Tuesday, February 24, 2009
Four owners of 33 U.S. newspapers have been declared bankrupt in the past two months and the outlook is far from offering encouragement to the sector.
Analysts doubt that these companies can emerge from bankruptcy without accepting the radical changes that agreements require its lenders, such as reverse some of its newspapers to digital format.
Of course, the publishers of newspapers have begun to make drastic changes, such as reducing the printed editions. But it remains unclear whether creditors can submit their best ideas, although that probably will not discourage lenders desperately trying to change things.
"These early warnings are declared bankrupt for all the others," said John Penn, a lawyer specializing in bankruptcy in Fort Worth, Texas. "It's almost certainly going to have to change their business models because the old are not working."
The publishers of newspapers say that the bankruptcy will not have an immediate impact on their daily operations and that probably affected the 33 newspapers will not close all at once as part of the reorganization.
But the problems were highlighted in the newspapers over the weekend with the statements of the bankrupt publishers of The New Haven (Connecticut) Register and Journal Register Co., and the owners of The Philadelphia Inquirer and Philadelphia Daily News.
These statements came after the bankruptcy Tribune Co., whose media group includes Los Angeles Times and Chicago Tribune, did the same in December, January and the bankruptcy of The Star Tribune in Minneapolis. Other firms could continue publishing these steps in the coming months as the chances of getting publicity for 2009 are bleak.
The four went to the publishers of commercial bankruptcies for help as their debts have become unsustainable in the fall during two years of advertising revenues, which have worsened with the economic recession.
Labels: Business
