Thursday, January 28, 2010

MediaNews bankruptcy hearing March 4

Carey
The date has been set. U.S. District Judge Kevin J. Carey of the bankruptcy court in Wilmington, Delaware, on Tuesday set a date of March 4 to hear the MediaNews Chapter 11 case.

The deadline to file objections is Feb. 4. To object, go to PDF page 139 (numbered in the document as page 124) in the MNG disclosure notice for instructions.

Appearing before Judge Carey was Kathryn A. Coleman of Hughes Hubbard and Reed, the Manhattan law firm representing MNG.

She briefly recited the situation — that the bankruptcy plan would reduce the company's debt from $930 million to $178 million.

Judge Carey seems to get a lot of media bankruptcy cases. Recently he approved $45.6 million in Tribune Company bonuses. Here's a link to a union site where he was criticized.

Contrary to earlier reports, Hearst will remain a shareholder in MediaNews, and will probably do better than other creditors. Hearst's share of MNG's non-Bay Area assets will go from 31% to 14%. While that sounds like a haircut, Hearst will retain more of its $317 million investment in MNG than other shareholders, who will only get 19 cents on the dollar.

Nothing in the bankruptcy papers filed so far rules out the idea that MNG and Hearst might try to swing a deal to sell the Chron to Singleton, as was discussed a couple of years ago.

In fact, media venture capitalist and "Reflections of a Newsosaur" blogger Alan Mutter says this scenario might go down:
    The most likely path in San Francisco would be to add the San Francisco Chronicle, where Hearst has sunk more than a $1 billion since 2000 without seeing much profit, to the chain of newspapers Singleton operates in the Bay Area. The long-running losses at the Chronicle, plus the MediaNews bankruptcy, may be sufficient to persuade regulators that an antitrust waiver is necessary to sustain journalism in Northern California. As an added argument in support of a waiver, Hearst could threaten – as it did early in 2009 — to shut the Chronicle, which would make San Francisco the largest American city without a daily newspaper. Adding the Chronicle to his Bay Area juggernaut would enable Singleton to eliminate most ad sales, administrative and back-office positions. At the same time, a consolidation would provide ample opportunities to streamlining production and circulation. This also would result in potentially the deepest cuts yet in the Chronicle newsroom. The Chronicle editorial staff, which has been halved over the years to a couple of hundred traumatized souls, could be thinned yet again to perhaps a couple of dozen individuals. Further insight into Singleton’s operating approach in the Bay Area is offered here.

5 comments:

Anonymous said...

It makes sense that MediaNews and the Chronicle would try again to get approval for a merger. But before the DOJ blesses such a deal, they should look at what has happened with the consolidation of the existing MediaNews papers -- less local news coverage, more wire stories.

Fred Dodsworth said...

Assuming the DOJ is concerned with the quality of the 'news' in the Bay Area is entirely missing the point. Bankruptcy is about preserving wealth, mainly the wealth of the folks filing the bankruptcy papers. If the creditors believe they'll recover more in a involuntary bankruptcy, they push the button. In this case Singleton believes he'll preserve more of his wealth if he controls the bankruptcy process and Hearst is making the (another stupid mis-) calculation that they will be better served by Singleton's proposal. Nowhere here is journalism or community benefit at issue. Frankly, if the Chron died, we'd all be better off as there would be more local ads for the existing local papers (and other media). This market is too valuable for the advertising void to last (the editorial void already exists and it's already being filled). A Chronicle owned or controlled by Dean Singleton would a complete editorial and advertising disaster for journalism in the Bay Area. The public's right to know and the business community's right to competitively market to readers would both suffer tremendously if Singleton has his way with the market.

Colin said...

I think Fred is mixing up the bankruptcy case and anti-trust issues, which are entirely different. As for the anti-trust issues, they're entirely discretionary. The rules are bent whenever it suits the administration in power. Currently the DOJ doesn't want to cut Pelosi any favors, which probably speaks to an undercurrent of resentment between the president and the speaker more than it has anything to do with the two newspaper companies.

Fred Dodsworth said...

They're different issues, but the same 'power structure' determines the net result. That's why the DoJ allowed the original Chron-Ex JOA in the 1960s and that's why the DoJ allowed the Hearst-Fangzaminer snow job in 2000 ..and I don't say that as a distant spectator, I was there. The antipathy you allege this administration has toward Pelosi is a fantasy. They're tied at the hip and (unfortunately) Pelosi's in the Media News/Hearst camp. The power players wanna play and she's going to do what she can to make it happen. Whatever else she may be, Nancy is a creature of privilege. Her father was a Congress critter and subsequently Baltimore's mayor, Nancy grew up in power and she's married to money. Don't buy the table talk, money owns the casino.

Fred Dodsworth said...

The following was posted by Robert Reich on Thursday: "Bankruptcy has been part of the “free market system” for hundreds of years, but its details are determined through politics – the same politics that arranged the $700 billion bailout of Wall Street. In fact, you might say that during 2009, Wall Street went through its own kind of bankruptcy restructuring, with the generous aid of American taxpayers. JP Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and Wells Fargo, along with their top executives, traders, and major investors, have benefited handsomely."
This is exactly what I mean about the jiggering of both the bankruptcy system and the Dept. of Justice. Money doesn't talk, it screams. No government agency is likely to stop MediaNew and Hearst from merging, far more likely will be some sort of taxpayer bilking that will occur in the process. It is quite likely that Nancy Pelosi will be driving that fiasco.