Tuesday, December 9, 2008

So are our local Inland Empire papers financially healthy?

A few days ago, people were noting that the Tribune Company had hired bankruptcy advisors and that they might file for bankruptcy this week. Then they went ahead and filed on Monday.

If the Tribune Company can have difficulties, and if the New York Times can have difficulties, what about our local papers?

As it turns out, three of our local papers - the Inland Valley Daily Bulletin, the San Bernardino Sun, and the Redlands Daily Facts - are all owned by one company, the Los Angeles Newspaper Group.

With nine daily newspapers serving over 1.5 million readers a day and the LA.COM Network reaching more than 2.7 million unique visitors a month, the Los Angeles Newspaper Group (LANG) continues to outdistance competitors as one of the most powerful and effective advertising buys in America today....

Print Readership:
1.5 million daily
1.6 million Sunday
1+ million exclusive daily
1+ million exclusive Sunday

Online viewership:
2.7 million monthly unique visitors

Paid Circulation:
Over 500,000 daily
Over 550,000 Sunday

But this isn't just an El-Lay operation:

LANG is powered by MediaNews Group, one of the largest newspaper companies in the United States situated throughout California, the Rocky Mountain region and the Northwest. MediaNews Group is privately owned and operate nearly 60 daily newspapers in 12 states with combined daily and Sunday circulation of approximately 2.6 million and 2.9 million, respectively....MediaNews Group also owns a television station, a CBS affiliate in Anchorage, AK and a radio station in Texas.

MediaNews Group used to file financial reports with the SEC, but quit doing so on April 4, 2008 as announced in a Form 8-K:

On April 4, 2008, MediaNews Group, Inc. (the “Company”) entered into amendments of its (i) Indenture dated as of November 25, 2003, between the Company and The Bank of New York, as trustee, regarding the Company’s 6-7/8% Senior Subordinated Notes due 2014, and (ii) Indenture dated as of January 26, 2004 between the Company and The Bank of New York, as trustee, regarding the Company’s 6-3/8% Senior Subordinated Notes due 2014.

The amendments ended MediaNews’ obligation to file reports under the Securities Exchange Act of 1934 (the “1934 Act”) on a voluntary basis. Such obligation has been replaced with an obligation to deliver to Note holders quarterly and annual financials.

Accordingly, the Company will no longer be filing reports under the 1934 Act on a voluntary basis.

So we don't know how they're doing financially, but we know what they're doing to cut costs:

It started with an advert on Craigslist India: "We seek a newspaper journalist based in India to report on the city government and political scene of Pasadena, California, USA." It ended with Pasadena Now, a local news website, firing seven staffers, including five reporters, and outsourcing research, writing and reporting to six people in India.

But for more on that, see the Foothill Cities Blog.

Here's how MediaNews Group has responded:

Dean Singleton, head of MediaNews Group, which owns 54 daily newspapers across the US, said recently that his company was considering outsourcing everything - including one offshore newsdesk for all the papers.

Luckily much of David Allen's reporting depends upon physical presence in the area - although there are ways to get around that:

They even report local council meetings via video streams (although they once missed two city council members walking out in protest because the camera didn't face that way).

I couldn't find any information on MediaNews Group's current debt, or dangers that they might get in a credit squeeze. Basically, it's none of our business - until the company asks for a bailout.

I have neglected one local paper, the Riverside Press-Enterprise, which is not part of the MediaNews Group conglomerate. The recorded owner of the paper is the Press-Enterprise Company. While I couldn't find any corporate information on the site, I did find some information at BusinessWeek:

Press-Enterprise Company provides news and information for Inland Southern California through newspaper and magazine publishing, printing, Internet, and telephone information services. The company offers Press-Enterprise daily newspaper; six community weekly newspapers in Western Riverside County; The Business Press, which is a weekly Inland Empire business and financial newspaper; PE.net, which is an Internet Service Provider; PE.com, which is a primary online news, sports, information, and entertainment source; NewsLink, which is a 24-hour voice information system; and La Prensa, which is a weekly Spanish-language publication providing information on the Inland Empire’s Hispanic community. Press-Enterprise Company was founded in 1878 and is based in Riverside, California. Press-Enterprise Company operates as a subsidiary of A. H. Belo Corporation.

The A. H. Belo Corporation (not to be confused with the television station owner with a similar name owns four papers (the other three are in Dallas, Denton, and Providence) and is publicly traded on the NYSE. It announced its third quarter results on October 31:

A. H. Belo Corporation (NYSE: AHC) reported third quarter revenues of $153.8 million and a net loss of $17.3 million or $0.84 per share for the third quarter. The results include charges totaling $11.1 million related to a voluntary severance program and $4.5 million related to the impairment of a printing press....

Robert W. Decherd, chairman, president and Chief Executive Officer, said, "These are challenging times for A. H. Belo, the industry and the country. In light of a weak ad environment and ad trends that may not stabilize in the short term, we remain steadfast in delivering highly-valued audiences and marketing solutions to advertisers while maximizing our existing infrastructure and reducing expenses Company-wide."

AHC continues its transformation in streamlining operations and targeting sustainable incremental revenue streams.

One of the streamlining items:

The Press-Enterprise re-evaluated its circulation footprint and eliminated its distribution to Palm Springs, which will improve EBITDA performance by approximately $600,000 for 2009.

And when your numbers are declining, you look for any window of hope you can find:

For the third consecutive quarter, the year-over-year percent decline in The Press-Enterprise's advertising revenues, including print and Internet, improved. The percent decline in The Press-Enterprise's advertising revenues improved 300 basis points from the second quarter to the third quarter.

I don't know enough about the newspaper business to know whether either group is healthy - especially since MediaNews Group isn't talking - but we'll have to see what happens in the coming years - or months - with respect to our local Inland Empire newspapers.

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