The Las Cruces Sun-News offices. (Photo by SpecialKolin/flickr.com)
The holding company for MediaNews Group, the newspaper chain that is the owner or majority stakeholder in nine New Mexico newspapers including the Las Cruces Sun-News and Farmington Daily Times, plans to file for Chapter 11 bankruptcy protection.
The company claims that the move will allow it to eliminate a great deal of debt without affecting operations at its newspapers, The Associated Press is reporting.
The news about one of the nation’s largest newspaper companies – MediaNews’ papers include the Denver Post and San Jose Mercury News – is the latest blow to an industry that has been crippled by readers’ moves to the Internet and the economic downturn. And it follows a series of changes at the company’s New Mexico newspapers.
In recent weeks, the company has brought on a new publisher at the Daily Times, and hired a new vice president for its New Mexico operations so the Sun-News publisher – who previously oversaw all New Mexico operations – can focus on being more active in the Las Cruces community.
Last year, the company eliminated a number of jobs at its Las Cruces newspaper, moved the Sun-News copy desk to El Paso – the company also owns the nearby El Paso Times – and furloughed all employees companywide for a week without pay.
The bankruptcy filing by MediaNews’ holding company, Affiliated Media Inc., is a “prepackaged” plan that’s already been approved by lenders, the AP reported. Affiliated Media says that will allow the company to more quickly come out of bankruptcy.
From the AP:
“MediaNews’ management and newspaper operations, employees and vendors won’t be affected by the holding company’s restructuring, MediaNews Group Chairman and CEO William Dean Singleton said. He is the chairman of The Associated Press board of directors.
“A date for the filing hasn’t been announced, but the company said it would be in the near future. The reorganization plan was expected to be filed in federal bankruptcy court in Delaware.
“Under the plan, the company’s debt would fall from about $930 million to $165 million. Senior lenders would swap debt for stock, the company said. The group of 116 lenders, led by Bank of America, would hold a majority of stock but not voting control.”
And the context, also from the AP:
“Affiliated Media’s bankruptcy filing illustrates the uncertainty facing major newspapers publishers as their main source of income – print advertising – has plunged during the past four years. Since 2005, the industry’s annual ad sales have dropped by more than $20 billion, a decline of about 40 percent, based on figures from the Newspaper Association of America.
“Publishers are hoping the slump will ease this year as the economy recovers from the worst recession in 70 years. But newspapers still must figure out how to support their operations as more readers and advertisers migrate to the Internet, where ads sell for dramatically less, many news articles are free, and the competition is much greater.”
In a letter to MediaNews employees, Singleton called the news of the bankruptcy filing “important and positive.”
“We expect all of our daily operations to continue without disruption, with employees receiving normal salary and benefits, suppliers being paid, advertising being placed and newspapers being printed and delivered as usual,” he wrote. “No layoffs, sale of newspapers, facility closings or consolidations are anticipated as a result of the financial reorganization announced today.”
In New Mexico, MediaNews owns the Ruidoso News and White Sands Missile Ranger. In addition to the Daily Times and Las Cruces Sun-News, it is the majority stakeholder in the Alamogordo Daily News, Carlsbad Current-Argus, Deming Headlight, the Four Corners Business Journal in Farmington and the Silver City Sun-News.