven (Conn.) Register is losing too much top-line revenue to cover its repayment obligations.

Moody's lowered its Corporate Family rating to B3 from B1, and its Probability of Default rating to Caa1, which means "substantial risk of default" in its rating system, from the non-investment grade B2 rating. Moody's also continued its negative outlook, meaning further downgrades are possible.

The downgrade was only the latest bad news for Journal Register, which announced earlier this week it may put itself up for sale and which reportedly is considering filing for bankruptcy. Its stock (NYSE: JRC) risks de-listing as it has traded for more than a month below $1 a share, hitting 16 cents after the announcement it was considering strategic options.

Before the Moody's action was announced, Journal Register stock at the 4 p.m. EDT end of trading Thursday was at 28 cents a share, up 3 cents from the opening.

Approximately $755 million of Journal Register debt is affected by the rating.

Moody's noted that Journal Register's top-line revenues shrank 8.5% in 2007, and its liquidity is "eroding."

"The negative outlook reflects Moody's concern that Journal Register will generate insufficient free cash flow to cover its scheduled 2009 debt repayment obligations (absent an amendment), and that ratings may need to be lowered further if the company's business operations and liquidity profile continue to deteriorate," wrote Vice President and Senior Analyst John Price.

"Moody's notes that debtholders are currently protected with only de minimus equity cushion (based upon the company's current market value of around $11 million), and that a sale or liquidation of the company would likely result in less than full (albeit above-average) recovery for secured lenders."

In announcing the hiring of Lazard Freres & Co. LLC to advise it on strategic options, Chairman and CEO James W. Hall said its 2007 cash flow of $90.3 million was "well in excess" of its $38.5 million interest expense. He also noted the company does not have to make principal payments until the second quarter of 2009.

Mark Fitzgerald ( is E&P's editor-at-large


I suspect we will be learning much more about the future of our local newspaper in the days and weeks to come.

I doubt any of it will be good news.


JRC BITES said...

How is this bad news? If you knew anything about JRC's evil behavior, you'd be cheering the demise of this disgusting company.

Karen said...

I'm not initimately familiar with the internal workings of JRC, jrc bites, and have no association with or loyalty to that company.

What really bites here is the fact that we may lose our daily newspaper.

In existence since 1888, 120 years, our hometown newspaper, may be in it's death throes.

Think of the history the newspaper has chronicled throughout those years, and think of those items which, if it's gone, will pass basically unnoticed, and without public scrutiny.

Bad news.

However, we put the horse before the cart in this instance because no official notice has been given regarding closure of any JRC owned newspaper.

I've seen the demise of the Iron Company, the move of the West Company and other businesses, the barely-escaped move of Phoenixville Hospital, the demolition our many historical and iconic buildings, i.e., the McCullum house, the Reeves mansion, the Knoll, the General Pike Hotel, and recently the closure of the Vale-Rio, to know that all change in the name of progress is not good in my eyes.

Love it or distain it, the fact that we still currently have a daily newspaper recording the events of the Phoenixville area should be recognized as a local treasure.

One we should be prepared fight for if need be.

Mr. Ellsworth Toohey said...

I would imagine that the next step would be a fire sale of JRC's existing print papers. If nobody picks up the Phoenix, they will close up the Phoenix and the DLN will cover the whole county. Is that a bad thing? I think it is but remember what the internet has allowed people to do here in Phoenixville, report the news that they feel is important. I think that it will be possible to have council information covered by non professional writers. I also think we can do without the editorial opinions of the Erie Times once a week. The real problem is that we will be missing the feel good stories but I would imagine that people could report that in the DLN if they pressed the editors.

Newspapers that can't step into the electronic age effectively, die painful deaths. The Phoenix can't compete the way they do business. Crime and fires that are reported on a timely basis and given "above the fold" space,government news that is delayed a few days and not reported comprehensively or correctly, and news and opinion from out of town through wire services are obsolete in this age of 24 hr. news cycles.

When Bill Rettew and Karin Williams left, the paper imploded. They were real reporters that had knowledge of the town and a desire to report on its real workings. They asked questions of a broad range of people and dug deep to get the real story. It doesn't happen like that anymore and it is a real joke. Brian McCarthy did an excellent piece on the HACC. He really dug deep and understood the issues. One reporter doing that infrequently does not lead to a strong and loyal readership. It leads to a very disappointed readership.

That is what the residents of Phoenixville are, just disappointed in the Phoenix.

Anonymous said...

Perhaps we should go back to the 1870s and 1880s when the local papers (yes, there were two for a while) were weekly's. And although many items were only a sentence or two the papers covered more local news than the daily Phoenix of today.

and the truth shall set you free said...

Karen, I agree with the above posting. The bloggers of this town have provided us more information about what is going on in local corrupted governtmental process than the paper has been willing to see fit for prrint. Now look at there posting trying to roast the Chickenman. Aflagrant personal attack and allowing a piling on effect to continue. Poor taste, no class lazy writters!

Gringo Starr said...

A Spanish language newspaper will be along shortly just as sure as you see all the new Hispanic store fronts and the men hanging out on the corners.
You'll have to learn Spanish to read the local newspaper.
The parking garage will be paid for in pesos.
The first story the paper will cover is how you do not have to pay the yearly occupational tax if you are an illegal alien. Oops, I meant to say "undocumented worker".