Sunday, April 5, 2009

Creditors will want changes at MNG

The announcement that MediaNews Group has won a forbearance agreement from its lenders is confirmation that the chain which owns most of the dailies in the Bay Area is in default, says Martin Langeveld, a former publisher and now a consultant writing for the Nieman Journalism Lab.

Langeveld said he expects the creditors will be looking to squeeze out as much cash as they can from MNG. Instead of trying to sell off individual papers at fire sale prices, which might get the banks 10 to 20 cents on the dollar, Langeveld has come up with his own restructuring ideas, including:
    • A sale of the company’s printing plants, packaged with its considerable commercial printing customer base. Some of this infrastructure is aging, but the company has built some state-of-the-art plants in recent years. These assets would be attractive to various regional printers looking to expand.

    • A sale of all other real estate, perhaps with partial leasebacks. The core digital enterprise to be retained won’t need all that office space.

    • A restructuring of the remaining business as a fully digital, online-first news organization operating in all of the company’s existing markets, with strategic options to expand into neighboring markets.

    • A reduction of publishing schedules in all markets to one or two days per week. Most of the advertising currently spread across six or seven publishing days can be nudged into one or two editions that are profitable.

    • A five-day commuter-style tabloid in selected markets like Denver, the Bay Area and Salt Lake City.
Langeveld also points out that the banks could also liquidate the existing company, lay everyone off and rehire selected employees into one of several new companies. This might also be a way of negating union contracts. Langeveld concludes that only a fundamental reinvention of the business provides any hope of saving it:
    There’s a small chance that MediaNews will be bold enough to attempt this kind of radical scenario, and then there’s an even smaller chance that it would succeed. But without the attempt, the company is staring across the Bank of America’s workout table at bankers who want to get paid, and get paid soon; who are not concerned about journalism or communities or employees; who will be satisfied with 20 cents on the dollar in a simple breakup scenario if the company can offer no strategic plan to navigate its way to a higher valuation. It’s worth a shot.

7 comments:

Anonymous said...

Digital newspapers? Why? That model won't work because people who get their news free from online sources won't pay. Why should they? Plus, what makes Mr Langeveld think that online ad revenue will be equal or greater than what print newspapers get?
Speaking for myself, I am not one to browse online ads. Just like I've been trained to do, I see them as pop up or spam invitations.
Studies have confirmed that there isn't money to be made in online newspapers, so why beat a dead horse?
The way I see it, this problem we're going through is based on two things: the recession and corporate greed. Singleton was in such a rush to buy the CCTimes and the MercNews that he was forced to sell the most important part in all this, the ability to gather news through solid reporting and good people.
Finally, last week one of MNG's columnist wrote about newspapers being the watchdog of government, going on and on about the media not being able to cover government because of the layoffs. Of course, what the columnist didn't say was that MNG has chosen no to cover local government anymore.
No, instead what passes now as local coverage is mindless, dumb stories about a new tea shop opening in Hayward, the Oakland Zoo receiving an award for animal care and a story about an Alamo Church expanding to four weekend services.
Gone are city council meetings, planning commission and school board coverage.
I say close the door, shutter the windows and fire the so-called reporters and editors and then demolish the building. These aren't newspapers any more.

Anonymous said...

Wow, that's a pretty harsh conclusion. Plenty of reporters are still doing good work, including coverage of government.

Anonymous said...

If the creditors were smart, the first thing they'd do is boot Singleton. The creditors might hire a forensic accountant to figure out where all the money went.

Anonymous said...

Sure, there are reporters doing good coverage of national and state government. But when it comes to local government, MNG is missing in action. it's like the new model is to forget local coverage and fill the newspaper with irrelevant stories about irrelevant issues. If I lived in Tracy, Dublin, Hayward or Fremont, would I really care about San Mateo, Oakland, Vallejo, San Ramon or Walnut Creek neighborhood stories? And where is the coverage of local government?
I want to know what my city council has been up to. But the local newspaper under MNG hasn't covered city hall, education, the planning commission since the revamping.
Newspapers are the supposed watchdog of government. But doesn't that include local government, not just state or federal governments? Under the new model, MNG doesn't have enough reporters in their local offices to cover local government.
That's why I advocate tearing down the buildings and letting the grass and flowers grow back. We'll all be the better for it.

Anonymous said...

The creditors will want to find ways to get their money back. They're not looking to make long-term investments. They'll want to find things they can sell fast. My guess is they'll close papers that they can't sell, and sell the real estate at a fire sale price. I doubt the creditors have any concern about journalism.

Anonymous said...

rather than closing papers, i'd bet they'll be more likely to combine publications, maybe create one paper for the entire bay area rather than 11 or 12 different titles. not saying that's a good idea, but it looks to be the direction they're headed and would preserve at least some of the advertising they now carry.

Anonymous said...

like shuffling deck chairs on the titanic