This is not Art in his younger days...

This is not Art in his younger days...

Another Paper on the Ropes

The Star Tribune filed for Chapter 11 bankruptcy late this week, after missing payments to creditors and laying off or buying out a quarter of its newsroom. From my former newspaper, the St. Paul Pioneer Press:

The Minneapolis-based Star Tribune got approval Friday from a New York bankruptcy court to continue to pay its bills and keep publishing.

The paper still is making money, according to court filings, and had almost $27 million in cash at the end of 2008. So Minnesota’s largest newspaper doesn’t appear to be going out of business anytime soon.

Longer term, however, questions remain.

Even if the Star Tribune emerges from bankruptcy, who will own it? And how much will its employees have to give up to achieve the cost cuts its publisher says are needed?

The Star Tribune filed for Chapter 11 bankruptcy late Thursday, two years after New York-based Avista Capital Partners, a private-equity group, bought the paper for $530 million.

“With the significant deterioration in our revenue in 2008 and the challenging outlook for our industry for 2009, we simply could not wait any longer to take this step,” publisher Chris Harte said in a release issued early Friday. “Our plan is to use the court-supervised process to reduce our costs, strengthen our balance sheet and create a financially viable business.”

The paper’s profits are down sharply. Court filings show that it had earnings of $31 million in 2008, before interest, taxes and debt payments. That was down from $59 million in 2007 and $115 million in 2004.

In its bankruptcy filing, the Star Tribune reported assets of about $493 million and debt of $661 million.

If you had told me five years ago that the Strib would be bankrupt and the PiPress still growing and holding its own, I would have said you were crazy — not because the PiPress and its people weren’t scrappy and talented (they were and are, he said modestly) — but because the Strib was so much bigger, seemingly better financed and operating from a position of dominance in our market. But the Strib’s fortunes have been in freefall since then and now there’s serious doubt that it can pull itself out of its fiery tailspin.

That’s a sad thing for the Twin Cities and Minnesota, despite what some know-nothing bloggers might tell you. Who’s going to do the hard reporting and watchdog journalism the Strib now commits millions of dollars to each year if they go away? If the evil “MSM” goes away, what will the bloggers “comment” on?

I wish all of my friends and former colleagues at the Strib the best as they work their way through this financial mess. They are real pros and help to keep us informed and entertained. I would miss them greatly if they went away.