Saturday, February 21, 2009

Journal Register - Bankrupt!

Will we lose the Phoenix, Mercury, Daily Local, Times Herald, and more?

Journal Register Files for Bankruptcy


The Journal Register Co., a newspaper company with dailies in the Philadelphia region that have a combined suburban circulation of 160,000, filed for bankruptcy protection from its creditors yesterday.
The Yardley company also operates newspapers in northeast Ohio and in Michigan, Connecticut, and New York. It blamed its troubles on a slump in advertising.

Revenue had declined 20 percent since 2006, the company said. Moreover, it carried a huge debt load, the legacy of a business strategy of buying daily and weekly newspapers in suburban areas. In recent months its stock traded at pennies a share.

The company still has more than 100 papers in operation.

Several of its weekly newspapers in the Philadelphia area have closed since late 2008 as the company slashed costs. According to news reports, they are the Germantown Courier, the Mount Airy Times Express, the Olney Times, the News Gleaner, and Northeast Breeze.

Locally, the company still publishes the Delaware County Times, West Chester Daily Local News, Pottstown Mercury, Norristown Times Herald, and Lansdale Reporter, as well as the tabloid Trentonian in New Jersey.

A reporter at the Delaware County Times last night referred calls to Edward J. Yocum at company headquarters. Yocum, senior vice president and general counsel, did not return a call seeking comment.

Under a reorganization plan filed in U.S. Bankruptcy Court in New York, the company would cancel its stock and become a closely held company owned by its lenders, according to Bloomberg News. It listed debt of as much as $1 billion and assets of between $100 million and $500 million in its Chapter 11 documents.

"With the increased competition from other forms of media and slumping advertising revenues, the downward pressure on newspaper earnings will likely remain intense in the near term," chief executive officer James Hall said in court papers.

Hall asked in the court documents that the judge maintain employee salaries and benefits to keep up morale.

In fall 2007, the company sold its corporate jet, eliminated management bonuses and country-club memberships, closed 34 publications, and cut at least 112 workers, Bloomberg reported.

The company sold its Massachusetts community newspapers to Gatehouse Media for about $72 million in February 2007. At the same time, it sold a Rhode Island community newspaper group to RISN Operations Inc. for $8.3 million.

As part of the bankruptcy case, the company has asked for permission to pay as much as $1.7 million in bonuses to 30 top officers and key employees should the Journal Register meet certain reorganization goals, including closing more papers and eliminating more employees. The company employs about 3,500 people.

The law firm handling the bankruptcy filing is Willkie, Farr & Gallagher L.L.P. The newspaper company hired Lazard Freres & Co. as financial advisers.

Contact staff writer Bob Fernandez at 215-854-5897 or


Anonymous said...

Considering that the Inquirer article didn't even mention that The Phoenix existed, I believe that it's doing so badly that the Journal Register is planning to shut it down.

Karen said...

I noticed that omission, Anonymous.

Let's hope it was just an oversight.

I simply cannot imagine Phoenixville without a newspaper.

A small Phoenixville section added to the Pottstown Mercury just wouldn't be the same.

Karen said...

Philadelphia Newspapers Seeking Bankruptcy


Published: February 22, 2009

The owners of The Philadelphia Inquirer and The Philadelphia Daily News will file for bankruptcy on Monday after talks aimed at restructuring the debt from that deal broke down, executives said on Sunday.

(February 23, 2009)

The papers will continue to operate and will remain under local control, said Brian Tierney, publisher of The Inquirer and the leader of a group of local investors who bought the papers in 2006, one of several newspaper deals from that era that have gone bad as the industry’s revenues have plunged.

Philadelphia Newspapers, a subsidiary of Philadelphia Media Holdings, will be the entity that will file for bankruptcy protection. In a brief interview late on Sunday night, Mr. Tierney said he expected the papers to be filed with the bankruptcy court in Philadelphia before dawn.

“Philadelphia Newspapers’ goal is to bring its debt in line with the reality of current economic conditions,” he said.

He signaled that his company’s primary aim in bankruptcy would be to seek concessions from the consortium of banks that hold its debt, not from the papers’ labor unions. “This restructuring is focused solely on our debt, not our operations,” he said.

The company has been negotiating for the better part of a year with the banks, led by Citizens Bank. It had not been in compliance with its debt covenants since mid-2008, and it suspended payment on the debt last fall. Most recently, executives of Philadelphia Media said the original investors offered to put $25 million into the company, but a meeting with the banks on Friday produced no resolution.

The sale of the Philadelphia papers was one of a flurry of deals made in the two years before the recession began, with buyers — many of whom had no background in the field — paying prices for newspapers that were called exorbitant even at the time. Revenue for most newspapers has dropped more than 20 percent since then, leaving the new owners struggling with debt.

The Tribune Company, which was taken private in December 2007 by Sam Zell, a real estate mogul, filed for bankruptcy less than a year later. The Minneapolis Star Tribune, bought in late 2006 by Avista Capital Partners, a private equity firm, filed for bankruptcy last month. (The Journal Register Company, which was not part of the buying spree of a few years ago, filed for bankruptcy on Saturday.)

The McClatchy Company bought the Knight Ridder chain in 2006, and has struggled with the debt from that deal. McClatchy quickly sold some of its papers, including those in Philadelphia and Minneapolis.

Mr. Tierney, a public relations executive, and his partners paid $562 million for the papers, including about $412 million in borrowed money. There remains about $390 million in debt.

Executives say that with debt payments suspended, the papers continue to generate cash flow, in part because of significant cost-cutting. One said that last year, they had earnings before income, taxes, depreciation and amortization of $36 million.

Philadelphia Newspapers is being advised by the investment bank Jeffries. Its bankruptcy lawyers are from Proskauer Rose and Dilworth Paxson.

Over the months of talks with the banks, Philadelphia Media executives have been frustrated by the consortium charging the company for fees paid to the banks’ lawyers and consultants, and for interest penalties — bills that the newspaper group says total $13.4 million. The executives said they had arranged $25 million in debtor-in-possession loans to continue operations.

Anonymous said...

Bye bye to the rag / police blotter / horrible journalism. We can get the high school to produce a better paper with better writers.

Anonymous said...

Anonymous February 23, 2009 8:19:00 PM EST:

Have you been reading the Purple Press? The kids do a decent job!

We already have the Phantom TV station; why not let the kids put out a newpaper to the comunity also?

Anonymous said...

I agree with letting the kids run the paper. They would do a better job of writing and it would probably be more accurate. How many more religious columns and right wing agendas do we need to read, next to the wrestling section and the police blotter. This paper is a laugh and deserves to go out of business. I hear the death march...............